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Short news and ideas

Google’s taxpaying tricks


01/10/2013

According to an article in the Irish Times, just about all of Google’s international offices divert their income to the company’s European centre in Ireland, where, by taking advantage of certain legal loopholes, they are able to avoid paying an awful lot in taxation. According to the figures for the last quarter, the income of the Irish central office was some 15.5 billion dollars, though they only paid 17 million dollars - or approximately 0.1% - in tax.

The secret behind this act of financial wizardry - as used by numerous other multinational companies - lies in the fact that the company transfers the income of all its offices to a certain country, typically Ireland or the Netherlands. The international offices avoid paying taxes locally, as the Irish company issues technology licensing invoices to each office for exactly the amount of its income, thus reducing the profit to zero. The Irish or Dutch office is registered in a tax haven, thus the amount of tax due there is also minimal.

America and the EU are both on the attack, but to date without much success.

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