Alphabet continues to revert to the well-known viewpoint: “We pay all taxes due and operate under the tax laws of the countries in which we operate globally,” a company spokesperson explained. And to further dampen criticism, he referred to the importance Google & Co. would have to the growth of the online ecosystem.
Alphabet uses constructs known as “Double Irish” and “Dutch Sandwich” to minimize the tax demands on its revenues. In this case, sales of the subsidiary responsible for Europe in Ireland are first shifted to another subsidiary in the Netherlands, for which not a single employee is registered. From there, the money is then transferred to a letterbox company, which is registered in Bermuda and formally belongs to another alphabet company from Ireland.
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The construct will cost the European taxpayers an estimated € 3.7 billion in 2016. The massive public criticism that such a thing is legally possible has prompted at least Ireland’s legislative changes. The “double Irish” gap is stuffed with the new regulations. However, transitional arrangements ensure that Alphabet will be able to redirect its sales in Europe to the South Seas until 2020, without the need for major tax claims.