A Microsoft subsidiary used Bermuda to avoid paying taxes on $315 billion in profit

By Robert Carnevale
published

Dodging tax consequences like Neo dodges bullets.

Microsoft HQ
Microsoft HQ (Image credit: Windows Central)

What you need to know

  • An Irish subsidiary of Microsoft managed to avoid taxes on $315 billion.
  • The Irish company in question has zero employees besides directors.
  • It achieved this zero-tax status by being "resident" in Bermuda.

Got $315 billion worth of profit lying around and want to learn how to avoid paying even a penny's worth of taxes on any of it? Ask Microsoft Round Island One, an Irish subsidiary of MS that used its Bermudian resident status to do just that.

As reported by the Guardian, Microsoft Round Island One, the company with zero employees to its name (besides directors), is not subject to tax because it's tax resident in Bermuda, a UK territory that doesn't charge corporation tax. This leaves a pretty big question out in the open: How does a company with zero actual employees make $315 billion in profit and not pay taxes?

If Microsoft's game here seems like a pretty overt way to game the system, that's because it is. In the Guardian's article, numerous sources acknowledge this tax avoidance as both a failing of Irish tax policy as well as proof that companies such as Microsoft need to be knocked down a peg.

For a frame of reference, Ireland's 2020 GDP was $433 billion. Compare that against the $315 billion that Microsoft Round Island One made, and the issue becomes even more apparent.

Robert Carnevale
Robert Carnevale

Robert Carnevale is the News Editor for Windows Central. He's a big fan of Kinect (it lives on in his heart), Sonic the Hedgehog, and the legendary intersection of those two titans, Sonic Free Riders. He is the author of Cold War 2395. Have a useful tip? Send it to robert.carnevale@futurenet.com.

31 Comments
  • Honestly, I would like to get mad at them. But, be mad at the lawmakers for allowing loopholes like this.
  • That's a big part of it, as mentioned in the article. Companies can only pull this stuff off in such grandiose, public fashion thanks to crafty above-board tactics.
  • This, exactly this. They are following the law(s). Don't like the laws? Change them.
  • Hear, hear. Not like every Fortune 500 company isn't taking advantage of the tax laws our elected officials have provided for them.
  • Might want to put some distance between this one and the story about Microsoft offering ideas on how to prevent people from gaming the election process.
  • My job's just to get the news out there, not to make the people in it look good or bad, ha. So if the two stories' proximity to each other gives more food for thought, I say why not.
  • Author says this:
    "My job's just to get the news out there, not to make the people in it look good or bad, ha." Writes this:
    "In the Guardian's article, numerous sources acknowledge this tax avoidance as both a failing of Irish tax policy as well as proof that companies such as Microsoft need to be knocked down a peg." Saying it's a failing of Irish tax policy and that companies such as MS need to be knocked down a peg is more than "getting the news out there" and definitely in the proximity of saying these companies are in the wrong.
  • under "Writes this" your entire quote points out that "numerous sources" in "the Guardian's article" say that. So not the author of this piece. actually not even the author of the piece that this article refers to. :S
  • Thank you, elrodeo! We write so that people may read, and you're better at this part than some others here.
  • There is zero relationship. This is about a one-time sale that generated profits in a tax haven according to the law. If you think major tech companies shouldn't offer their help in securing election systems that's a different story.
  • The $300B+ change in profit from last year was from the "sale of subsidiaries."
  • Awesome job. Keep it up!
  • Google and Apple are guilty of this too as well others. The reasons these loops holes continue to exist - corporate lobbyists.
  • Satya Nadella is helping to make a more equitable Microsoft. Time to pay those taxes too.
  • Wait they took advantage of a legal loophole that those WE elected left open? Our politicians would never let that happen. Honestly, if they didn't take advantage of it, I'd question the intelligence of the people they hire.
  • As opposed to today, when we rightfully question the ethics of those they hire.
  • What's unethical about following the laws?
  • Just because something is legal does not make it ethical. Lying is perfectly legal, it's also unethical. Many, many legal actions are also unethical. Law does not govern ethics.
  • What exactly is a Microsoft subsidiary?
  • Good for them.
  • Meanwhile, a bridge on an interstate highway in Memphis shutdown because of a giant crack (also impacting marine traffic on the Mississippi).
  • I live in CA. We pay the highest gas tax in the country supposedly to fix roads. It changes nothing. Roads are still a mess. The State is a cesspool of corruption. Who knows what they do with the cash but hey, the tax is going up again soon because they can never get enough.
  • It goes into state vanity projects rather than infrastructure.
  • The gas tax is the biggest joke. Most never goes to the roads. It's like the 911 fund, that doesn't go to emergency services, it's just a fund to "borrow" out of at times of need.
  • The G7 summit is coming up shortly, and I believe a global corporation tax structure is on the cards, although Ireland have already objected
  • These aren't loopholes. These laws are meant to help the wealthy, whether individuals or businesses. It's not necessarily a bad thing. If you consider this as a, probably under simplified example, ever wonder why a lottery winner typically go broke after a few years? It's not just the lavish spending. It's the taxes that catch them. Many think once they get their lump sum, that's it. There is a reason people who've built their wealth never have too much available cash. They tie up their money into investments and other areas that give them huge tax benefits. They understand the tax laws and make use of them. Can't fault any company for doing that.
  • Zut, we given for democracy in the world.
  • Then they will make a large (but insignificant by comparison of the tax they would have paid) donation to a charity (in a public spectacle) and that makes it all good. Crooked is as crooked does.
  • I hear you, but can anyone honestly say they would willing pay millions of dollars in taxes, if there was a legal way to not pay them? Is it crooked to take advantage of something that's legal to do?
  • The net is closing...https://news.sky.com/story/g7-nations-close-to-historic-deal-to-tax-tech...
  • A corporation not paying taxes? Why, that's unheard of!