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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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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.
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.
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.
It's a very smart change. It's very hard to not do evil things. It's very easy to do "right things". In this case for example, they most certainly are doing the right thing for themselves.
And being evil in process.
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'
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.
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 . . .
Double Irish: Having sex with not one, but two redheads at once.
That doesn't sound that bad to me...
Ezekiel 23:20
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!
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
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.
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?
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".
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
I don't think the government here in Canada is particularly wasteful - I've argued that point for years - and I suspect the same is true in your country. Rather, from my point of view the US government spends money fairly efficiently on the wrong things. First example - drug enforcement. Second example - having people spend major time in prison for minor crimes, many of which aren't crimes at all in other first-world jurisdictions. (Not to mention LEO's whose budgets are inflated by the need to fight those 'crimes'). Third example - a military and an intelligence apparatus whose primary focus is furthering US economic interests, by force and/or subterfuge, in other countries. (I think of that as 'indirect corporate welfare'). Fourth example - expenditures to clean up the messes left behind by the third example. I'm sure there are many others.
'The Economy' is a giant Ponzi scheme whose most pitiable suckers are the youngest among us and the yet-unborn.
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.