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Double Irish with a Dutch sandwich saves Google $3.6 billion
And no, these are not some delectable noms. We are talking about the tax loopholes that Google used to save $3.6 billion in 2015. While this is a trick that Google – among many other big corporations – has been using for over a decade now, the amount evaded seems to be increasing each year.
Oh, those deadly taxes! And oh, those darn tax loopholes! Apple had its turn with the Irish controversy and a hefty 13 billion euro fine, and now it’s Alphabet’s turn. According to new filings from Alphabet’s Google, the company managed to save a whopping $3.6 billion from a common tax avoidance technique known as “the double Irish with a Dutch sandwich.”
Essentially, the tax loophole takes advantage of differences in national tax codes. By using multiple Irish and Dutch subsidiary companies, you can technically “legally” avoid paying a large sum in tax money. A simple explanation goes something like this: a company sends its profits through an Irish subsidiary to a Dutch company. Using generous tax laws in the Netherlands, the company can then transfer the profits to yet another Irish subsidiary headquartered in a tax haven.
Using generous tax laws in the Netherlands, the company can then transfer the profits to yet another Irish subsidiary headquartered in a tax haven.
In the case of Google, it’s Bermuda. Google’s operations take place mainly in Ireland, and to avoid paying income taxes there, the company sends its profits to the Netherlands. Sending them directly to a tax haven doesn’t make much sense, given Ireland’s harsh laws regarding that. Conveniently for the search giant, it has Google Netherlands Holdings BV subsidiary. All of that is subsequently transferred out to Google Ireland Holdings Unlimited in Bermuda, and neither the Netherlands nor Bermuda have strict laws regarding this practice. And that’s how the search giant has been sheltering billions of dollars from the US and other nations.
According to Bloomberg, through this, Google was able to bring down its tax rate outside the US to 6.4 percent in 2015. And the total amount of profit has amounted to $58.3 billion as of 2015. Yes, $58.3 billion. Unfortunately, the double Irish with a Dutch sandwich technique is frequently used by large tech companies, and will be allowed until the end of 2020. That’s why Google can simply say that it’s complied with every country’s tax law where the company operates.
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