Google uses tax havens to expatriate Spanish profits

Google has moved most of the profits it makes in Spain and other markets to tax havens abroad in order to avoid paying taxes on its revenues, Bloomberg reported yesterday.

The owner of the world's most popular search engine has cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda. The strategies, known to lawyers as the "Double Irish" and the "Dutch Sandwich," helped Google reduce its overseas tax rate to 2.4 percent, the lowest of the top-five US technology companies by market capitalization, according to regulatory filings.

In Spain, Google only reports a fraction of the profits it makes in the local market. In its last available tax records, for the year 2008, Google reported income worth ¤

17.06 million, but reaped some ¤324.4 million in advertising, according to the Interactive Advertising Bureau and PricewaterhouseCoopers accounting firm.

Google controls 96 percent of the Spanish market.

Martin A. Sullivan, a tax economist, said that it was "remarkable" that Google's rate is low when it operates throughout the world, mostly in high-tax countries with 20-percent average rates.