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At a Glance:
Google legally avoided billions in taxes using a complex international structure
Strategy exploited gaps between U.S., Irish, and Dutch tax laws
Known as the "Double Irish with a Dutch Sandwich"
Saved Alphabet (Google's parent company) an estimated $19.2 billion in 2017 alone
🔍 The Strategy in Simple Terms
The “Double Irish with a Dutch Sandwich” might sound like a lunchtime special, but it's actually one of the most infamous tax strategies in corporate history.
Multinational giants like Google used it to:
Minimize corporate taxes dramatically
Shift profits from high-tax to low-tax jurisdictions
Operate fully within the boundaries of international law (at least until 2020)
Let’s break it down in plain English.
🌏 Step-by-Step Breakdown
1. Google Ireland Ltd. (First Irish Entity)
This entity brought in billions by billing advertisers across Europe, the Middle East, and Africa.
It's where the revenue stream began.
2. Royalty Payments to Google Netherlands BV (Dutch Entity)
Google Ireland Ltd. then paid huge royalty fees to a Dutch subsidiary for the rights to use Google’s intellectual property (IP).
Those royalties were tax-deductible expenses, which shrank the Irish company's taxable profits significantly.
3. Money Moves to Google Ireland Holdings (Second Irish Company)
The Dutch subsidiary passed the royalties to another Irish company—but this one was based in Bermuda.
Bermuda has no corporate income tax, so the money essentially disappeared from the tax radar.
4. Final Destination: Bermuda
With 0% corporate tax, Bermuda became the end point for billions in profit.
The money zigzagged across jurisdictions, giving rise to the sandwich metaphor and enabling Google to indefinitely defer paying taxes on foreign profits.
💰 Real-World Numbers
Let’s put some real figures on this:
In 2017, Google shifted $19.2 billion through this setup
Paid virtually zero in taxes on those profits
Slashed its global effective tax rate to around 6%, a fraction of the U.S. corporate tax rate (then 35%)
✉️ Was This Legal?
Yes — 100% legal.
This wasn’t some backroom trickery. It was clever use of international tax mismatches:
Ireland allowed companies to be incorporated locally but tax resident elsewhere
The Netherlands offered a royalty-friendly route with minimal tax friction
Bermuda has no corporate tax at all
It was aggressive, controversial, and absolutely within the letter of the law.
⛔ Why It Ended
This setup didn’t fly under the radar forever. Mounting pressure from the EU, OECD, and U.S. lawmakers forced change.
Ireland closed the residency loophole in 2015 and gave companies until 2020 to restructure. Alphabet eventually brought its IP rights back to the U.S.
🔬 Key Lessons for Digital Entrepreneurs
Tax strategy is part of smart scaling. You don’t need to be Google-sized to benefit from legal tax optimization.
Governments move slowly. Entrepreneurs who understand the law can stay ahead—ethically.
Public perception matters. Just because it’s legal doesn’t mean it won’t spark backlash.
⚡ What You Can Do
Even if you're not shifting billions, there are actionable takeaways:
Set up your company in a tax-friendly jurisdiction from day one
Be strategic about where your IP is owned and licensed
Hire international tax pros who understand your business model
Follow @thefreedom.brief on Instagram for daily insights like this one. Stay ahead of the curve with smart, legal, and ethical strategies to grow your digital business.
More coming soon. Stay tuned.
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