Google to end controversial 'Dutch sandwich' loophole that allowed it to move billions to tax haven

Telegraph 31 Dec 2019 05:56

Google is ending a controversial tax structure that allowed it to delay paying taxes on its international profits amid a global avoidance crackdown.

Alphabet, Google's parent company, said it would no longer use an intellectual property licensing scheme in anticipation of more stringent tax avoidance regulation planned by the Organisation for Economic Co-operation and Development and G20 for next year along with changes to US and Irish laws. 

The scheme allowed companies like Google to shift large portions of profits overseas by licensing intellectual property rights to foreign subsidiaries by exploiting gaps between different countries’ tax systems. 

The “double Irish, Dutch sandwich” loophole allows multinationals to move profits to a tax haven registered in the Caribbean by moving it through subsidiaries based in Ireland and the Netherlands without being taxed in either country. They can then sit there for years before being moved to the US parent company.

Google’s 2017 filings to the Dutch government showed it moved €22bn (£19bn) through a shell company to Bermuda in 2018 by licensing intellectual property held in the tax haven.

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