Here's the simple version. A company pays corporation tax in the UK on its profit, not on its sales, just its profit. Your UK company makes sales of £500m and

Here's the simple version. A company pays corporation tax in the UK on its profit, not on its sales, just its profit. Your UK company makes sales of £500m and makes £200m profit. You offset this by paying a £200m 'license fee' (for nothing special, it's easy to conjure up) to a company you also own based in Ireland. It pays just 12.5% corporation tax on this £200m instead of 28% in the UK. That Irish company moves the money out to Bermuda in a similar way and there's no corporation tax to pay between Ireland and Bermuda. You can't go directly from the UK to Bermuda as the UK's existing tax laws prevent that. Going via Ireland is the cheapest method (see "Double Irish"). Variants to help indemnify sometimes use a firm in the Netherlands (see "Dutch Sandwich"). So, by paying a £200m license fee to another company the UK company has made no profit, so it pays no corporation tax in the UK, despite sales of £500m. Other variants include obtaining loans from the foreign companies and then paying interest on these loans. If you want to bring that money back into the UK again then the remaining 15.5% (28% UK corportation tax rate minus the 12.5% already paid in Ireland) is due, so you're no better off than having just paid the full 28% in the UK in the first place. Eventually you want to have the money somewhere else than Bermuda, and in Google's case this is back in the US, so they wait for the US Government to announce another tax amnesty and bring it back into the US from Bermuda and only pay 5% on it. Ireland wins (they get 12.5% for nothing really), the US wins (they get 5% instead of nothing) and the UK loses out (it gets 0%). My point about Apple was that Google aren't alone in doing this, nor are they the biggest beneficiaries of these types of schemes.