Google moved $75bn out of Ireland in last use of the ‘double Irish’

19 Apr 2021

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The controversial tax strategy has been phased out but the tech giant used it one last time in 2019 to move profits to Bermuda and avoid tax.

Google’s tax affairs drew much criticism over the weekend after it was revealed that the tech giant moved $75bn in profits out of Ireland in 2019.

Using the controversial ‘double Irish’ loophole, Google Ireland Holdings Unlimited Company, an Irish registered company, shifted profits to Bermuda where it is tax domiciled and where the tax rate is 0pc, as first reported by the Irish Times.

As a result of the move, Google did not pay corporation tax in either Ireland or the US. Google Ireland Holdings Unlimited Company was set up to manage intellectual property licensing and is separate to the company that oversees the tech giant’s Irish operations.

The Irish government has been phasing out the ‘double Irish’ loophole that allowed multinationals to move money through Ireland to a destination where no tax is paid.

The plans were first announced in 2014, giving companies like Google until 2019 to cut out the practice. In its last chance to do so, Google availed of the tax arrangement and moved a hefty portion of profits in the 2019 financial year.

“In December 2019, in line with the OECD’s BEPS (base erosion and profit shifting) conclusions and changes to US and Irish tax laws, we simplified our corporate structure and started licensing our IP from the US, not Bermuda,” Google said in a statement.

The latest accounts for Google Ireland Holdings Unlimited Company filed in Ireland cover the financial year before these changes came into effect, it said.

“Including all annual and one-time income taxes over the past 10 years, our global effective tax rate has been over 20pc, with more than 80pc of that tax due in the US,” the company added.

Turnover at Google Ireland Holdings Unlimited Company was $26.5bn in 2019, up from $25.7bn in 2018.

The ‘double Irish’ tactic has been used by multinationals for years to funnel billions of IP-related profits through Ireland into no-tax jurisdictions like Bermuda, putting profits beyond the reach of tax.

This loophole has been closed on a phased basis as part of growing international pressure to rein in the tax avoidance strategies of multinationals.

Those efforts have been renewed of late with US president Joe Biden and his expansive corporation tax reforms that present the firmest plans yet to curtail low corporation tax rates, like Ireland’s 12.5pc. The plan, in conjunction with the Organisation for Economic Cooperation and Development, would see an international consensus on a minimum corporation tax rate globally of around 21pc.

Jonathan Keane is a freelance business and technology journalist based in Dublin