Tech giant Google shifted nearly $23 billion to an offshore tax haven in 2017, according to a Reuters report on Thursday.
Securities filings with the Dutch Chamber of Commerce show Google funneled $22.7 billion through a Dutch shell company to Bermuda in an effort to trim its foreign tax bill.
According to Reuters, the company used Google Netherlands Holdings BV to legally shift revenue on royalties earned outside of the U.S. to Google Ireland Holdings – based in Bermuda – where there is no corporate income tax.
The strategy is known as a “Double Irish with a Dutch Sandwich” – an international tax evasion strategy that involves channeling profits first through an Irish company, then through a Dutch company, and then to another Irish subsidiary headquartered in a location – like Bermuda —with lower or no income taxes. The method uses features of the various countries’ tax codes to dramatically reduce tax burdens.
Tech companies are well-known users of the strategy, which officials from each of the countries involved have moved to close. By 2020, the strategy will no longer be allowed.
The U.S. lowered its corporate tax rate to 21 percent through the Tax Cuts and Jobs Act in an effort to prevent companies from shifting profits overseas.
As of June, 949 non-financial companies held $1.8 trillion overseas – a 9.5 percent decline from the end of 2017, according to a report from Moody’s Investors Services. However, Alphabet was among the companies with large international cash stockpiles – at $102.3 billion as of the end of June.
Google Netherlands Holdings BV paid more than $3.8 million in taxes on a profit of more than $15.5 million in 2017, according to Reuters.
In a statement to FOX Business, a spokesperson for Google said the company pays its corporate income tax globally, but pays the vast majority of its corporate income taxes in the U.S.
"We’ve paid a global effective tax rate of 26 percent over the last ten years. All foreign profits, including 2017 and prior, regardless of where they’re held, are subject to corporate tax in the United States,” the spokesperson said.
This story has been updated