Google saved itself as much as $3.7 billion in 2016 by moving 16 billion euros between Ireland, the Netherlands, and Bermuda using infamous legal loopholes that allow it to skirt high tax responsibilities overseas, according to a report from Bloomberg. Citing regulatory filings in the Netherlands, 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.
In 2016, Google saved seven percent more than it did in the year prior, at a tax rate of 19.3 percent.
Despite attracting criticism for its tax-saving methods, Google’s use of “Double Irish” and “Dutch Sandwich,” appear to be perfectly legal. The Irish government put a stop to “Double Irish” arrangements back in 2015, although companies have been given permission to continue using the loophole until the end of 2020.
“We pay all of the taxes due and comply with the tax laws in every country we operate in around the world,” Google said in a statement given to Bloomberg. ”We remain committed to helping grow the online ecosystem.”
Google is under pressure from regulators and authorities around the world for not paying enough tax. Last year, the company escaped a €1.12bn 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.
Companies like Apple have already moved their money to other tax havens to keep shielding their profits from taxes. However, disclosures like these could increase the pressure for legal reforms by showing just how much these companies could be contributing to local economies.
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