Google used the tax haven of the Bermuda Islands to avoid paying taxes on 34,000 million euros (40,957 million dollars) of profits that it collected between 2016 and 2018. The multinational records in its accounts that it did not pay corporate tax on those profits since “The tax rate in Bermuda is 0%,” as published The Economist.
Digital multinationals like Google use a corporate framework based on local divisions that pay their parent companies, based in tax havens, for concepts such as intellectual property, use of their technology or the brand. Google’s European parent, Google Ireland Holding Unlimited Company, has its headquarters in Dublin but its tax headquarters in Bermuda, as recorded in the Dublin Companies Register.
In 2018, the last year with accounts available, that Google management company located in the North Atlantic islands declared income of 18.3 billion euros received from the provision of services to its various subsidiaries, 15% more than a year earlier. Its net earnings during that year were 12,731 million euros, details the same media.
This situation will change in the next income statements, the company announced at the end of last year. The company receiving the benefits will be located in the USA. “We have simplified the structure of our corporate legal entity and now license the intellectual rights from the US, instead of from Bermuda as we have done before, which will affect our geographic distribution of profits,” he said.
The Irish trick
By paying parent companies located in tax havens, digital multinationals can reduce the profit figures they declare in the countries where their headquarters are located. In the EU, they use an added step to lower the tax rate.
Google, Facebook or Apple have established their headquarters in Ireland to take advantage of the special tax rates that Dublin grants to technology to attract them to the country.
Google declared a turnover of 45,684 million euros last year in Ireland, of which it only paid 263 million in company tax, 0.58%.