Google avoided about $2 billion in worldwide income taxes in 2011 by shifting $9.8 billion in revenue into a Bermuda shell company, almost double the total from three years before, filings show.
By legally funneling profits from overseas subsidiaries into Bermuda, which doesn’t have a corporate income tax, Google cut its overall tax rate almost in half. The amount moved to Bermuda is equivalent to about 80 percent of Google’s total pretax profit in 2011.
The increase in Google’s revenue routed to Bermuda, disclosed in a Nov. 21 filing by a subsidiary in the Netherlands, could fuel the outrage spreading across Europe and in the United States over corporate tax-dodging. Governments in France, Britain, Italy and Australia are probing Google’s tax avoidance as they seek to boost revenue during economic doldrums.
Last week, the European Union’s executive body, the European Commission, advised member states to create blacklists of tax havens and adopt anti-abuse rules. Tax evasion and avoidance, which cost the E.U. $1.3 trillion a year, are “scandalous” and “an attack on the fundamental principle of fairness,” Algirdas Semeta, the European Commission’s head of taxation, told a news conference in Brussels.