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Google's 'Dutch Sandwich' Shielded 16 Billion Euros From Tax (bloomberg.com)
Google moved 15.9 billion euros ($19.2 billion) to a Bermuda shell company in 2016, saving at least $3.7 billion in taxes that year, regulatory filings in the Netherlands show. From a report: Google uses two structures, known as a "Double Irish" and a "Dutch Sandwich," to shield the majority of its international profits from taxation. The setup involves shifting revenue from one Irish subsidiary to a Dutch company with no employees, and then on to a Bermuda mailbox owned by another Ireland-registered company. The amount of money Google moved through this tax structure in 2016 was 7 percent higher than the year before, according to company filings with the Dutch Chamber of Commerce dated Dec. 22 and which were made available online Tuesday.
This dovetails nicely with all the "We love social justice!" TV commercials that Google was running during football games this past weekend.
Is that perfectly-legal tax-avoidance strategies like this one aren't available to lower and middle class employees.
If the law allows this and the tax forms are turned in and all the tax agencies say "looks good", it is not illegal. Don't blame Google for being smart, blame Holland, Bermuda, and Ireland for being dumb.
What loopholes? Corporations write the tax rules. This is all intentional. Why do you think corporations donate to political campaigns?
As you said, these are loopholes that are written into the laws. You cannot make something that is perfectly legal, illegal because you feel it is morally wrong. You fix the loopholes if there are any but by doing so you will also hurt a lot of import/export.
You have to think like a politician on this: would you like Google to pay their $10M tax bill or do you want your constituents to miss out on $100B in trade? Even if taxing everything (eg. a VAT) would only dip trade by 10%, it still would be more hurt than a few companies not paying $100M combined taxes.
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Since Alphabet, their new motto is: "Do the right thing."
https://en.wikipedia.org/wiki/Don%27t_be_evil
But I think they should change it one more time.
How about: "Fuck you all."
Very altruistic :)
I blame a system that encourages poorer nations to be the next rung on the ladder down the shithole.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
If the law allows them to do this then what are you complaining about? Don't like it? Change the laws.
How very strange. Politicians want to do this all the time. Maybe they're just saying it to placate or appeal to a voting bloc, but you literally cannot swing a dead cat in the Deep South without hitting a politician who wants to outlaw abortion, gay marriage, and in some extreme cases, religion other than Christianity.
Mr. Hu is not a ninja.
They've been trying for years though, this is nothing new, most state and federal justices, even the more extreme ones won't agree.
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Don't blame Google for being smart, blame Holland, Bermuda, and Ireland for being dumb.
They're not being entirely dumb: they each likely get more tax $$$ out of all of this than they would ever have gotten otherwise.
We're being dumb for allowing Google to deduct the expenses from contractually-created artificial charges or "licensing royalties" owed to an international unit that (1) Doesn't pay tax for products and services delivered in the US, AND (2) Are administered in precise amounts specifically designed to shift away profits from high-tax domains to low-tax domains.
Corporate donations to the political powers campaign funds.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
Is that his stance this week, or did Google give a complement, so he is eating out of their hands.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
The Netherlands gets a little bit of extra money from this, yes. Of course those billions do get added to our GNP, which means that any costs that are GNP-related (such as EU-membership, NATO membership, and third world aid) also go up immediately. I don't know how much Google is paying, but it's not impossible that this is a netto loss for the Netherlands.
Of course we gets lots of high tech jobs... Wait, what? Zero employees? Right, so that's pointless then.
Let Google pay the same on its income as I (Dutch person, living and working in the Netherlands) do. That's _52%_ income tax, for those interested... Corporations are people. Let them pay income tax like the rest of us.
You don't understand the very fundamentals of every human society. Laws are made by people, who in fact can take something perfectly legal and make it illegal for any reason they want. Feeling that this something is morally wrong is actually one of the biggest historic reasons things have been made illegal in human societies.
You'll regret looking up _anything_ that you have to goto the urban dictionary to find.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
You are sadly mistaken if you think the EU had anything to do with the complete mismanagement of the Irish economy. The base cause of the collapse in Ireland was rampant government corruption and collusion between government and banking industry.
I mean eventually that money gets spent, if not this year then next year. Right?
I'm not stating a strong opinion or preference here, I'm just saying this is what I think is happening and I may be wrong.
I'd love for someone to explain this to me in simple terms (seriously).
All those moments will be lost in time, like tears in rain... time... to... die...
It's really about whose property it is. If you take the view that the economy and money belongs first to the government, and people and corporations are only allowed to keep what portion of their own income the government permits, then every time the laws are used or adjusted so that they pay less in taxes, you see it as a "giveaway" to the rich or to corporations. In this case, it's the responsibility of individuals to live within whatever remaining means the government allows them.
But, if you take the view that government is by the consent of the governed, and the money belongs first to the individuals, then you see it as the right of individuals and corporations to come together to change the laws to ensure that the government only takes that portion of their property and income that they decide to permit. In this case, it's the responsibility of government to function within whatever means the people allow it. That's the true Libertarian utopia.
What percentage of "income" would you like Google to pay at 52%? Does Google need to keep track of only the money generated in the Netherlands and pay tax on that? Every country in the world will want it's cut. So how do you split this up? You can't have all countries taxing their total income. Even Google would be out of business in a day. It's not so simple as just tax them like me, an average citizen. An average citizen doesn't make money in countries all over the world. It's a complex problem. It also seems the more we try to make laws/rules to stop it, the more "creative" companies become.
You don't need tax breaks when you manage to avoid paying any taxes at all. In the realm of social justice, this whole thing is obscene. It doesn't benefit society, and it certainly doesn't create jobs.
Zero employees? I guess Amsterdam isn't part of the Netherlands. Likewise Eemshaven and Groningen where Google has a EUR600 million datacenter. And Google does pay tax on gross income (not revenue); I assume you take all legally available deductions yourself?
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
The continued machinations that everyone has gotten into with respect to taxing profits feels just like the epicycles used in the heliocentric models -- continued added complexity to make something work that at base doesn't make sense.
At base, the truth is that profit is an interpretive value. It's not a basic arithmetic concept like gross revenue or net revenue -- it's a derived value that requires subjective judgment to assign to the inputs. As such, you can create more and more complicated rules that never really continues. Like epicycles, the corrections and adjustments continue forever.
It would seem totally logical that the simplest and least-subject-to-perversion method of taxation would be to chose to tax a value that requires the absolute minimum subjective interpretation: either a gross revenue tax or a consumption tax. Both can be made arbitrarily progressive and both are virtually impossible to game.
Instead we go on and on trying to tax an elusive concept . . .
I'll blame Holland, Bermuda and Ireland for being selfish and irresponsible, but I'll blame the USA for being dumb. That's where the companies using these avoidance schemes are headquartered, and where the loopholes exploited by those other countries could be closed.
"When information is power, privacy is freedom" - Jah-Wren Ryel
People at lower incomes generally aren't paying taxes in the first place, so they have nothing to avoid.
Yes they are. They pay sales taxes on pretty much all their earnings, while rich people pay sales taxes on a tiny fraction of their earnings.
Even low income earners ought to pull at least some of their weight, and currently that's not happening. It's why upper income earners get so mad every time people talk about lowering their taxes as a "giveaway to the rich."
Low income earners pull most of the weight. They work as hard or harder than high income workers, but are no better off at the end of the year than the start.
Double Irish: Having sex with not one, but two redheads at once.
That doesn't sound that bad to me...
Ezekiel 23:20
Let Google pay the same on its income as I (Dutch person, living and working in the Netherlands) do. That's _52%_ income tax, for those interested... Corporations are people. Let them pay income tax like the rest of us.
OK, so go ahead and let them. Why aren't you?
We primitives in the US are supposed to emulate you, right? Because you are so much better than us?
So I thought you already had this all figured out and nailed down?
https://en.wikipedia.org/wiki/...
"The case is clear: an economically challenged government, perniciously influenced by the interests of the housing lobby, blew it. The entire Irish episode will be studied internationally in years to come as an example of how not to do things."
https://www.irishtimes.com/new...
https://www.rte.ie/eile/brains...
Vintage computer adverts: http://www.vintageadbrowser.com/computers-and-software-ads
Google: tax cuts for me, my friend ... for me, not for thee :) Social justice! or something!
That's right, much better to put it on the credit card.
If you want to shrink government, make the taxes equal to expenditures. When taxes double or triple for everyone, you'll see a strong movement to shrink government.
https://en.wikipedia.org/wiki/Inverted_totalitarianism
Maybe in the US, but in civilized countries we like our good roads and social security and pensions and medical insurance and police and so on and so forth. So we like corporations to pay their taxes.
-- Cheers!
Zero Employees? Then who's going to stop you when you rent an office, redirect their mail, and give yourself a nice salary for being employee #1? I mean, it's not like anyone can say you don't work there, unless you get tricked into admitting it yourself.
Velociraptor = Distiraptor / Timeraptor
different fiscal IDs are awesome, you can have a local google company claim no profit for the datacenter... and that datacenter only have the expenses income from the USA google fiscal ID , so they pay low taxes... and having a external company with a different ID transferring money to that country, convert it to the local coin/make payments for fake service/"whatever is the financial loop of the year" and then transfer again to another (tax heaven) place. In this case, internal EU transfers between Ireland and Netherlands aren't taxed and converting the money pay only minimal taxes
Higuita
Your implication is that our society couldn't organize those benefits without a violently imposed monopoly called "government". Well, that's disputable.
Theoretically, perhaps, but history has no examples in your favor. At least not on a scale of 4-digit populations.
it's better to keep the power to make decisions for society's resources in the hands of the people who have actually and objectively proven themselves good at making profitable allocations of society's resources.
Disagree, there's nothing inherently good or helpful to society about making a profit. The EITC made profits. Gilded age companies made profits. Microsoft in the 90s made huge profits. Google's profit helps nobody except those at Google.
"When information is power, privacy is freedom" - Jah-Wren Ryel
I know they CAN but they also have to live with the consequences, hence why we have politicians, it's their job (although they often do it poorly) to think not just about what YOU find morally wrong or obscene but also what the consequences of laws would be. It's easy to say these tax-evasion schemes are wrong, but fixing it would limit all sorts of trade and/or rebase a lot of companies. We don't have the richest country in the world because we were nice in the past.
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and it's a real political theory/movement. It's currently being used by the American Republican party to argue for cuts to our national pension program (Social Security) and our Single Payer healthcare system for people over 65 (Medicare).
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..my ass.
Organization? You must be joking..
The best part about all of this is it was the US State Department's idea to set up Ireland as a tax haven. Back in the late 40's when Ireland was basically broke, the US and UK got together with them to figure out how to fix their economy. The US brought up a bunch of ideas, and setting up a tax haven was one of them. So Ireland went ahead and did it.
So it's a bit suspect when the US congress calls CEOs onto the floor and lambastes them for taking advantage of something the US told Ireland to do.
My Other Computer Is A Data General Nova III.
Non sequitur of the day.
Organization? You must be joking..
Holland, Ireland and Bermuda are not dumb, they're just facilitating this for legal kickbacks in the shape of these companies setting up offices in the country. The enabling countries themselves gain more than what they lose, but on the whole it's a loss for tax payers internationally.
In a way the financial crisis has become something of a blessing in disguise as governments and organisations like the EU are finally getting themselves into gear and fighting corporate tax avoidance. They are doing it mostly because they (the politicians) don't want to take any more political backlash from continued austerity measures and growing national debts so it's a bit self-serving, but at least they're doing it and starting to reign in corporate tax avoidance.
"Why should I want to make anything up? Life's bad enough as it is without wanting to invent any more of it."
I would expect a company the size of Google to hire an army of tax accountants and lawyers to do this, but one thing that I think people overlook is that businesses in general get a huge advantage over typical wage-earners in the US tax system.
It drives me crazy when I hear small business owners whining about how expensive it is to do business and how they're being taxed to death. I'd love to see what entity owns their house, their cars, and incurs all their personal expenses...in almost all cases, these are easily passed through to the corporation or other business structure they own. All the complaints about high tax rates ring hollow when you can avoid it by offsetting revenue with expenses. Let's say you have $100K in revenue and maybe $20K in legitimate business expenses. Rent your house out as a place of business...that's thousands in rent, and of course your business needs cars, computers, business-related travel expenses, etc...and all of a sudden you're reporting a loss instead of a profit. Even better, if it's a corporation, you issue yourself a W-2 for a tiny salary, legitimizing the corporation's existence and further reducing your tax liability by paying tax on the salary at the personal rate.
The only way to fix this would be to switch to a consumption tax, or cut out every single deduction and charge a lower rate...but companies have already purchased their tax laws and aren't going to give them up without a fight.
I think youâ(TM)re missing a point here. Itâ(TM)s not about being dumb but about unfair competition. I live in the Netherlands and his is a much discussed topic but very much how the current government coalition wants it.
Dennis Onstenk
Some firm never make a profit. Some stays in the black, barely. A scheme of taxing gross revenue would kill such fledgling firms and increase considerably joblessness by making those not viable anymore. A regressive consumption tax predominantly hit those with the lowest income, they are like VAT tax , tax on sales, and making them progressive tax makes it difficult to implement, possibly adding infrastructure which do not exist today, adding a burden on the state. Really, there is a good reason to avoid consumption tax and gross tax as opposed to revenue tax.
C. Sagan : A demon haunted world:
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visit randi.org
Who pays corporate taxes? Answer: the corporations. And who owns the corporations? Answer: the shareholders.
Why don't we just tax the shareholders and skip the corporate tax?
What is a guy who is dying of thirst in the desert going to do with a bar of gold? Eat it?
Aah, change is good. -- Rafiki
Yeah, but it ain't easy. -- Simba
Those two articles do not mention the EU.
The housing crisis was entirely manufactured within Ireland.
But please go on blaming the EU for failings within Ireland. Such thinking will continue to hold back the economy there.
The real "Libtards" are the Libertarians!
Zero employees?
It's right there in the summary: "...to a Dutch company with no employees..."
OK, so go ahead and let them. Why aren't you?
I have no idea. I'm not in charge here.
We primitives in the US are supposed to emulate you, right? Because you are so much better than us?
I have no idea where you got that idea. I would, however, suggest you get out more.
If you want to shrink government, make the taxes equal to expenditures.
No, you CUT SPENDING.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
Voluntary trade means that both sides have profited—otherwise, there would have been no deal.
Utter bullshit. You might be able to safely trade two loaves of bread for an axe in the local market because you can test the axe, but how can the poor guy that received the loaves know they aren't contaminated with Salmonella or something worse? Free-marketeers frequently assume that both parties have complete and perfect knowledge of the goods or services being exchanged, something which is practically impossible in this highly technical age. When you purchased and installed that app, did you read the 100-page EULA that came with it? Did the parents of 8 dead children "profit" by purchasing IKEA dressers with a propensity to tip?
"I'm so moist I'm sticking to the leather." -Kermit the Frog on The Late Late Show
is the upkeep on our Empire (aka "Defense Spending") and keeping old people alive (SS and Medicare). Here's a nice, well researched write up. I say 1/4 because another 4% is vetrans, and it's only that high because of our Empire...
Medicare has absurdly high payout rates vs it's overhead. There's virtually no waste there and what little there is comes from laws passed by right wing legislatures (Republicans and Blue-Dog Dems) that prevent the government from negotiating lower prices.
Now, that 25% isn't anything to sneeze at, but it's also spread out over 9 categories, with one of the categories being 'Remainder'. You're going to find a lot of that is stuff like the farm subsidies that keep our food supply consistent, the FDA, Patent office, FBI, etc, etc. Things you probably don't want to cut.
My point is, government isn't _nearly_ as wasteful as you think it is. It sounds crazy when the government wastes $1 billion until you realize that's just not a lot of money to a country of 350 million people with a $57k per capita GDP
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The specific assignment of who is paying the tax isn't important. Only the overall flow of money. You could argue that renters don't pay tax on their rent. But the landlord supposed to pay tax on their property and on their rental income. If you reduced the tax on the landlord and increased the tax on the peasa-- renter, then logically, the rent would reduce by the amount of the tax and the flow of money would stay the same. But of course, human behavior is not logical, but that's another debate.
Don't say that the poor aren't paying their taxes since, by and large, poor people work for rich people. By taxing the employer rather than the employee, it's basically the same flow of money. Of course, the situation will differ on a case by case basis, but on a broad scale, everybody who works pays taxes.
As for the poor who don't work, you can't squeeze blood from a stone.
The only way spending is going to be cut is if the voters demand it. As long as the spending can go on the credit card, why would the voters demand it?
https://en.wikipedia.org/wiki/Inverted_totalitarianism
How are they dumb? They are profiting by the arrangement. Sure, their profit is less than the tax that was avoided, but that tax would've gone to some other country like the USA.
Yes, Google and any other multinational keeps track of the money generated in Netherlands. The problem is that they can shift the profit from one place to another by creating a shell company that buys and sells "services" from another division that does the actual work.
Poorer? The worldwide standard of living has risen dramatically over the past 40 years, including specifically the poorest. The rich are *much* richer - the discrepancy is larger - but literally all groups are better off. This is almost entirely due to the benefits of capitalism.
Enjoy life! This is not a dress rehearsal.
Setting up these "Tax Dodges" take effort and expense. If they're spending a nickel to save a dime, they'll do it. If they are spending a nickel to save 3 cents, not so much. Now spending a nickel to save 6 cents, 5 cents or 4 cents that is where things start to get interesting.
Apocalypse Cancelled, Sorry, No Ticket Refunds
blame Holland, Bermuda, and Ireland for being dumb.
This is the crux of it; big companies with major income can afford MUCH smarter lobbyists to get loopholes written and accountants to exploit them than legislatures can afford accountants to check over tax laws to prevent loopholes.
The intention matters with everything else that ends up in court, why not this?
The intention is to take full advantage of the tax laws as written. That's an intention to behave legally.
What loopholes? Corporations write the tax rules. This is all intentional. Why do you think corporations donate to political campaigns?
If corporations write the rules, why do corporate taxes exist at all?
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
I've seen no evidence American politicians didn't collaborate on this, in exchange for "Financial Contributions" to their election campaign. For a politician, being "Outsmarted" often involves "Other Benefits".
Literally all? Most of the first world is certainly not better off, unless you subscribe to the "hidden value in technology" theory.
"When information is power, privacy is freedom" - Jah-Wren Ryel
Leave it to his children so they have better choices.
Cheap storage VM.
That's all that it takes. Why it didn't happen? Because of the influence of evaders on governments.
I do not believe in karma. "Funny"=-6. Do good and forbid evil. Yours, Oft-Offtopic Flamebaiting Troll.
There are three cups, upside down on the table, each one labelled on the inside.
The first cup is labelled "avoidance", the second cup is labelled "evasion", and the third up is labelled "shell game".
And they all wing around the table so rapidly only a meth-addicted Rain Man could tell them apart from any intermediate camera angle.
We should be riding around in our own personal larger on the inside time machines by now. Something went wrong. This is not the great and bountiful human empire.
Because when the rules were written, the corps weren't writing the rules. Now they are. Do try and keep up. I mean, did you not just see the corporate tax reduction they just gave themselves? They're working directly towards what you are trying to attack us with. As always, you're being a decietful deplorable.
If Google doesn't pay, then the citizens have to pick up the slack. I'm rather tired of the "Government can do no good" argument. Go move to Somalia if you don't want a government on your back.
The reality is that a larger prosperous country cannot stand without a functioning and funded government. Relying on roving militias for education, healthcare, judicial services, etc is impractical.
Hows the drinking water in Michigan these days?
That's fine, but it's Ireland's policy to fix.
My Other Computer Is A Data General Nova III.
I cannot fathom the kind of sheltered world one must live in to spout this level of nonsense and think it has any relevance on the real world. People, normal ordinary people thinking certain law needing change and petitioning those in power to change it is one of the oldest mechanisms of law creation that exists in human history.
Not only that but the shareholder ALSO gets to pay tax on dividends as well as tax on capital gains.
You are left with this: Shareholders own the company. The company pays tax on profits. Then the company distributes those profits back to the shareholders (dividends)......where they are taxed a 2nd time.
This is why many people advocate elimination of the corporate tax. It's pretty obvious to see why.
There aren't many companies that want the employees using their dumpster!
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
I cannot fathom the kind of world you must live in not to be able to see the bigger picture.
For example: I have a company that does trade in the US and the EU, the EU has laws protecting foreign and local tax income, they're horrendous to deal with, slow everything down and lop off 11% of the profit I make which is a cost that is illegal to recoup through my customers (there are certain laws making sure I cannot raise prices to absorb the VAT). That's been enough of a damper for me to stop servicing small customers within particular countries.
You're recommending the US does the same thing, introduce a VAT-type system where all profits that passes through the US (regardless of their origin) get taxed, I'm telling you from experience, a bunch of people will stop doing trade, not with the big companies, they can absorb this kind of shit, but the small business won't be able to compete.
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What? No. Vaccines.
And we have a winner. Apparently there are no competitive small and medium sized businesses in EU because of VAT. Nevermind that Germany's competitiveness is wholly dependent on such businesses, which flourish, while it's the US that is economically extremely dependent on large business to drive economic efficiency.
Not sure if you're genuinely this ignorant of reality, insane or just trolling. Regardless, this will be the last time I entertain it.