Google’s ‘Dutch Sandwich’ shielded $19.2 billion from taxes

Alphabet’s Google moved $19.2 billion to a Bermuda shell company in 2016, regulatory filings in the Netherlands show — saving the company billions in taxes that year.

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 last month and which were made available online Tuesday.

“We pay all of the taxes due and comply with the tax laws in every country we operate in around the world,” a Google spokesman said. “We remain committed to helping grow the online ecosystem.”

Google is under pressure from authorities around the world for not paying enough tax. Last year, the company escaped a $1.3 billion French tax bill after a court ruled its Irish subsidiary, which collects revenue for ads the company sells in France, had no permanent base in the country. The European Union has been exploring ways to make U.S. technology companies, many of which use similar tax shelters, pay more.

The Irish government closed the tax loophole that permitted “Double Irish” tax arrangements in 2015. But companies already using the structure are allowed to continue employing it until the end of 2020.

According to U.S. financial filings, Google’s global effective tax rate in 2016 was 19.3 percent, which it achieved in part by shifting the majority of its international profit to the Bermudabased entity. Applying that tax rate, Google would have saved $3.7 billion via the 2016 transfer.