Google’s parent company Alphabet will stop using an intellectual property licensing scheme, known as the “Double Irish, Dutch sandwich”, which allowed it to delay paying US taxes.
“We’re now simplifying our corporate structure and will license our IP (intellectual property) from the US, not Bermuda. Including all annual and one-time income taxes over the past ten years, our global effective tax rate has been over 23%, with more than 80% of that tax due in the US”, a spokesman said.
The move is seen as an end to a controversy, as experts have repeatedly warned that Google was using loopholes to avoid paying taxes on overseas ad revenue.
The “Double Irish, Dutch sandwich” is a strategy that avoids paying US income tax by moving money from an Irish subsidiary to a Dutch holding company, and back to an Irish shell company in Bermuda, which has no corporate income tax.
Under increased pressure from both the EU and the US, Ireland closed the loopholes in 2014 and gave companies a deadline until 2020 to comply with the new regulations.
“A date of termination of the Company’s licensing activities has not yet been confirmed by senior leadership, however, management expects that this termination will take place as of 31 December 2019 or during 2020”, the company said in its filing.
Google has always said it pays all its taxes.
Google to end controversial Dutch, Irish tax scheme
EPA/BORIS ROESSLER
A file picture dated 21 October 2004 shows a man passing by a Google logo in Frankfurt, Germany. Germany is mulling stricter regulation of Google and other search providers, and might seek a break-up of US-based Google if it did not get its way, a spokesman in Berlin said 16 May 2014. US-based Google has been heavily criticized by major German media groups which have requested a share of revenues from news searches. It has also faced a European Union inquiry since 2010 into whether it discriminates against competitors. 'The Economics Ministry is studying whether, over and above existing competition laws, consideration should be given to integrating regulation of search-engine access into the general regime of network neutrality at the European level,' said Stefan Rouenhoff. He spoke hours after his minister, Sigmar Gabriel, published an article in a national newspaper calling for 'unrestricted data capitalism to be restrained and tamed.' He suggested in the Frankfurter Allgemeine Zeitung that Google could be 'unbundled' as a last resort if nothing else stopped it.
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