In a bid to reduce its foreign tax bill, the world’s largest search engine giant Google is revealed to have moved billions to a tax haven in 2017.
Documents filed at the Dutch Chamber of Commerce have revealed that the Alphabet-owned company moved $22.7 billion through a Dutch shell company to Bermuda during the year.
The documents that were filed on December 21 showed that the funds were moved by Google, as part of an arrangement that allows the company to reduce its foreign tax bill.
In a statement, Google explained, “We pay all of the taxes due and comply with the tax laws in every country we operate in around the world. Google, like other multinational companies, pays the vast majority of its corporate income tax in its home country, and we have paid a global effective tax rate of 26 percent over the last ten years.”
The documents have also revealed that the company channeled the amount through Google Netherlands Holdings BV and showed that the amount moved in 2017 was around 4 billion euros more than in 2016.
Reports noted that the tax strategy used by the company is known as the “Double Irish, Dutch Sandwich.”
As part of the tax strategy, which is legal, Google’s subsidiary in the Netherlands is used to shift revenue from royalties earned outside the U.S. to Google Ireland Holdings.
This is an affiliate based in Bermuda, where companies are not supposed to pay income tax.
According to the company, the tax strategy allows it to avoid triggering U.S. income taxes or European withholding taxes on the funds.
Meanwhile, the documents filed recently showed that Google Netherlands Holdings BV paid 3.4 million euros in taxes on a gross profit of 13.6 million euros in the Netherlands.