What are illegal or legal tax loopholes

Google smuggled eleven billion euros through Europe's tax loopholes

Mountain View - According to its own information, Google smuggled around eleven billion euros through legal tax loopholes from Europe two years ago. The US Internet company transferred this sum via the Netherlands to Bermuda, where no income tax is incurred for companies, according to balance sheet data from Google Netherlands Holdings BV.

This was done through a complex network of companies, thanks to which most of the profit earned abroad remained tax-free. Google said the company adheres to tax laws in all countries in which it operates.

Effective steering rate: six percent

In essence, it is about a structure that is known among experts as the "Double Irish, Dutch Sandwich". Two Irish companies and a holding company in the Netherlands play a role here. The Dutch Google subsidiary transferred almost all of its income to Google Ireland Holding, which has its tax residence in Bermuda but is registered as a company in Ireland.

These revenues came primarily from license fees from an Irish subsidiary, through which the majority of sales are outside the US business. Thanks to this structure, which has existed for a decade, Google parent Alphabet recently only paid an effective tax rate of six percent on its profits outside the USA. That is around a quarter less than the average tax rate in their foreign markets.

Numerous international corporations are criticized for such tax tricks. The group of the 20 leading industrialized and emerging countries (G20) launched an initiative last year to close these controversial loopholes in tax avoidance. (APA, February 19, 2016)