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add text about Google's tax strategy
== Google evading taxes ==
=== Google's tax strategy ===
From Adam Townsend thread on twitter
How Google uses "reversals" to reduce its tax obligations.
An imperfect glossary of some of the mechanisms used:
a. Exploiting mismatches is tax arbitrage when different countries view the same entity or financial instrument differently, exploitation of asymmetries in a tax arbitrage.
b. Treaty shopping to route income so as to reduce taxes
c. Delay repatriating earnings
d. Earnings-stripping. A corporation loads the U.S part of the company w/debt owed to foreign subsidiaries. Interest payments on debt are tax-deductible/reducing taxable American profits.
Google's profits come mainly from royalties on intellectual property, patents and digital "things", such as downloaded songs. Consider this as stateless income. This is the intangible nature of intellectual property rights. They may be assigned, licensed and sub-licensed.
Google has its headquarters in the United States, it wants to sell its digital products in Europe, but the tax rate in Europe is high. For example, Goog licenses Google Ireland Holdings the IP patents for its search and advertising technology for the Eu/Middle East/Africa region.
Ireland has a tax rate of 12.5% of corp inc. this transfer of intellectual property is made at an early stage of development, when its value is low, so that no taxable gain is realized in the United States. It is an unlimited liability company and is not required to publish income statements or balance sheets under Irish law.
Although incorporated in Ireland, it is controlled and managed by directors based in Bermuda. Under Irish law, Google Ireland Holdings is therefore a tax resident in Bermuda, and is therefore only subject to Bermuda law which does not tax corporate profits.
Google Ireland Holdings in turn owns a subsidiary called Google Ireland Limited. It operates the intellectual property portfolio, sells advertising and collects payments, which generates revenue. However, Google Ireland Limited does not make a profit because it has to pay ROYALTIES to Google Ireland Holdings for IP licenses. To avoid Irish withholding tax, Google Ireland Limited payments do not go directly to Bermuda. He takes a detour (tax route) to the Netherlands avoids this liability "because Irish law exempts certain royalties to companies from other EU countries - "tax treaty". The costs therefore go first to the Dutch unit: Google Netherlands Holdings B.V., which pays almost every dollar to the Bermuda entity - which does not pay taxes.
<blockquote>This structure is only used by companies headquartered in the United States, as it is based on the specific features of OUR tax law. It is no longer possible to use this same tax channel - Trump has signed a new law, taxing foreign profits if they are held outside the United States. But...... When one door closes, another opens.....</blockquote>
Google restructured and became a wholly owned subsidiary of a new Delaware company called Alphabet Inc. The new structure will allow its subsidiary Google to take advantage of Delaware's loophole and reduce its corporate taxes.
You: "That's what any company would do"
Adam Townsend: That's what any company would try, Google only succeeded thanks to the privileges of the state."
Google passes the tests, without being challenged by the SEC, the IRS or a Tax Chamber and any legislative oversight to determine the validity of control of a company or subsidiary.
Subsidiaries do not need to be transparent if the financial statements are not "material"; a common mechanism is therefore to divide the "material" financial statements into a large number of subsidiaries, each individually making them intangible.
=== Google shifted $23 billion to tax haven Bermuda in 2017: filing - Reuters - 2019 ===
