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News : Innovation Last Updated: Oct 14, 2013 - 4:26 AM


Google's Irish-Dutch sandwich grew to €8.8bn in 2012
By Michael Hennigan, Finfacts founder and editor
Oct 11, 2013 - 4:06 AM

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SEE: ABC Australia video

Google's Irish-Dutch sandwich grew to €8.8bn in 2012 with that amount transferred from Ireland via the Netherlands to an Irish company in Bermuda with a physical presence on the island that amounts to a letter box in the offices of an offshore services company.

The Financial Times reports today that the latest figures come from the accounts of Google Netherlands Holdings, which represents the “Dutch sandwich” part of the tax structure. It received €8.6bn in royalties from Google Ireland Ltd and €232.8m in royalties from Google’s Singapore operation. All but €10.4m of this was paid out to Google Ireland Holdings, a company that is incorporated in Ireland but technically controlled in Bermuda, where there is no corporation tax.

The FT says that differences between the Irish and US tax codes mean that this dual-resident company is viewed as Irish for US tax purposes but Bermudan for Irish purposes. It acquired much of Google’s intellectual property in 2003, which it licensed to Google Ireland Ltd, a Dublin-based business that is at the heart of its global operation. The business, which employed 2,199 people last year, paid €17m in Irish corporation tax, having reported pre-tax profits of €153.9 on turnover of €15.5bn.

Still, according to Irish ministers, “The Irish tax regime is a statute based, transparent and clear system” - - it's a tack consistent with the modern political messaging of repetition, irrespective of the veracity and if pressed on individual company examples, that is easy to handle: "We cannot comment on individual cases."

"Stateless" Irish companies used by Apple and Google are not Ireland's responsibility!

Google's provision of €17m in corporate tax in 2012 to Ireland on the foreign net income of $8.1bn it booked in Ireland, gave an effective tax rate of 0.21%.

Google's foreign-paid tax rate in 2012 was 4.4%.

On Thursday, Süddeutsche Zeitung, the German newspaper, reported that  the SPD opposition party, which is in talks with Angela Merkel's CDU-CSU conservative grouping on the formation of Germany's next government, is opposed to use of the European Stability Mechanism rescue fund for recapitalisation of Irish banks or the assumption of responsibility for the legacy bank-related debt burden, without conditions.

“We say that whoever wants a common resolution fund must agree to a financial transaction tax,” Carsten Schneider, SPD budget spokesman in the German parliament, told the Financial Times.

Schneider also said Ireland would have to agree to raise its headline 12.5% rate of corporation tax - - however, this would do nothing to change the most egregious examples of tax avoidance.

Finfacts articles:

US company profits per Irish employee at $970,000; Tax paid in Ireland at $25,000

IMF explains “Double Irish Dutch Sandwich” tax avoidance

Check out our subscription service, Finfacts Premium , at a low annual charge of €25

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