GOOGLE IS ONE of a number of companies benefitting from a tax loophole known as the ‘Double Irish’, that allows the internet giant to reduce its overseas tax bill to just 2.4 per cent, Bloomberg claims.

The strategy allows companies like Google, Facebook and Microsoft to take advantage of Irish tax laws and legally move profits into subsidiaries.

Tax planners call such an arrangement a Double Irish because it relies on two Irish companies: one which pays royalties to use intellectual property, which can be offset against income under Irish tax laws; and a second which collects the royalties in a tax haven like Bermuda.

Bloomberg reports that Google managed to legally reduce its taxes by $3.1 billion in the last three years using this technique.

A Google spokeswoman said that the firm’s practices were “very similar to those at countless other global companies” operating across a wide range of industries.

In a statement last night, the company said:

Google complies completely with the tax laws of all the countries in which we have operations. As a result, we make a very substantial contribution to local and national taxation and provide employment for thousands of people outside the US.

However, the strategy is attracting criticism in the US, which is faced with a $1.4 trillion hole in its finances. Bloomberg quotes an American professor of accounting, Abraham J. Biloff as saying that availing of the tax loophole means Google is “pertpetuating evil under our noses.”

Who is it that paid for the underlying concept on which they built these billions of dollars of revenues? It was paid for by the United States citizenry.

Ireland came under scrutiny in 2009, when the Obama administration flagged its intention to address the avoidance of US tax by corporations operating overseas.

Google’s Irish subsidiary recently reported a fivefold increase in profits.