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Joel Muckett 3 Jan 2018 02:38pm

Google saved $3.7bn using tax loopholes in 2016

Internet search giant Google saved $3.7bn (£2.7bn) in taxes in 2016 by using tax avoidance structures, Dutch regulatory filings show

According to Bloomberg, the Alphabet-owned company shifted $19.2bn (£14bn) to a shell company in Bermuda using two tax loopholes – the “Double Irish” and the “Dutch Sandwich”.

The filings were made available online by the Dutch Chamber of Commerce on Tuesday, with news of the filings being initially reported by Dutch newspaper Het Financieele Dagblad.

Nearly all of Google’s international advertising revenue is booked through Google Ireland Ltd., the firm’s Irish subsidiary. From there, the money is passed onto Google’s Dutch subsidiary – Google Netherlands Holdings BV.

The money is then moved to Google Ireland Holdings Limited, a subsidiary based in Bermuda, effectively sheltering international profits from taxation due to the country’s lack of corporation tax.

“We pay all of the taxes due and comply with the laws in every country we operate in around the world. We remain committed to helping grow the online ecosystem,” said a Google spokesperson.

The amount moved by Google was 7% higher than in 2015, when £15.5bn (£13.1bn) was passed through the firm’s Dutch subsidiary, saving $3.6bn (£2.93bn) in taxes.

Google has faced international pressure over its tax avoidance. Last summer, it avoided paying €1.1bn in back taxes after a French court ruled that its Irish subsidiary was not liable for tax in France.

In 2015, the Irish government closed the “Double Irish” loophole. However, companies already employing the scheme are still able to use it until the end of 2020.

During the Autumn Budget in November, chancellor Philip Hammond promised to raise £200m a year by clamping down on tax avoidance by tech companies.

From April 2019, income tax will be applied to royalties relating to UK sales, when those royalties are paid to a low tax jurisdiction
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