Google caused quite a stir in the last several months, when news emerged that it had dodged billions in tax dollars by booking profits through its Bermuda based Dutch subsidiary. The arrangement that Google uses to minimize its taxes is often referred to as the “Double Irish with a Dutch Sandwich.”
Wikipedia defines “The double Irish arrangement as a tax avoidance strategy that some multinational corporations use to lower their corporate tax liability. The strategy uses payments between related entities in a corporate structure to shift income from a higher-tax country to a lower-tax country. It relies on the fact that Irish tax law does not include US transfer pricing rules. Specifically, Ireland has territorial taxation, and hence does not levy taxes on income booked in subsidiaries of Irish companies that are outside the state.”
This arrangement will only work for Goggle until 2020 however, as the Irish Government have moved to close this loop hole and changed the law in 2015 so that new companies can no longer avail of this tax break and existing registered companies can only take advantage until 2020.
Despite this controversy, Bermuda is unlikely to change its tax laws anytime soon and supporting company setup remains a government priority. With a 0% corporate tax rate, no capital gains or transfer tax, no withholding tax, no inheritance or estate taxes, Bermuda will continue to be one of the most attractive countries in the world to register a business.
This explains why over 75% of fortune 500 companies have a business registered on this island paradise. The majority of these companies have little more than a PO Box on the island but the Bermudian government are perfectly happy as long as it does not impact local businesses. Indeed the majority of local employment is created by these offshore companies and the services required to maintain these entities. Additionally these registered businesses have to pay various taxes and levies to the government in Bermuda.
Registering a company is Bermuda is considered to be more complex than many surrounding jurisdictions. Healy Consultants Group PLC can help you to structure your business in Bermuda and help you with ancillary services such as bank account opening, appointing resident bodies etc. Contact us at firstname.lastname@example.org
Photo by JoshuaDavisPhotography, available under a Creative Commons Attribution 2.0 Generic (CC BY 2.0) license.