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-On an island known for ships that go missing,
companies make billions of dollars mysteriously disappear.
We're here to break down how the rich live above the law,
set up systems to do it,
and fuck over the rest of us.
Welcome to "Offshore."
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Ahh, Bermuda.
Pink sand beaches, a Dark 'n Stormy, some shorts.
We've all heard of the spooky powers of the Bermuda Triangle,
but did you know that companies harness
that power to make billions of dollars go away?
Do these people get away with it?
And how did Google, a company supposedly so into
not being evil that they made their motto "Don't be evil,"
make billions of dollars disappear
by using the numbers [evilly] 666?
-A lot of companies also evade taxes through tax havens
in Switzerland and Bermuda.
It's not right. -Biden talks about going
after offshore tax avoidance.
He would know more than most,
because his home state of Delaware
is its own little corporate paradise.
68% of Fortune 500 companies are incorporated in Delaware.
There are more corporations than people in Delaware,
which means if you're on Hinge in Delaware,
you stand a good chance of getting literally fucked
by a corporation.
But even with its very chill corporate regulations,
Delaware cannot beat out Bermuda.
Each offshore island has its own niche.
One of Bermuda's is base erosion and profit shifting,
or the Bermuda black hole.
Oh my God! It's a tax black hole! Look out!
Aah!
Huge US multinational corporations use tax loopholes
to shift profit from normally taxed countries to Bermuda.
And all of this has to do with
Bermuda's sweet-ass corporate tax rate.
Bermuda's out here beating down the competition,
giving corporations the best tax rates in the offshore biz.
35% from Argentina? Slash it.
21% from America?
Easy. Slash it.
12.5% from Ireland? Slash it!
Bermuda taxes corporations at the low, low of 0%.
And you know that is too tempting for corporations
to pass up.
Let me give an example.
Take a look at this logo. Iconic.
The Swoosh was commissioned in 1971 by Phil Knight
when he was an assistant professor
of accounting at Portland State University.
Knight paid $35 to design a logo for his brand, Nike.
The Nike Swoosh is now estimated to be worth $26 billion.
The Nike company was created in Oregon.
Phil Knight, born and raised in Oregon.
Nike is headquartered in Oregon.
So the Nike Swoosh is Oregonian, right?
Nope. Throw some shorts on it.
Give it a Dark 'n Stormy.
The Nike logo is Bermudian, baby!
At least for tax purposes from the early 2000 to 2014.
And we only know about the Swoosh's
Bermudian status because of the Paradise Papers,
a huge leak of documents from an offshore law firm.
The Paradise Papers outed leaders
from nations all over the world.
Trump's Secretary of State Rex Tillerson,
his Secretary of Commerce Wilbur Ross,
Queen Elizabeth, and now King Charles.
Celebs like Bono, Madonna, and American companies like Apple,
Facebook, McDonald's, Disney, Twitter, Uber, Walmart, Yahoo!
And of course, Nike and their little Bermudian Swoosh.
When all these dealings, they're not technically illegal,
come to light, then policies change.
But can you keep the biggest, messiest bitch
of a Bermudian scheme quiet?
Let me tell you about the Double Irish with a Dutch Sandwich.
It isn't a special at a diet bar.
It's also not a pretend sex term
that teens made up on Urban Dictionary.
It's the name of a heist.
It's a heist that uses base erosion and profit shifting,
or the Bermuda black hole.
And the Double Irish with a Dutch Sandwich
is a tricky little maneuver that's hard to keep quiet.
Let's look at Apple's use
of the Double Irish with a Dutch Sandwich.
They've been doing it since the '80s.
They were the best at it. The OGs.
Apple sells IP
to an Apple-owned Bermuda company for $1.
Bermuda Apple sells IP to an Apple-owned Irish company
for $100.
Apple Irish sells to an Apple-owned Dutch company
for $100.
Apple Dutch company sells to
another Apple-owned Irish company for $100.
That's where you get your sandwich.
All money winds back to Bermuda,
where the $99 profit is taxed at 0%
for their corporate tax rate.
Then the money can be sent back to America already taxed
to US Apple.
Looks a bit like a triangle, doesn't it?
Let's look at another sweet little company.
This is the Googleplex outside of Palo Alto.
It's Google's big office complex,
the one everybody talks about.
It's got all kinds of crazy stuff -- nap pods,
temperature-controlled toilets, slides, massage rooms.
There's the volleyball courts right there.
It's pretty crazy. It cost a lot of money --
about $1 billion to create this Googleplex thing.
[ Bird caws ]
Get out of here! Get!
Google's Office of Bermuda was a little bit smaller.
The Googleplex is 2,000,000 square feet.
The Bermuda office was less than one square foot.
The Googleplex has 144,000 employees.
The Bermuda office has zero.
Google uses Bermuda Office for one sole purpose --
the Double Irish with a Dutch Sandwich.
Untaxed European profits don't need slides,
swimming pools, and nap pods.
They just need a $300-a-year PO box
at the post office in Hamilton, Bermuda.
That's right. The office is a goddamn PO box!
Which is perfect if they're employing fucking Stuart Little.
Remember, they don't have any employees there.
You may think this kind of elaborate tax avoidance scheme
is a bit immoral and hypocritical
for a company whose motto was famously "Don't be evil."
The exact address of this Bermuda office
was 56 Church Street, Hamilton, Bermuda,
PO Box 666.
The number of Lucifer himself!
Satan's lucky enough! [ Evil laughter ]
Little on the fucking nose, Google.
The Googleplex cost $1 billion.
PO box number 666 received $8 billion a year.
Some reports have Google making away with over
$75 billion total of untaxed revenue before they got caught.
Very cool, I guess.
But let's go back to Apple.
Their abuse of the system was so large and brazen
that it created what is known as leprechaun economics.
That's when Ireland's GDP jumped 26% in one year
because of Apple's tax avoidance structures.
That's a lot. That's not normal. So, that raised questions.
The scandal ultimately helped bring down
this tax avoidance tool.
In 2018,
the EU created new regulations
that completely destroyed
the Double Irish with a Dutch Sandwich.
And that was one messy sandwich.
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The offshore runs on secrecy.
You can't raise too much attention.
New regulations came into place and, of course,
corporations learned their lesson and stopped
trying to find loopholes and turned over a new leaf.
Sike! Corporations created
new tax avoidance structures
and gave them stupid nicknames too --
like the immediate successor
of the Double Irish with a Dutch Sandwich
was the Single Malt,
which got its nickname from where the money goes,
which is Malta instead of Bermuda.
You know, single malt? Get it? Malta?
Corporations will never stop
looking for tax avoidance structures.
Their entire existence has one sole purpose --
maximize shareholder value.
And not paying taxes?
Well, yeah, that sure helps create shareholder value.
There are ideas out there, solutions like
the global minimum corporate tax rate,
which has been passed by 137 countries, but not quite ours.
For now, the rich keep getting richer
and their accountants keep coming up with dumb names
for how they do it.
That was "Offshore."
I'll see you on the beach next week.
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Alright. I'm going home now.
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