Google Inc. (GOOG) avoided about $2 billion in worldwide income taxes in 2011 by shifting $9.8 billion in revenues into a Bermuda shell company, almost double the total from three years before, filings show.

By legally funneling profits from overseas subsidiaries into Bermuda, which doesn’t have a corporate income tax, Google cut its overall tax rate almost in half. The amount moved to Bermuda is equivalent to about 80 percent of Google’s total pretax profit in 2011.

(Last year, Google reported a tax rate of just 3.2 percent on the profit it said was earned overseas, even as most of its foreign sales were in European countries with corporate income tax rates ranging from 26 percent to 34 percent.)

The increase in Google’s revenues routed to Bermuda, disclosed in a Nov. 21 filing by a subsidiary in the Netherlands, could fuel the outrage spreading across Europe and in the U.S. over corporate tax dodging. Governments in France, the U.K., Italy and Australia are probing Google’s tax avoidance as they seek to boost revenue during economic doldrums.

Last week, the European Union’s executive body, the European Commission, advised member states to create blacklists of tax havens and adopt anti-abuse rules. Tax evasion and avoidance, which cost the EU 1 trillion euros ($1.3 trillion) a year, are “scandalous” and “an attack on the fundamental principle of fairness,” Algirdas Semeta, the EC’s commissioner for taxation, said at a press conference in Brussels.

Google was Obama’s 3rd largest campaign contributor. It will be interesting to see if this will affect CEO Eric Schmidt’s purchase of a coveted Obama cabinet position., or if the IRS will close off this avenue of tax-avoidance.

  1. The Monster's Lawyer says:

    I see you found the picture of Obama detailing how to do this to Google.

  2. bent at the waste says:

    Good. Less money to the gov. means less gov. It’s not like they were going to house the homeless with it.

    • seetheblacksun says:

      Good point.

      • stormtrooper 651 says:

        No, smaller US businesses will be gouged more while mega caps like google who make their cash with their protection racket and by giving away US ip to Samsung will be let off paying tax by their DC buddies.

        • Al Davis says:

          Until the whole tax code is restructured I agree with stormtrooper 651. There are small companies who will make up the difference by paying more taxes. Perhaps it is like Walmart who pays their employees so little that their healthcare expenses are paid by other tax payers. They force redistribution of wealth.

  3. dusanmal says:

    For Leftists, the best way to explain this is parallel with music industry RIAA/MPAA and similar crap. If payment for something is made hard and unreasonable high vs. the real market value, potential customers/payers will have incentive to at least legally abuse the system if not completely pirate it. Same as with music industry, it is time for Government to understand that what they are providing is not worth cents on the dollar demanded. Also, that the legal and regulatory maze on its own will push even corporations willing to pay current rates away as the cost of executing and keeping up with all that legal mumbojumbo is prohibitive.
    Simplify tax code, simplify and reduce regulations, reduce tax rates to what services provided are really worth on the market and corporations will not flee with their money nor spend resources on legal loopholes search. Deficit? – fire half of the bureaucrats and demote/cut pay in half the rest. Repeat every year during one Presidential term.

    • Dallas says:

      Awful and nonsensical analogy.

    • Trex says:

      WTH does this have to do with Leftists?
      Here’s how it works. Corporations contribute to Whoever is in power (Dems or Repubs) to get political favors. Both parties are on the Corporations side, not on your side. And if you think ‘your party’ is any better than the other party, you are being Played Bigtime. Stop watching Faux News. It’s poisoning your mind.

  4. bobbo, we think with words, and flower with ideas says:


    same as it always is.

    The only thing making this “legal” is the illegal bribery that is allowed under cover of campaign contributions. and that gives us:


    So–mathematically, of course without any further knowledge at all you can deduce that POLITICIAN = RICH… which they are. Not SUPER Rich, just filthy rich.

    Ha, ha. Stoopid Hoomans like do-ill thinking the government isn’t about providing the entire playground in which business, people, and society play. HEY DOUCHBAG===society is not about as few as people as possible getting rich.

    Wake up. YOU are part of the 99% that is being prayed upon and always will be as long as you cut your own throat.

  5. ECA says:

    this was mony made from OUTSIDE THE USA..shipped to Bermuda..

    But it DONT SAY that they WERE NOT taxed in those nations OUTSIDE the USA..

  6. Uncle Patso says:

    Google is far from the only company doing this. In fact, as a public company, if they didn’t do it, they would be subject to shareholder lawsuits for misfeasance.

  7. McNally says:

    The town I live in has a 10% sales tax. There is one about 20 miles away with a 4%. Whenever I make large purchases, I drive the 20 miles to the other town and save myself 6%. It is well worth my time to save myself hundreds and sometimes thousands of dollars. I don’t see this as ethically wrong or illegal.

    The same is true of companies who use methods such as this to save themselves tax expenses. If they find a legal way to lower their bill, so be it. It is the same thing I do when I find a way to lower mine.

  8. Phydeau says:

    You can’t blame the corporations for trying to save money on their taxes. Who you can blame is the politicians who take money from the corporations to write laws that give the corporations tax breaks.

    As a result, those of us without expensive lobbyists end up picking up the slack and paying more in taxes.

    • Dallas says:

      Glad you support Obama on this and join the liberals . Tax loopholes must go away and a simplified tax code.

      Do you want the Hibachi or the knife set?

      • Phydeau says:

        lol Dallas, I have no political party representing me in Washington… I’m a liberal from way back.

        And yes, I’m very much in favor of a simplified tax code, and one that doesn’t give tax breaks for exporting jobs.

        • bobbo, we think with words, and flower with ideas says:

          “lol Dallas, I have no political party representing me in Washington… I’m a liberal from way back.” /// OR—do you have two political parties REPRESENTING YOU in Washington and both are doing a crappy job of it? And by that I mean neither do represent you as they are bought and beholding to corporate oligarchy?


  9. WmDE says:

    Another way of looking at is 9.8 billion did not enter the US because of 2 billion of taxes.

    • Dallas says:

      It looks like paying US taxes is a condition to operating in and doing business in the US.

  10. DogEars says:

    “if the IRS will close off this avenue of tax-avoidance”
    The article does not state that any of the $9.8b of revenue came from business in the US. Is it? If not, then the IRS isn’t involved.
    “By legally funneling profits from overseas subsidiaries”
    Looks like “legally” is the key word there. If the EU doesn’t like it, change the laws. There’s nothing “scandalous” about tax avoidance if it’s done within the laws of that country.

    • NobodySpecial says:

      It’s pretty scandelous for Starbucks in the UK to claim that for every $2.50 cup of coffee they sell they have to pay $2.00 to Starbucks Bermuda for the rights to the name – so they officially make a loss in the UK and don’t pay tax.

  11. MikeN says:

    How about changing the tax code so that corporations don’t pay taxes on income earned in other countries, only the US income?
    Might not help with Google, but would help for most companies.
    Instead we have Pres Obama proposing tax cuts for big businesses and tax hikes for small businesses.

    • Cap'nKangaroo says:

      Way too easy to game that system. Big company builds widget in US and sells it to US customer. Entire proceeds should be taxed in US, right? But Big company has patents on the product, so Big company assigns the patents to shell company in Luxembourg. So some of the proceeds of the sale are assigned to the off-shore shell company before taxes. Also, Big company has a “Design” company in India. So some more of the proceeds, pre-tax, are assigned to the “Design” shell to compensate them for “designing” part of the product. Before long, there is only enough proceeds of the sale left in the US to cover the costs of manufacturing the product, so no profit to be taxed.

      And if Big company learned from the likes of General Electric, their lobbyists have helped write legislation to get tax credits from the US government and they will not only pay no US corporate tax, they will get a check from the Treasury to help them thru the “tuff” economic times.

      • MikeN says:

        System is already being gamed. Better not to give incentives to companies to move overseas. Other countries do not tax in this fashion. Give companies incentives to move here.

  12. Captain Obvious says:

    Google’s not worried about the backlash. The’d just turn off Gmail for two hours and you’d shit your bloomers.

  13. George says:

    Make the USA a “tax haven” and bring that money here.

    Bureaucrats only think about how they can get their hands on somebody else’s money, not how they can get REAL investment (as opposed to the fake government spending type) to come into the country.

  14. MikeN says:

    MR. GIBSON: And in each instance, when the (capital gains tax) rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

    SENATOR OBAMA: Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness.

    • NobodySpecial says:

      Bermuda – where this money ends up has zero corporation tax. So if the US had negative corporation tax, if it actually paid companies then more companies would re-locate there !

  15. MikeN says:

    The model is to have a company in Ireland that collects the revenues, a company in Netherlands to which you send the profits, making them untaxed in Ireland, then an Irish company in Bermuda to send the profits from the Netherlands. Known as Double Irish or Dutch Sandwich.

  16. Sea Lawyer says:

    And the United States is one of the only industrial nations who taxes profits earned outside the country; profits that were already taxed by the local governments where they had been earned. Which is also why so much money is kept outside the United States.

  17. MikeN says:

    In response to evidence that Democratic states with higher tax rates are causing wealthy individuals to leave to states with lower tax rates, the IRS has stopped measuring such data.

  18. CrankyGeeksFan says:

    On an interview from a few years ago, a financier said most American companies don’t need any foreign or “offshore” shelters. These companies can just use Delaware, Nevada, and the parts of the U.S. “outside” the 50 states and the District of Columbia; i.e. Puerto Rico, U.S. virgin Islands, Guam, Northern Mariana Islands, etc.

    This article explains how Apple, Inc. uses Braeburn Capital in Reno, Nevada.

  19. MikeN says:

    The offshore commenters have come here.

  20. MikeN says:

    Bet JCD is now wishing his site were blocked in China as well as Dubai.

  21. Not paying taxes to US government is funny but not really helpful for our economy!


Bad Behavior has blocked 19683 access attempts in the last 7 days.