Google has no office, no staff and little more than a plain PO Box numbered ‘666’ on the sunny Caribbean Island of Bermuda. [Umm.. Ok, Caribbean, sure.]
But it still sends £8billion in profits a year to the island – which happens to have a 0 per cent corporation tax rate.
Google’s communications chief Peter Barron today insisted the billions of pounds funnelled from the search engine’s global network of subsidiaries had no impact on the firm’s tax bill in Britain.
But after a week dominated by criticism of an agreement between Google – which once had the slogan ‘Don’t be Evil’ – and HMRC to pay just £130million in back taxes for the past decade details of the company’s arrangement on Bermuda are set to shock.
Google’s tax bill in Britain is held down by the firm’s insistence it has no ‘permanent’ base here – on the basis all sales in Europe are made via Dublin.
But Google has five major offices in Britain and 5,000 staff working here.
The Sun on Sunday today revealed the Bermudan government’s Registrar of Companies, Google Bermuda Unlimited and Google Ireland Holdings are registered to the address of Conyers Dill and Pearman, a law firm at Clarenden House, 2 Church Street, Hamilton.
The firm is based just a few streets from the PO Box to which Google directs billions in profits.
But Derrick Ward, 51, told The Sun he had no idea Google was based at the building – despite working in the post room for the past four years.
He said: ‘Google don’t have an office in the lawyers’ building. I’m sure we’d know about it if they did.’
He added: ‘If there was a Google HQ on Bermuda it would be clear to see. I hear they have football pitches at their offices. I’ve never met anyone who works for Google in all my life.’
A receptionist at the windowless Bermuda office told the Sun: ‘Google doesn’t have an office here, they don’t employ any staff here.’
But after referring to her computer, the receptionist said that Google Bermuda Unlimited is registered at PO Box 666 through the law firm’s affiliate company, called Codan.
Mr Barron today told the BBC Andrew Marr programme: ‘In the UK we pay corporation tax at 20 per cent – there is no sweetheart deal.
‘We are taxed on the economic activities of Google UK. We pay corporation tax in the UK at 20 per cent.
‘Globally, our effective tax rate over the last five years is roundabout 20 per cent.’
Mr Barron said its new accounts showed Google UK paid £46.2million for the last year, plus £130million for the period of 2005 to 2014.
He insisted the additional payment was the result of six years of cooperation with HMRC to ensure the firm abided by the law.
Mr Barron – a former editor of the BBC’s Newsnight – claimed: ‘Everything we do across the business, we always try to do the right thing.’
He defended Google’s decision to headquarter its European businesses in Ireland and then operate ‘subsidiaries’ in the UK and other European countries.
And pressed on why the company the moves £30billion of global revenues onward to Bermuda – which has a corporate tax rate of 0 per cent – Mr Barron said: ‘It’s very, very important to make it clear that the Bermuda arrangement has absolutely no bearing on the amount of tax we pay in the UK.’
Google manages to reduce its tax bill by using a set of subsidiary companies across the globe.
The network – nicknamed the ‘Double Irish and Dutch Sandwich’ – is hugely controversial but totally legal.
Google moved its headquarters for Europe, the Middle East and Africa to Ireland in 2008 to benefit from the country’s lower tax rate on profits.
In Britain, its biggest market outside the US, Google is classified as having no ‘fixed base’ so none of its sales are technically made in the UK.
It means when a British company buys a Google advert for the UK, for example, the money goes straight to Dublin, meaning it pays little tax to the UK Treasury.
After paying Ireland’s lower corporation tax rate of 12.5 per cent, international profits are then funnelled via Google Netherlands Holdings, taking advantage of generous tax laws there.
The profits are then sent to Google’s main overseas company, another Irish business domiciled in Bermuda – where the corporation tax rate is zero.
This complicated arrangement is explained by experts as the Double Irish and Dutch Sandwich – with the Irish businesses being the bread and the Dutch subsidiary being its filling.
It means that Google’s overseas tax rate on all its profits falls to around five per cent when in the UK it would have to pay 20 per cent.
Though this process has been branded ‘immoral’ by MPs, it is not illegal and Google says it has abided by international tax rules.
The company also says its Bermuda operation does not impact the tax it pays in the UK.
Executives say the reported UK profit margins are far below the group average because most of its algorithms and codes, which drive the company’s profits, are developed outside the country.
Google still pays the majority of its taxes in America, but on its American profits only.
Google has five British offices that helped the tech giant make £6billion in profit over ten years but HMRC still accepts it has no ‘permanent’ UK base, allowing executives to funnel its cash via Dublin to Bermuda.
It has multi-million pound contracts renting four central London buildings and a northern headquarters in Manchester while building a £1billion super-headquarters to house 5,000 of its staff.
Google claims that all UK sales are ‘closed’ in Dublin, with its lower rate of tax, allowing the US business to legally avoid an estimated £200million a year in UK tax.
Osborne hailed the £130million deal as a ‘victory’ for the British taxpayer but fellow minister Anna Soubry yesterday contradicted the Chancellor and admitted it ‘doesn’t sound like an awful lot of money’.
Briton Barney Jones, 37, who worked for the company between 2002 and 2006, said ‘heads should roll’ at HMRC for agreeing the ‘sweetheart’ deal after he handed them over 100,000 emails to the taxman he claims proved the tech giant does business in the UK.
Google’s three main offices are in central London – two close to Victoria station and the other near Covent Garden – and has another in London for its artificial intelligence arm, known as DeepMind.
Its main building is Central St Giles, a typical London tower block painted bright colours and filled with typical Google quirks.
Based over five floors its strange rooms and spaces include a ‘Granny’s Flat’ with chintzy furniture and wallpaper as well as padded meeting rooms with airlock doors, including one decked out like an old London pub.
It has a kooky ‘Lala library’ with a comfy furniture and a large library for staff to use to relax and contemplate their work, while for major meetings there is the Flower Power boardroom.
Outside there is a grand and green roof terrace and a ‘Hedge Your Bets’ secret garden – complete with powerful WiFi allowing people to work from there.
Employees can plant and grow things at the building’s allotments but are thrown off if their work is not up to standard.
This competitive edge runs through all Google’s work because staff are encouraged to just take work off others if they believe they can do it better.
Those working there are served breakfast at their desks and have kitchens packed with free food and drink, while on a Friday the canteen, where food is also free, is converted into a free bar.
Describing life there Lee Penson, founder of its PENSON designers said: ‘It’s all about human beings and that’s it. Think sunken snugs, comfort, fun, comfy slippers, squishy carpets, cushions, daybeds, nice fresh food, gardening, vegetables, health, visual stimulation, relaxation, exercise, fresh air and you’ll get what it’s all about as a HQ.’.
Despite the multi-million pound investment made there in 2012, Google is spending £1billion on London headquarters for 5,000 staff and hired a leading designer to create an 11-storey building next to Kings Cross station ‘worthy of standing for 100 years’.
The company’s boss rejected an initial design, including rooftop pool, an indoor football pitch and a private climbing wall, because it was deemed too ‘boring’.
In the meantime, most staff are making do with its Covent Garden offices which feature allotments, a dance studio, rocking chairs, acoustic airlocks and a padded cell for meetings. The lavish premises have been visited by several senior government figures.
The company is also fitting out temporary UK headquarters in Kings Cross with a meditation room, five massage rooms, a running track, games area, spinning and cardio studios and ‘informal breakout space’.
The makeshift offices at 6 Pancras Square, over 11 floors, are opposite the planned site of the new Google headquarters in the UK, originally designed by leading architects Allford Hall Monaghan Morris.
The majority of Google’s multi-billion pound UK business is done by staff working in Victoria, where they are told when they join: ‘Here at Google London, our sales teams focus on helping our customers grow their businesses throughout Europe’.
But despite Britain being its biggest market outside America, Google insists all sales are completed in Ireland – allowing it to avoid 20 per cent corporation tax usually due in the UK.
Read more: dailymail.co.uk