Multinational companies are frequently criticized for taking advantage of legal loopholes to reduce international taxes. In 2017, Google was able to leverage tax shelters to move $22.7 billion to Bermuda.
The “Double Irish” loophole involves moving revenue from an Ireland-based subsidiary — through a Dutch company that has no employees (the “Dutch Sandwich”) — to a Bermuda mailbox owned by a different, but affiliated company also registered in Ireland.
Figures for 2017 (via Reuters) filed by Google Netherlands Holdings to the Dutch Chamber of Commerce just became available. In 2017, Google shifted $22.7 billion to Bermuda compared to $19.2 billion in the year prior.
The goal of these loopholes is to move overseas profit away from countries with higher taxes, and avoid others. This allow for an effective tax rate on foreign profits in the single digits.
Google continue to maintain that this is legal and complies with local tax laws. In a statement to Reuters, Google notes an effective 26% tax rate over the last decade.
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.
Due to criticism from the European Union, the “Double Irish” was halted in 2015 by the namesake country, though existing companies can use the structure until 2020.