Google funnelled €8.8 billion of royalty payments to Bermuda last year, a quarter more than in 2011, underlining the rapid expansion of a strategy that has saved the US internet group billions of dollars in tax.

By routing royalty payments to Bermuda, Google reduces its overseas tax rate to about 5 per cent, less than half the rate in Ireland, where it books most of its international sales.

The figures were revealed in the latest filings by one of Google's Dutch subsidiaries, and means that royalty payments made to Bermuda have doubled over the past three years. It also routes the profits through the Netherlands to avoid withholding taxes, using a structure known as a Dutch sandwich. Google declined to comment.
– Copyright The Financial Times Limited 2013