Google saved $2 billion in corporate income tax by shifting nearly $10 billion into a Bermuda shell company last year, according to reports.
Google sent about $9.8 billion in revenue to Bermuda, almost twice the amount from 2008, Bloomberg News reported.
The process is legal and widely used. By dropping its revenue into Bermuda, which has no corporate income tax, Google can save about half its tax rate. The $9.8 billion is close to 80 percent of the tech titan's pretax earnings. The news was disclosed in a Nov. 21 filing in the Netherlands.
So far, countries in Europe aren't happy about Google ducking taxes. Recently the European Union's executive body urged countries to blacklist tax havens because they cost the EU $1.3 trillion a year.
“The tax strategy of Google and other multinationals is a deep embarrassment to governments around Europe,” Richard Murphy, an accountant and director of Tax Research in Norfolk, England, told Bloomberg. “The political awareness now being created in the U.K., and to a lesser degree elsewhere in Europe, is: It’s us or them. People understand that if Google doesn’t pay, somebody else has to pay or services get cut.”
While Google is obviously dodging taxes, why does Europe think it would get all of Google's income tax if it didn't have Bermuda as a tax shelter? Wouldn't it be more likely that Google's money would stay in its home country? We know that most nations are cash-strapped right now, but denying Google its tax break would simply mean more taxes for the United States.
Published at 8:37 AM PDT on Dec 12, 2012