Dutch Sandwich: The accounting trick that helped Google avoid £3bn in taxes
While the practice is slightly dodgy, there is nothing illegal about it.
Tech giant Google has managed to avoid almost £3bn (€3.4bn) in taxes thanks to a sly process that involves moving revenue between countries.
Google used two popular techniques, the "Dutch Sandwich" and "Double Irish", to shield around £14bn from income tax. The method involves moving funds from Ireland to a Netherlands firm that does not have any staff. After that, the money is shifted again to a Bermuda account owned by an entirely different Irish-listed company.
While the process helps Google dodge billions in tax, nothing about the practice is illegal. According to Bloomberg, Google said it defended its method. "We pay all of the taxes due and comply with the tax laws in every country we operate in around the world," Google said in a statement to Bloomberg. "We remain committed to helping grow the online ecosystem."
The Irish government outlawed the "Double Irish" process in 2015, but a ruling allowed companies already using the method to continue until 2020.
Google is by no means the only company trying to slash its tax bill. Apple has been using Ireland for years to pay minimal tax and has saved around £11.5bn. Unfortunately for Apple, it is now being forced to back pay the money, despite the Irish government being happy to forego the money in exchange for Apple's continued business in the country.
The European Commission had ordered Ireland to collect the money after concluding that two Irish tax rulings allowed Apple to pay less tax than other businesses — thus giving them an unfair advantage. The Commission ordered Ireland to collect back taxes for the years 2003-2014, which it estimated to be as much as €13bn plus interest.
