International tax authorities were welcoming in the new year after Google’s parent company, Alphabet, announced it will no longer use a notorious tax loophole known as the “Double Irish, Dutch sandwich”.

The technique allowed the tech giant to delay paying US taxes on international earnings for years, and pay a lower tax rate overseas. It is thought to have allowed American companies to cut their tax bills by hundreds of billions of dollars, but is finally being closed by authorities.

A Google spokesman confirmed the company would scrap the intellectual property licensing structure, by which international profits are channelled through Ireland and on to Caribbean tax havens, putting them outside the reach of US tax authorities.

This will simplify Google’s tax arrangements in line with efforts by the Organisation for Economic Co-operation and Development to limit international tax avoidance, following changes to US and Irish tax law.

It is estimated that by the end of 2017, some of America’s most profitable companies, including Apple, the largest by market capitalisation, had sequestered more than $1tn offshore, using the “double Irish” to park billions in “ghost companies”. Companies including Google, Cisco, Pfizer, Merck, Coca-Cola and Facebook all avoided a 35% US corporate tax rate, which has now been cut by Donald Trump.

Like other multinationals that make use of tax minimization schemes, Google has always said it pays all its taxes.

Appearing before a US Senate subcommittee in 2013, Apple chief executive Tim Cook claimed the company paid “all the taxes we owe, every single dollar”.

“We don’t depend on tax gimmicks,” he added. “We don’t stash money on some Caribbean island.”

But a year later, under pressure from the European Union, Irish officials began to crack down on the loop hole. In 2017, US authorities gave companies until the end of 2020 to end the system.

Google now appears to have acted. In a statement, it said it was reacting to changes in US tax law designed to limit the ability of companies to cut their US tax bills.

For more than a decade, Dutch, Irish and US tax law allowed Google to enjoy an effective tax rate in the single digits on non-US profits, estimated at around a quarter the average tax rate in overseas markets.

Filings seen by Reuters showed that in 2018 Google moved €21.8bn ($24.5bn) through its Dutch holding company to Bermuda, up from €19.9bn in 2017.

“A date of termination of the company’s licensing activities has not yet been confirmed by senior leadership, however management expects that this termination will take place as of 31 December 2019 or during 2020,” the filing with the Dutch chamber of commerce said.

“Consequently, the company’s turnover and associated expense base generated from licensing activities will discontinue as of this date.”

Under the Double Irish, companies shift taxable income from an operating company in Ireland to another Irish-registered firm in an offshore tax haven. Dutch tax law allows untaxed profits to be moved to a tax haven without incurring a withholding tax, so a Netherlands-based company is used in the middle of this “sandwich”.

The Dutch Google subsidiary was used to shift revenue from royalties earned outside the US to Google Ireland Holdings, an affiliate based in Bermuda, where companies pay no income tax. This allowed Google to legally avoid triggering US income taxes or European withholding taxes on the bulk of its overseas profits.

“Including all annual and one-time income taxes over the past 10 years, our global effective tax rate has been over 23%, with more than 80% of that tax due in the US,” the company stated in the Dutch filing.

After Donald Trump’s tax reforms dropping the tax rate to 15.5% from 35% came into effect in early 2018, Apple announced plans to repatriate $252bn in cash over five years.

But despite the end of the “Double Irish” and “Dutch Sandwich”, tax experts warn that little is known about how specific companies have adjusted their tax arrangements.

“Based on what we have been able to see in the past, there is no reason to think that planning [by multinationals] hasn’t already evolved several generations beyond the kind of classic ‘Double Irish’ that is now officially coming to an end,” Chris Sanchirico, a law professor at the University of Pennsylvania, told the Financial Times.

In 2017 the Guardian and other outlets reported on the Paradise Papers, a huge trove of confidential documents regarding offshore investments. The reports revealed that Apple, for example, had found a new tax structure to exploit, routing international profits through Jersey.

“US multinational firms are the global grandmasters of tax avoidance schemes that deplete not just US tax collection but the tax collection of almost every large economy in the world,” Ed Kleinbard, a former corporate lawyer and now a professor of tax law at the University of Southern California, said at the time.