Google breaking the law
"What Google has done is illegal under EU antitrust rules," declared Margrethe Vestager, the European Union's Competition Commissioner. "It has denied other companies the chance to compete on their merits and to innovate, and most importantly it has denied European consumers the benefits of competition, genuine choice and innovation."
Ongoing Antitrust EU investigations
- "Do something about monopolies. The whole business model of Silicon Valley is monopoly." Thomas Frank
Collecting illegally personal info from kids and should be fined
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.
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.....
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
"Google moved 19.9 billion euros ($22.7 billion) through a Dutch shell company to Bermuda in 2017, as part of an arrangement that allows it to reduce its foreign tax bill, according to documents filed at the Dutch Chamber of Commerce.
The amount channeled through Google Netherlands Holdings BV was around 4 billion euros more than in 2016, the documents, filed on Dec. 21, showed. The subsidiary in the Netherlands is used to shift revenue from royalties earned outside the United States to Google Ireland Holdings, an affiliate based in Bermuda, where companies pay no income tax.
The tax strategy, known as the “Double Irish, Dutch Sandwich”, is legal and allows Google to avoid triggering U.S. income taxes or European withholding taxes on the funds, which represent the bulk of its overseas profits. "
Aggressive_tax_avoidance Criticisms of Google - Wikipedia
"the chair of the United Kingdom Public Accounts Committee, accused Google of being "calculated and [...] unethical" over its use of the scheme. Google Chairman Eric Schmidt has claimed that this scheme of Google is "capitalism", and that he was "very proud" of it."
How Google and Apple Make Their Taxes Disappear - Newsweek
Google Moved Billions Of Dollars To Bermuda To Avoid Taxes... Again - Forbes - 2016
"On Friday, Reuters reported that in 2014 the tech giant—which now falls under parent company Alphabet—transferred 11.7 billion Euros (approximately $13 billion) to Bermuda in an effort to minimize the taxes it had to pay on its income through a little tax maneuver that has been dubbed a "Double Irish with a Dutch Sandwich." In the simplest of terms, Google , like many multinational corporations, used differences in the Irish and American tax codes to its advantage. A portion of Google’s profits are paid to an Irish affiliate as royalties on its patents (which are taxed at a lower rate). To further avoid taxes, this money is then routed to the company’s Dutch subsidiary, Google Netherlands Holdings BV. From there, the company tranfers its revenue to another affiliate, Google Ireland Holdings, which is based in the notorious tax haven of Bermuda—but registered in Ireland, Reuters reports. So there you have it—double Irish with a Dutch sandwich."
Google ducks $1.27bn bill for back taxes in France - The Guardian - 2017
A French court handed Google’s parent company, Alphabet, a reprieve from a 1.11bn-euro ($1.27bn) tax bill on Wednesday in a major victory for the tech giant.
The decision comes after six years of fighting with the French tax authority over back taxes it claims are due from the tech firm for the years 2005 to 2010.
The French tax administration argued that Google had to pay taxes in France because the California firm and its subsidiary in Ireland have been selling a service for inserting online ads to clients in France for years through its Google search engine.
Steuerschlupfloch: Google-Mutter Alphabet vermeidet weiter Steuern in Milliardenhöhe - Heise.de - 2018
Alphabet hat 2016 schon fast 20 Milliarden US-Dollar der Besteuerung entzogen und dank eines komplizierten Verfahrens wohl mindestens 2,4 Milliarden an Steuern eingespart. Das Schlupfloch bleibt noch bis 2020 offen.
Google Forced To Pay 13m of 6.4bn profits BUT Manages To Reduce The Amount
While we can clearly see such a deal is inadequate:
It is hard to believe that £13m tax payment on $6.4bn turnover is an adequate tax bill. It feels more like a PR deal designed to counter the reputational damage created by Google failing to pay a fair share of tax on the profits it makes from its economic activity in the UK.
We can then shortly see that the amount was even not completely true or paid by Google!
The company’s accounts show that the government was only able to claw back less than £100m in corporation tax from Google for the 2005-2014 period, and not the £130m the chancellor claimed.
Google influencing policymakers and the law
Google spends millions on academic research to influence opinion, says watchdog
In its Google Academics Inc report, the CfA identified 329 research papers published between 2005 and 2017 on public policy that the company had funded. Such studies have been authored by academics and economists from some of the world’s leading institutions including Oxford, Edinburgh, Stanford, Harvard, MIT and the Berlin School of Economics. Academics were directly funded by Google in more than half of the cases and in the rest of the cases funded indirectly by groups or institutions supported by Google, the CfA said. Authors, who were paid between $5,000 and $400,000 (£3,900-£310,000) by Google, did not disclose the source of their funding in 66% of all cases, and in 26% of those cases directly funded by Google, according to the report.