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Google Shifted $23B to Bermuda in 2017 to Avoid Taxes

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Google, one of the big four tech companies, moved more than $22.7 billion through a Dutch shell company to Bermuda in 2017, in an arrangement to reduce its foreign tax bill. Photo Credit: Shutterstock

Google, one of the big four tech companies, moved more than $22.7 billion through a Dutch shell company to Bermuda in 2017, in an arrangement to reduce its foreign tax bill. The report by the NY Post, was based on documents filed at the Dutch Chamber of Commerce, on Dec. 21st. The funds, which were directed through Google Netherlands Holdings BV, were more than $4.5 billion more than it forwarded in 2016, as per the documents. Google’s owner, Alphabet, has enjoyed use of this tax loophole for over a decade. The company enjoys an effective tax rate in the single digits on its non-US profits, which is about a quarter of what the average tax rates are in its overseas markets. In 2017, Google Netherlands Holdings BV paid about $3.89 million in taxes in the Netherlands in 2017, on a gross profit of $15.5 million.

“We pay all of the taxes due and comply with the tax laws in every country we operate in around the world,” Google responded in a statement. “Google, like other multinational companies, pays the vast majority of its corporate income tax in its home country, and we have paid a global effective tax rate of 26 percent over the last ten years.”

The tax strategy, which is legal is well-known as the “Double Irish, Dutch Sandwich”. It essentially allows Google and other multinational companies to circumvent owing US income taxes or European withholding taxes on the funds, which represent the bulk of its overseas profits. Before the New Year, Google’s subsidiary in the Netherlands shifted revenue from royalties earned outside of the U.S. to Google Ireland Holdings, an affiliate based in Bermuda, where companies do not need to pay any income tax. The tech giant’s loophole is on its last leg, however. In 2014, Ireland decided to phase out the arrangement, after much pressure from the European Union and the United States. Google’s tax advantages will therefore end in 2020, along with that of many other large corporations.

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