Google (GOOG) Uses Loophole to Save Fortune in Taxes
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According to a report from Bloomberg on Thursday Google Inc. (NASDAQ: GOOG) has used a tax loophole to save $3.1 billion over three years, by sending profits through Ireland and the Netherlands to Bermuda.
The income shifting known as the "Double Irish" and "Dutch Sandwich" helped the world's largest Internet search company reduce its tax rate to 2.4 percent, which is the lowest of the top five U.S. technology companies by market capitalization, according to Bloomberg.
The practice has gained favor from companies like Microsoft Corp. (NASDAQ: MSFT) and the social networking company Facebook.
The loophole allows companies to take advantage of Irish law to shuttle profits in and out of subsidiaries there and largely avoid Ireland's 12.5 percent income tax.
The profits then go to the islands where there are no corporate income taxes.
“Google’s practices are very similar to those at countless other global companies operating across a wide range of industries,” said Jane Penner, a spokeswoman for Google.
The income tax rate in the U.S. is 35 percent, while in the U.K., Google's second largest market by revenue, the rate is 28 percent.
The income shifting known as the "Double Irish" and "Dutch Sandwich" helped the world's largest Internet search company reduce its tax rate to 2.4 percent, which is the lowest of the top five U.S. technology companies by market capitalization, according to Bloomberg.
The practice has gained favor from companies like Microsoft Corp. (NASDAQ: MSFT) and the social networking company Facebook.
The loophole allows companies to take advantage of Irish law to shuttle profits in and out of subsidiaries there and largely avoid Ireland's 12.5 percent income tax.
The profits then go to the islands where there are no corporate income taxes.
“Google’s practices are very similar to those at countless other global companies operating across a wide range of industries,” said Jane Penner, a spokeswoman for Google.
The income tax rate in the U.S. is 35 percent, while in the U.K., Google's second largest market by revenue, the rate is 28 percent.
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