According to documents filed at the Dutch Chamber of Commerce, Googles Dutch subsidiary Google Netherlands Holdings reportedly moved almost EUR €20 billion to Bermuda in 2017, as part of a legal loophole known as the Double Irish, Dutch Sandwich a scheme that allows companies to reduce their foreign taxes by a substantial amount.
Google issued a statement regarding the findings, ‘We pay all company taxes due and are in full compliance with tax legislation in every country we operate in globally. Google, like other international companies, pays the vast majority of its corporate income tax in its country of residence, and we have paid a global tax rate that is effectively 26% over the last ten financial years.’
Commentators are stating that a company worth several billion dollars, should be paying a higher rate than 26%.
Googles Netherlands subsidiary was used to move revenue stemming from interests and royalties earned outside the US to its Irish subsidiary, an affiliate based in Bermuda, where corporations effectively pay little-to-no income tax.
The tax strategy is currently still lawful in Ireland and has allowed companies like Google to legally avoid catching US income tax payment or EU withholding tax; an amount which makes up the majority of its foreign-earned profits.
Following pressure from the EU and US in 2014, Ireland was forced to phase out the tax strategy, which effectively ends Google’s tax loophole in 2020. Documentation worryingly showed that Google Netherlands Holdings BV was taxed €3.5 million by the Netherlands government during the 2017 financial year, on a gross profit of €13.6 million.