Google avoided billions in taxes by funneling money offshore

Alphabet Inc.’s Google managed to save $3.6 billion in 2015 by shifting its profits to a Bermuda shell company, according to filings in the Netherlands. Google used Ireland and the Netherlands as intermediaries.

According to files obtained by Bloomberg, Google used the so-called “Double Irish” and a “Dutch Sandwich” tax avoidance method.

The scheme is complicated. First, Google’s taxes outside the US are sent to Ireland to Google Ireland Limited. Then, the profits are sent to the Netherlands, which is also acknowledged for low corporate taxes.

Then, the money is sent from the Dutch subsidiary to a Bermuda shell company known as Google Ireland Holdings Unlimited, which has no employees but has the rights to Google’s intellectual property.

Bloomberg further reported that using the tax avoidance scheme Google sent 40 percent more of its profits in 2015 than in 2014. In total, Google has sheltered $58.3 billion from US taxation, according to parent company Alphabet’s filings.

While Ireland closed the loophole last year, corporations may still enjoy it until 2020.

The report may be of interest to the EU antitrust chief Margrethe Vestager, who has recently been tackling inappropriate behavior of US companies on the European market.

Just on Tuesday, the European Commission found Facebook guilty of providing misleading information before winning approval to buy the WhatsApp messenger in 2014. The company is facing a fine of up to one percent of annual sales.

In August, Apple was fined €13 billion after a European investigation concluded Ireland provided the iPhone maker with a favorable tax rate.

Vestager is also digging into major US corporations like McDonald’s, Starbucks and Chrysler.