Google cuts tax bill by €2.2bn with 'Double Irish' tax scheme

GOOGLE CUT its taxes by $3.1 billion (€2.2 billion) in the last three years by using a strategy known as the “Double Irish”, under which it shuttled foreign profits through its Irish operation to Bermuda.

Google’s “income shifting” helped reduce its overseas tax rate to 2.4 per cent, the lowest of the top five US technology companies, according to regulatory filings in six countries.

Google’s tax reduction method takes advantage of Irish tax law to legally move profits in and out of subsidiaries here, eventually lodging them in island havens that levy no corporate income taxes.

Companies that use the “Double Irish” arrangement – so named because it relies on two Irish companies – avoid taxes at home and abroad.

Facebook is preparing a similar structure that will send earnings from Ireland to the Cayman Islands, according to its filings in the Caymans and Ireland.

The strategy yesterday attracted criticism in the US, which is struggling to close a projected $1.4 trillion budget gap. The US has a corporate tax rate of 35 per cent.

The tactics of Google, which employs almost 2,000 people in Dublin, and Facebook depend on “transfer pricing” – paper transactions among a company’s subsidiaries that allow for the allocation of income to tax havens while attributing expenses to higher-tax countries.

International income shifting helped cut Google’s overall effective tax rate to 22.2 per cent last year. The company also shifted income through the Netherlands, in a technique known as the “Dutch Sandwich” because it sees the country acting as a stopover between two other jurisdictions.

“It’s remarkable that Google’s effective rate is that low,” said Martin Sullivan, a tax economist who formerly worked for the US treasury department.

A spokesman for the Department of Finance declined to comment specifically on Google’s strategies.

“Ireland always seeks to ensure that the profits charged in Ireland fully reflect the functions, assets and risks located here by multinational groups,” he said.

A Google spokeswoman said that the firm’s practices were “very similar to those at countless other global companies” operating across a wide range of industries.

Google’s Irish business provides technical, sales and operations support to customers in more than 50 countries. Last year, the Dublin-based company posted profits of €47.5 million, up almost fivefold on the previous 12 months.

Google paid taxes of € 18.3 million in Ireland last year, up from €8.1 million in 2008. – ( Additional reporting: Bloomberg )

http://www.irishtimes.com/newspaper/fro ... tml?via=mr

is there a double o'malley strategy. I'll let them go to islands if i get a cut.

Angela's Ashes, this is wrong!

"You do it to yourself you do....."

It's legal, yeah. The point is that it probably shouldn't be.

The question I would pose regarding this however is whether or not it is actually better for Google to keep that money themselves. By doing so, they are able to maintain or increase their current productivity, engage in continued development of new products, maintain their current workforce, expand their workforce, pay their workers which in turn filters that payroll money back into the economy. Me thinks this is referred to as "trickle down" economics. Not saying I'm right or wrong, just posing the question.

I'm not sure even "do no(t get caught doing) evil" Google actually does this. If, in theory, they do, then it's better for them than to have the money then for it to go to some welfare broodmare in Mississippi. Whether or not you think it's better for society probably depends on your view of The Fountainhead.

Don't hate the player, hate the collection structure. It's just the economics of doing buisiness. Writing laws to try and punish this or that group generally has unintended consequences (see Income Tax...also AMT)

Again, all tax is eventually paid by individuals, therefore tax should be paid by individuals.

Eliminate the costly repressive ridiculous way we force businesses to do business here in America and streamline the tax structuring.... we wind up with more business AND more tax money.

Oh well, I'm sure if that happened the "correct" people wouldn't have all the money so... theres the issue.

We have a tax structure that makes as much sense as the BCS and we wonder why companies export themselves for cheap labor.

Make the United States a tax haven for buisinesses and look at the jobs roll in.

It's freaking easy as hell to create jobs these guys just don't want to lose the control they have over the process.


Also, this is the effect of globalization. Global companies make money for and in a lot of different countries. Tax Shopping is the prudent thing to do.

It's up for governments to make their tax structure sexy enough to grab that cash.

Hey, in this day and age, as long as they are able to keep their business thriving and their employees paid it has to be looked at as a positive. I know I certainly have no beef with Google; they provide a service that I use on a daily basis and its a service that works smoothly and efficiently for me.

How do you feel about flat tax proposals? From my viewpoint, the only impediment to it at this point is the fact that the IRS is so bloated and overgrown that there are too many people with too much to lose to allow it to be something that gets taken into serious discussion. In other words, doing the prudent thing (implementing a national flat tax) threatens an established power structure therefore it gets squashed, ridiculed, or otherwise discredited by said power structure.

I knew Google had turned evil when they rolled out those automatic cars that navigate in traffic. Have you read Daemon by Daniel Suarez? First it's automatic cars then it's killer motorcycles covered in spinning blades with blinding laser beams and swords where the handlebars should be.

Yeah, the regressivity of a national sales tax has nothing to do with why anyone might oppose it.

In other words dk, you feel that implementing a national sales tax shifts too much of the tax burden to the lower class, correct? I'm asking out of sincere curiosity regarding the issue. I in no way profess to be an expert regarding all the ins and outs of all the various systems of taxation. Believe it or not, I actually use N&D as a resource for information regarding many financial issues. I don't take anything I read in here as gospel, but I am aware of the fact that there are many people here who have far more advanced understandings of finance than I do and I use many of the ideas I read here as a springboard towards my own further research.

I tend to do the same. Yeah, sales taxes place greater tax burden on the poor and middle class compared to the rich as a percentage of their income. Now, the national flat tax proposals do contain some provisions to mitigate this effect, but they don't go far enough, especially regarding the middle class. I'll be honest, I'm a believer in a progressive tax structure, at least nationally, where mobility between nations isn't very high so the adverse economic effects (like people moving to low tax states) aren't very common. I think we should probably create a higher tax bracket than 250k. Also, I agree that the tax system is bloated and absurd, that the IRS probably would resist major change, and I'd be in favor of some sort of massive reform and streamlining (the same goes for the state level). If you get rid of many exemptions, general tax levels can decrease, or current tax levels can help pay the debt. I just don't think a national sales tax is the right way to go.

Another problem I see with the flat tax is that taxes are simply too low under the proposed system for the amount of debt we have. I don't see starving the beast as a feasible strategy until we're really fucked, but I'm also not sure what the alternative is.

I'm going to go ahead and hate both.

Whoever criticizes Google or any other company who does that (basically all) is a fuckin hypocrite. Or does anybody here reads all the tax laws and regulation looking for some forgotten tax or fee he is not paying but could? Or wants the company you are working for to pay more taxes?

Taxes are the confiscation of wealth by the threat of force, so it's quite natural to avoid them when possible.

Yeah, because filling out the form that you're given w/o asking questions is the same as actively moving money around to avoid the taxes expected of you.

The funny thing is to play the ignorance card is actually illegal while moving money around is legal.

What kind of secret taxes could I be missing?