Google's 'Dutch Sandwich' shielded 16-bn euros from tax

Alphabet Google moved 15.9 billion euros ($19.2 billion) to a Bermuda shell company in 2016, saving at least $3.7 billion in taxes that year, regulatory filings in the Netherlands show.

Google uses two structures, known as a “Double Irish” and a “Dutch Sandwich,” to shield the majority of its international profits from taxation. The setup involves shifting revenue from one Irish subsidiary to a Dutch company with no employees, and then on to a Bermuda mailbox owned by another Ireland-registered company.

The amount of money Google moved through this tax structure in 2016 was 7 per cent higher than the year before, according to company filings with the Dutch Chamber of Commerce dated December 22 and which were made available online Tuesday. News of the filings was first reported by the Dutch newspaper Het Financieele Dagblad.

The Mountain View, California-based company didn’t immediately reply to requests to comment on the filings. Google is under pressure from regulators and authorities around the world for not paying enough tax. Last year, the company escaped a 1.12 billion euro French tax bill after a court ruled its Irish subsidiary, which collects revenue for ads the company sells in France, had no permanent base in the country. The European Union has been exploring ways to make US technology companies, many of which use similar tax shelters, pay more.

The Irish government closed the tax loophole that permitted “Double Irish” tax arrangements in 2015. But companies already using the structure are allowed to continue employing it until the end of 2020.

According to US financial filings, Google’s global effective tax rate in 2016 was 19.3 per cent, which it achieved in part by shifting the majority of its international profit to the Bermuda-based entity.

The total pool of foreign earnings Google was holding overseas, free from taxation, was $60.7 billion at the end of 2016, the company said in its SEC filings.

New Law

The US tax law passed last month would give companies such as Google an incentive to repatriate much of that cash by offering them a one-time, 15.5 per cent tax rate. After that, foreign earnings would be taxed at 10.5 per cent, although companies can deduct foreign tax liabilities from this amount.

The law will also impose a 13.1 per cent tax on certain international patent royalties that could hit Google’s tax arrangement in which its Bermuda-based subsidiary licenses its intellectual property to its other foreign subsidiaries.

Google Ireland collects most of the company’s international advertising revenue and then passes this money on to Dutch subsidiary Google Netherlands Holdings. A Google subsidiary in Singapore that collects most of the company’s revenue in the Asia-Pacific region does the same. The Dutch company then transfers this money on to Google Ireland Holdings Unlimited, which has the right to license the search giant’s intellectual property outside the US That company is based in Bermuda, which has no corporate income tax.

The use of the two Irish entities is what gives the structure its “Double Irish” moniker and the use of the Netherlands subsidiary as a conduit between the two Irish companies is the “Dutch Sandwich.”

Google’s taxing times

— Google uses two structures, known as a "Double Irish" and a "Dutch Sandwich," to shield majority of its international profits from taxation

— Amount for 2016 was 7 per cent higher than the year before
— Tax shelter saved Google at least $3.7-billion in tax
— Google under pressure around world for not paying enough tax

It takes only 5 seconds to share, Please do Share.

Live Recent News

  • Doordarshan rejects NFDC’s demand to pay Rs 2.92 crore to private firm, here is why

    Prasar Bharati and Smriti Irani-led Information and Broadcasting Ministry are at loggerheads over financial issues, according to The Indian Express report. There was an alleged tussle between I&B Ministry and Prasar Bharati over Prasar Bharati’s autonomy on hiring and sacking, the IE report says. The bone of contention between this... Read More

  • ‘Future very bright for US-India counter-terrorism cooperation’

    Describing India as an “incredibly valuable and close counter-terrorism partner” of the US, the Trump administration today said the future is “very bright” for bilateral co-operation in this arena. US Counterterrorism Coordinator, Nathan Sales credited the meetings between Prime Minister Narendra Modi and Trump early in... Read More

  • North Korea Evades Sanctions With Ships That Change Names

    As Washington and Seoul try to maintain a unified front against North Korea, the case of two cargo ships shows how Kim Jong Un's regime keeps finding ways to evade increasingly tough international sanctions aimed at halting its nuclear weapons program.Both vessels have gone through repeated changes of names and owners, part of an international... Read More

  • Bijepur by elections: BJD defeats Congress; BJP 2nd in Odisha by-poll

    The ruling Biju Janata Dal today wrested the Bijepur Assembly constituency in Odisha from the Congress and voiced optimism that the impressive victory will brighten its prospects in the Lok Sabha elections next year. BJD candidate Rita Sahu trounced her nearest rival, Ashok Panigrahi of the BJP, by 41,932 votes. The Election Commission said... Read More

  • Two arrested for alleged GST fraud

    Directors of two companies were today arrested by the Goods and Services Tax authorities here for alleged tax evasion to the tune of over Rs 7 crore, in what could be the first arrests under the new indirect taxation regime. CGST Mumbai Central Commissionerate arrested Sanjiv Pravin Mehta, director of Shah Brothers Ispat Pvt Ltd, and Vinaykumar... Read More

  • Signal Detected From "Cosmic Dawn", When Stars First Lit Up The Universe

    For the first time, scientists have detected a signal from "cosmic dawn" - the moment when the universe's earliest stars emerged.The signal, reported Wednesday in the journal Nature, is little more than a blip in the radio echo of that ancient era, as difficult to detect as the wingbeat of a hummingbird caught in a hurricane. But if confirmed,... Read More

  • In A Record Haul, 631 Kg Cocaine Seized In Cargo Of Bananas In Albania

    Tirana, Albania:  Albanian police said it seized 631 kilos (1390 pounds) of Colombian cocaine in a cargo of bananas on Wednesday, the record in the country used as a crossroads for smuggling to Europe.According to Albanian police chief Ardi Veliu, the drug with a market value he estimated at 180 million euros ($220 million) was found in a... Read More

  • How To Get CBSE Digital Marksheets From DigiLocker

    CBSE students can get digital versions of their marksheets from DigiLocker , a cloud-based platform for issuance and verification of documents and certificates that allows users to store and access electronic versions of their certificates. According to a tweet posted by official twitter handle of DigiLocker- @digilocker_ind, 5.27 crore CBSE... Read More

  • New Blue Coloured Aadhaar Card Launched: How To Apply And Other Details

    The Unique Identification Authority of India (UIDAI) has recently launched a new blue coloured Aadhaar card or 'Baal Aadhaar' card for children aged below five years. For enrolling a child for 'Baal Aadhaar' card, the child's birth certificate and the Aadhaar card number of one of the parents is required, said UIDAI in a tweet on it's official... Read More

  • AirAsia India Offer: Domestic Flight Tickets Start From Rs 1,249

    With Holi around the corner, airlines are coming up out discount offers on airfares. After GoAir and Jet Airways ’ offers, now AirAsia India is also offering flight tickets at discounted rates. In its ‘BeatTheBudget’ offer, the carrier is offering domestic flight tickets at a starting all-inclusive price of Rs 1,249. AirAsia India's... Read More

Advertisement: itinyde@gmail.com Rate:100Rs/Month

Top News