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Google Businesses The Almighty Buck

Google's 'Dutch Sandwich' Shielded 16 Billion Euros From Tax (bloomberg.com) 289

Posted by msmash from the what's-happening? dept.
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.
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Google's 'Dutch Sandwich' Shielded 16 Billion Euros From Tax More

Google's 'Dutch Sandwich' Shielded 16 Billion Euros From Tax

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  • Nice (Score:5, Funny)

    by tripleevenfall ( 1990004 ) on Tuesday January 02, 2018 @12:52PM (#55849215)

    This dovetails nicely with all the "We love social justice!" TV commercials that Google was running during football games this past weekend.

    • Re:Nice (Score:5, Insightful)

      by sycodon ( 149926 ) on Tuesday January 02, 2018 @01:06PM (#55849301)

      Instead of Don't be Evil it's Don't Pay Taxes.

      • Re:Nice (Score:5, Funny)

        by Midnight Thunder ( 17205 ) on Tuesday January 02, 2018 @01:08PM (#55849333) Homepage Journal

        Instead of Don't be Evil it's Don't Pay Taxes.

        Nah, it really comes down to "what do you really mean by evil and in what jurisdiction?"

      • Comment removed based on user account deletion

        • Re: (Score:2)

          by dryeo ( 100693 )

          Actually lately wars are put on the credit card, often like porn is, under a different name. The Iraqi war was a good example of this with the government actually giving tax breaks as upwards of a trillion dollars was spent on war.
          If at the start of the Iraqi war (or any war), the government said to the citizenry that we're invading Iraq and taxes have to go up to pay for it, there would have been one fuck of a lot of resistance to the war, same with if the government cut back other stuff to pay for it suc

      • Re: (Score:3, Insightful)

        by swillden ( 191260 )

        Instead of Don't be Evil it's Don't Pay Taxes.

        Corporate taxes are evil.

        Not because we should love all the corporations, but because corporations never actually pay taxes. All corporate taxes end up being shifted to individuals in one of three groups: investors, who receive lower rates of return; employees, who receive lower salaries/less benefits; and consumers, who pay higher prices. Exactly how the cost of taxes gets allocated among those groups is variable, hard to quantify and ultimately decided by corporate execs, which is bad because the alloca

      • They've update it now it's

        Don't be evil

        Taxation is theft

        Theft is evil

        Don't pay taxes.

        /s

        There was a lot of anger in the UK about Google not paying taxes, with Google execs grilled by the PAC.

        http://www.bbc.co.uk/news/busi... [bbc.co.uk]

        Google's executive chairman Eric Schmidt has said he is "perplexed" by the ongoing debate over the company's tax contributions in the UK.

        Mr Schmidt told the BBC that the company did what was "legally required" to pay the right amount of taxes.

        Google paid £10m in UK corporate taxes between 2006 and 2011.

        Mr Schmidt said it was up to the government to change its tax system if it wanted companies to pay more taxes.

        Speaking on BBC Radio 4's Start the Week, he said: "What we are doing is legal. I'm rather perplexed by this debate, which has been going in the UK for some time, because I view taxes as not optional.

        "I view that you should pay the taxes that are legally required. It's not a debate. You pay the taxes.

        "If the British system changes the tax laws, then we will comply. If the taxes go up, we will pay more, if they go down, we will pay less. That is a political decision for the democracy that is the United Kingdom."

        And as much as I dislike Google for its political meddling, bias, censorship and data mining, he's got a point.

        Oddly enough the griller in chief was Margaret Hodge, MP was director of a company which paid very low levels of taxes, using the rules to the max

        http://www.telegraph.co.uk/fin... [telegraph.co.uk]

        The Labour MP has been one of the fiercest critics of tax avoidance by companies such as Starbucks, Google and Amazon. However, she is likely to face questions over the limited tax paid by Stemcor, the steel trading company in which she owns shares and which was founded by her father and is run by her brother.

        Analysis of Stemcor's latest accounts show that the business paid tax of just £163,000 on revenues of more than £2.1bn in 2011. However. it is not known whether the company - which made profits of £65m - used similar controversial tax avoidance measures criticised in the past by Mrs Hodge.

        Stemcor's tax bill to the exchequer equates to just 0.01pc of the revenues it booked through its UK-based business. In accounts filed with Companies House, Stemcor revealed that despite generating about one third of its revenues in Britain, its UK tax contribution made up only 2.7pc of the tax the company paid globally.

        Stemcor was founded by Mrs Hodge's father Hans Oppenheimer more than 60 years ago.

        Today, the business claims to be the sixth largest private UK company by turnover. Last year the company, which employs 2,000 people in 45 countries, generated sales of £6bn from trading about 20m tonnes of steel.

        The majority of Stemcor's shares are still controlled by the Oppenheimer family and Mrs Hodge declares a "registrable shareholding" in the company, which is run by her brother Ralph Oppenheimer, executive chairman.

        Speaking to The Daily Telegraph, Mrs Hodge defended Stemcor's behaviour and said that the company had "assured" her it paid "every penny of tax that is owed", adding that she was only "a very small shareholder".

        "Clearly, I have asked them the question," said Mrs Hodge. "They have always promised that they do absolutely nothing to avoid tax. I would be very mad if I found out differently."

        Mrs Hodge said unlike other companies under the spotlight, Stemcor did not try to shield profits or "hide information" and that was the difference between Stemcor and Starbucks.

        However, when pressed about the details of why so little tax was paid by Stemcor despite the billions of pounds it makes, Ms Hodge said that she had not done "enough detailed work" and did not have the information.

        On Monday, Mrs Hodge will chair a hearing at which senior executives from Starbucks, Google and Amazon will be questioned on their tax affairs. The US companies, along with Facebook, were recently shown to have paid just £30m of tax between them despite generating £3.1bn of British sales in the past three years.

        Mrs Hodge has led much of the criticism of these companies over the ways in which they minimise their tax bills. Mrs Hodge previously said: "There is a growing anger among ordinary people who pay their taxes that the system is not fair. That big corporates and the rich find ways to avoid tax. It may be legal but it is not moral."

        A spokesman for Stemcor defended the company's tax policy and said it paid more than many of its peers. "In the past three years, a total of £14m of corporation tax has been paid by Stemcor in the UK. Stemcor's effective tax rate internationally in the last three years has been over 30pc."

        The spokesman added that Stemcor was "happy" to provide more detail "about its tax affairs to the media if requested" and that it was "proud of the company's contribution to the UK economy".

        "Stemcor is almost unique among international trading companies in that it still maintains its headquarters in the UK. Most other such companies have located themselves in low tax jurisdictions, while still having sizeable operations in London. Stemcor's shareholders refuse to countenance such a move," the spokesman said

        Schmidt's implicit question of 'We pay what we're legall

    • In other news, shaving with Gillette makes you look like David Beckham and using Axe Deodorant will have attractive women chase you in the streets.

  • The real injustice here (Score:5, Insightful)

    by Anonymous Coward on Tuesday January 02, 2018 @12:55PM (#55849237)

    Is that perfectly-legal tax-avoidance strategies like this one aren't available to lower and middle class employees.

    • Re: (Score:2)

      by guruevi ( 827432 )

      It is, if you make enough money to pay the bank fees and you want to use a foreign transaction fees for every purchase you make. You don't open these types of bank accounts without at least retaining 1 attorney in each country and paying the fees on your banking in each of the countries.

      Plus, how long do you WANT to wait on your paycheck to clear? It goes through at least 5 banks, with at least 2-3 weeks of time for each transfer to clear, you may be waiting 3-6 months.

    • Re:The real injustice here (Score:5, Funny)

      by Wootery ( 1087023 ) on Tuesday January 02, 2018 @01:14PM (#55849357)

      If only western governments were starved of the tax funds they need in order to function! We'd finally have our libertarian utopia!

      • Whose is it to start? (Score:2, Insightful)

        by Anonymous Coward

        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 v

      • and it's a real political theory/movement. It's currently being used by the American Republican party to argue for cuts to our national pension program (Social Security) and our Single Payer healthcare system for people over 65 (Medicare).

  • If the laws allow them to do this... (Score:4, Insightful)

    by linuxguy ( 98493 ) on Tuesday January 02, 2018 @01:15PM (#55849363) Homepage

    If the law allows them to do this then what are you complaining about? Don't like it? Change the laws.

    • Re:If the laws allow them to do this... (Score:5, Insightful)

      by Anonymous Coward on Tuesday January 02, 2018 @01:31PM (#55849475)

      I can't afford to bribe politicians like google can.

    • Re: (Score:3, Insightful)

      by Anonymous Coward

      If the law allows them to do this then what are you complaining about? Don't like it? Change the laws.

      You seem to be under the mistaken notion that US law is not bought and paid for by those with money, be it corporations, or people so rich that the next 5 generations of my family are unlikely to earn in their entire life times together what one of these rich people earn in a single year.

      My vote does not matter.

      I cannot change any laws that would influence those with money or power, because I am not one with money and power. I am the lower class and even when the people in what is effectively a united voice

    • The fundamental "problem" is that taxation is not a natural state. It's an artificial construct created to divert money from the private sector to government coffers (in a method deemed "fair" by the government - the people in democracies, whatever the ruler wants in dictatorships).

      Since it's artificial and not natural, taxation can never be foolproof. Short of the government completely taking over the economy (which is what Communism tried to do), there will always be loopholes and workarounds. It's

  • I mean eventually that money gets spent, if not this year then next year. Right?

    I'm not stating a strong opinion or preference here, I'm just saying this is what I think is happening and I may be wrong.

    I'd love for someone to explain this to me in simple terms (seriously).

  • You don't need tax breaks when you manage to avoid paying any taxes at all. In the realm of social justice, this whole thing is obscene. It doesn't benefit society, and it certainly doesn't create jobs.

    • You don't need tax breaks when you manage to avoid paying any taxes at all. In the realm of social justice, this whole thing is obscene. It doesn't benefit society, and it certainly doesn't create jobs.

      Well, I don't know if we can just arbitrarily say that.

      It might not create any jobs. But it's not impossible that a huge corporation prospering more just might in fact create more jobs on balance. They'd have more to spend on salaries, for one thing.

      As far as "benefiting society", from the "social justice" point of view that might be arguable as well. Having a behemoth corp that just so happens to control everybody's search results on your side in politics has to have some value after all ...

  • Stop Taxing Profits! (Score:5, Interesting)

    by Wrath0fb0b ( 302444 ) on Tuesday January 02, 2018 @02:13PM (#55849741)

    The continued machinations that everyone has gotten into with respect to taxing profits feels just like the epicycles [wikipedia.org] 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 . . .

    • I've wondered why they don't just tax the behavior they're trying to prevent and subsidize the behavior they want. Both parties say they want to see middle class wage growth, but nobody on either side of the aisle has proposed tying corporate tax rates to their wage growth. They say they want to stimulate the economy, but nobody proposes taxing savings to encourage spending. Am I missing some obvious reason why neither of those tactics have been tried? They seem much simpler than a lot of the existing looph
      • Wages are an expense, so increasing wages already decreases corporate taxes. In theory, if a company distributed the entirety of its profit to its employees as bonuses, it would have zero profit and therefore have to pay no corporate taxes (which are a percentage of profit).

        The most direct impact of corporate taxes are on shareholder dividends, since that's basically distribution of profit to shareholders.* Increase the corporate tax, decrease the shareholder dividend. For a company existing in a sing

    • Re: (Score:2)

      by zmooc ( 33175 )

      I don't think that's going to work either. A gross revenue tax would put companies with a relatively low margin at a major disadvantage; wholesale companies can close their doors immediately while Apple wouldn't give a shit. And a consumption tax is effectively just a tax on consumers so that's not really helpful either.

      My solution (which is just as hypothetical as yours ;)) would be to stop taxing profit (and property) while starting to tax any use of natural resources including using the environment to du

    • Some firm never make a profit. Some stays in the black, barely. A scheme of taxing gross revenue would kill such fledgling firms and increase considerably joblessness by making those not viable anymore. A regressive consumption tax predominantly hit those with the lowest income, they are like VAT tax , tax on sales, and making them progressive tax makes it difficult to implement, possibly adding infrastructure which do not exist today, adding a burden on the state. Really, there is a good reason to avoid co
  • Google: tax cuts for me, my friend ... for me, not for thee :) Social justice! or something!

  • ..my ass.

  • I would expect a company the size of Google to hire an army of tax accountants and lawyers to do this, but one thing that I think people overlook is that businesses in general get a huge advantage over typical wage-earners in the US tax system.

    It drives me crazy when I hear small business owners whining about how expensive it is to do business and how they're being taxed to death. I'd love to see what entity owns their house, their cars, and incurs all their personal expenses...in almost all cases, these ar

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