How Google Avoids Paying Billions in Taxes

'Double Irish' and 'Dutch Sandwich' maneuvers save big bucks

By Kevin Spak,  Newser Staff

Posted Oct 21, 2010 3:39 PM CDT | Updated Oct 24, 2010 6:45 PM CDT

(Newser) – Google has shaved a staggering $3.1 billion off its tax bill over the last three years by shuffling its earnings through Ireland, the Netherlands, and Bermuda, Bloomberg reports. Using common maneuvers like the “Double Irish” and the “Dutch Sandwich,” the search giant has brought its overseas tax rate down to just 2.4%, the lowest of the top five US tech companies. Quite a feat, says a former Treasury Department official, considering it operates "throughout the world mostly in high-tax countries where the average corporate rate is well over 20%."

That international maneuvering (which is fairly involved; read the entire piece for the breakdown), in turn, shaved Google's overall effective tax rate to 22.2% last year. Countless companies around the world use such arrangements—Facebook, for example, is prepping a similar setup through the Cayman Islands. But Google’s efforts are somewhat ironic, Bloomberg notes, since taxpayers funded the Stanford research that helped create the company. Google is “flying a banner of doing no evil,” complains one business professor, “and then they’re perpetrating evil under our noses.”

In this photo taken Friday, Oct. 8, 2010, a sign at Google headquarters in Mountain View, Calif. is shown.
In this photo taken Friday, Oct. 8, 2010, a sign at Google headquarters in Mountain View, Calif. is shown.   (AP Photo/Paul Sakuma)
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