Google Got Out of Paying $2 Billion in Taxes by Funneling Money Through Bermuda
Most other big tech companies employ similar schemes
All the big tech companies do their best to avoid paying more taxes than they have to. This is why they all have offices in Ireland in the EU, where tax rates are much lower than in the rest of the union.But even that is not enough and some, like Google, funnel revenue from Ireland to tax havens like Bermuda, to avoid paying income tax.
The mechanism for this is quite simple, companies set up subsidiaries in places with very low taxes. Amazon does it with Luxembourg for example.
They transfer their IP over to their subsidiaries, then license the technology for huge amounts of money in the countries where it operates.
Google, Amazon and others can then claim that these are business expenses, even though the companies are essentially paying themselves, and get out of paying taxes on that income.
Bloomberg revealed that Google used this method to get out of paying some $2 billion, €1.55 billion in taxes in 2011 alone.
Google paid just $1.5 billion, €1.16 billion in taxes worldwide last year, some 21 percent of its revenue. It would have had to pay double that if it were taxed in the US in full, for example.