Turns out even tech giants use loopholes to avoid paying taxes. But how much do they actually shelter?
According to the latest regulatory filings from Netherlands, Google saved around $3.7 billion in taxes on €15.9 billion (about $19.2 billion) of revenue back in 2016.
These filings – dated December 22nd 2017 – were revealed by the Dutch Chamber of Commerce yesterday.
Dutch Sandwich Trick
The company used tax saving tricks called the “Dutch Sandwich” and the “Double Irish”. It involves moving the revenue from an Irish subsidiary to a Dutch company with no staff. The money is then moved to another Irish company based in Bermuda.
Google didn’t use this once or twice, in fact it moved 7% more money through this trick in 2016 than in 2015.
Despite being one of the biggest companies in the world, Google defended it’s tax sheltering move. In a statement to Bloomberg, the search engine giant said,
We pay all of the taxes due and comply with the tax laws in every country we operate in around the world. We remain committed to helping grow the online ecosystem.
They’re not lying, the practice is perfectly legal however that’s beside the problem. The real issue is that large tech companies like Microsoft, Facebook and Apple follow the law but don’t take it’s ethical significance seriously.
This isn’t the first time for Google either, the company avoided €1.12 billion tax in France last year.
US and European Governments complain that these companies are depriving them of tax revenue. They’re using legal loopholes (like the Dutch Sandwich) and other tax avoidance schemes.
The Double Irish loophole was closed back in 2015, but companies using the loophole are allowed to use it until 2020.
Won’t Help Much
This revelation won’t exactly lead to the governments getting billions in taxes. Apple has already shifted its profits to other tax havens to avoid paying them.
However, it might push legal reforms in these countries that could remove these loopholes entirely.