SOURCE: ZERO HEDGE
Because in a recent filing, Google disclosed a “totally legal” tax-avoidance scheme involving a soon-to-be-phased-out strategy known as the “Double Irish, Dutch Sandwich.”
While it may sound like an exotic menu item from a Midtown Irish pub, the DIDS is so much more than that: The strategy involves using a Netherlands-based subsidiary to shift royalties paid in Europe – Google EU is headquartered in Dublin – to Google Ireland Holdings, the company’s Bermuda-based affiliate. According to a Google filing with the Dutch Chamber of Commerce, the company funneled 19.9 billion euros ($22.7 billion) through the subsidiary to its Bermuda tax haven in 2017, around 4 billion euros ($4.5 billion) more than 2016, Reuters reported.
The arrangement has allowed Google to reduce its foreign tax bill to single-digit levels in some places – roughly one-quarter of the average rate for overseas markets.
But don’t worry. Because, as Google reminds us, this is all legal.
“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.
“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% over the last 10 years.”‘
The DIDS strategy, which is 100% legal, allows Google to avoid US income taxes and European withholding taxes. However, thanks to recent changes in Irish law (which followed pressure from the EU), the favorable treatment is slated to end in 2020.
That doesn’t bode well for the company’s yoy comps.