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Google's Paris HQ raided in tax probe

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Re: Google's Paris HQ raided in tax probe

#41

Post by mike_hearn »

lloyd-christmas wrote: post #15
hrnnnnnn wrote: post #6

Earlier quoted context omitted.

It's not the most eloquent phrasing. I think what they're trying to say is "People find legalistic tax-dodging unethical, and they're sick of rich people and big companies getting away with it."

Solution: Get rid of tax law as one of the major sub-industries of the legal profession. When I no longer need a lawyer to submit my taxes, I'll start caring about corporate tax loopholes.

This isn't really about tax loopholes. It's about France being uncompetitive and unwilling to change.

Google advertisers sign contracts with a company in Ireland because Ireland decided to effectively not apply corporation taxes (i.e. use a low rate and allow a variety of schemes that reduce the real rate even further). They did this fully knowingly ... the policy has been popular with voters ... because they wanted to attract international investment and employers to a place that otherwise wouldn't have much to offer, and as a strategy it worked amazingly well. Even during the financial crisis Ireland did not back down on that.

This upset other countries in the EU but none moreso than France which has notoriously high taxes and a notoriously stagnant economy, combined with a population that routinely mounts protests against any attempt at reform.

France is very powerful in the EU and thus instead of trying to make itself competitive has spent the last few years coming up with a variety of political solutions to their competitiveness problem:

• Pressuring low tax jurisdictions to charge more tax

• Getting the VAT rules for online businesses altered so now instead of paying VAT where the sale takes place, you have to pay to the country of the buyer ... woebetide you if you don't speak Hungarian or Croatian. You're gonna have to find someone who does and get them to file a tax return for you.

• Now, apparently, simply harassing rich companies in an attempt to extract more money directly.

Google hires very competent accountants, I seriously doubt they have actually made mistakes or lied on their tax returns. Instead France is going to exploit the existence of a Paris office to try and present Google with a giant bill. This would strongly incentivise Google to simply leave France entirely, I don't think the Paris office is very large compared to the others it has in Europe.

Re: Google's Paris HQ raided in tax probe

#42

Post by mike_hearn »

Bartweiss wrote: post #37
bambax wrote: post #20

Earlier quoted context omitted.

Don't know about American law, but in French the notion exists and is called "abus de droit"; just because you can do something "in general", you can't do it with the specific purpose of circumventing another legal obligation. For example, as an Irish company, you can open a subsidiary in France to do business in France. That's a right. But if you're doing business in France essentially, you can't make the French com…

In America, there's at least one clear example of this - laws against "structuring". Basically, they say that it's criminal to arrange financial transactions with the purpose of avoiding laws about financial transactions. As an example, banks are required to report all deposits of $20,000. It's a right to deposit $19,999 into a bank account, nothing wrong there. But to deposit $19,999 five times in a row, rather than…

Structuring laws are highly controversial and have caused huge amounts of pain for innocent people who were just legitimately trying to reduce their paperwork burden. They're bad laws.

Re: Google's Paris HQ raided in tax probe

#43

Post by mike_hearn »

nametakenobv wrote: post #33
logicchains wrote: post #7

Earlier quoted context omitted.

>while contributing nothing themselves They contribute a service, in this case a search engine that's miles ahead of its closest competitor, Bing. They don't "take" anything, they offer something that you're free not to use. Unlike nation states, which are happy to take whatever they want (claiming they're owed it for providing you things you may never have asked for, which are paid for by other people potentially ag…

Google makes money in France. Given France's economy size, it's probably billions. They need to pay taxes to the french government for the privilege of doing business there, so the government can sped it on schools and other infrastructure, so the french citizens can be prosperous.

The idea that doing business is a "privilege" granted by the state is exactly why France's economy is famously bad, with unemployment double that of the UK.

Re: Google's Paris HQ raided in tax probe

#44

Post by gsnedders »

mike_hearn wrote: post #30
realusername wrote: post #18

Earlier quoted context omitted.

All the laws are judged on intent, not on the exact wording, why would finance laws be any different than the other ones ?

No, people are judged on intent. Laws are meant to be applied as written. That's why you hear about people getting off on a technicality, and why you hear about obviously dumb rulings like two teenagers who get into a relationship and end up guilty of paedophilia. That obviously wasn't the intent of the lawmakers, but it's the result of the law as written. The notion of intent is a very important protection in law ..…

> Laws are meant to be applied as written. That's why you hear about people getting off on a technicality, and why you hear about obviously dumb rulings like two teenagers who get into a relationship and end up guilty of paedophilia.

This isn't true in the English legal system, which seems worthwhile to note given its wide reaching influence. When dealing with statue law (because obviously common law cannot be applied as written!), judges have three options as to how to interpret the law: the literal rule, where the law is interpreted literally as written; the mischief rule, where something that would have been judged illegal under common law can be judged to have been intended to be illegal under the statue law even though it is not literally; and finally the golden rule, which essentially allows the judge to avoid an absurd result. (It's relatively similar under Scots law, and I cannot comment as to elsewhere.)

Re: Google's Paris HQ raided in tax probe

#45

Post by bsimpson »

rmc wrote: post #28
lloyd-christmas wrote: post #15

Earlier quoted context omitted.

Solution: Get rid of tax law as one of the major sub-industries of the legal profession. When I no longer need a lawyer to submit my taxes, I'll start caring about corporate tax loopholes.

Is this actually a thing in USA? Where you need a lawyer to do your taxes? Cause I'm in the EU, and this never happens.

Some people hire a Certified Public Accountant; others use software like TurboTax. The American tax law is so complicated that doing them yourself leads to spending at least one weekend locked in your house with a calculator, filling out forms and hoping you don't get audited.

Vox made a video about how companies like Intuit lobby to keep them complicated, to keep the money from TurboTax rolling in:

http://player.ooyala.com/iframe.html#pbid=88e901a4b29c47ba95...

Re: Google's Paris HQ raided in tax probe

#46

Post by ucaetano »

charlesdm wrote: post #24
bambax wrote: post #20

Earlier quoted context omitted.

Don't know about American law, but in French the notion exists and is called "abus de droit"; just because you can do something "in general", you can't do it with the specific purpose of circumventing another legal obligation. For example, as an Irish company, you can open a subsidiary in France to do business in France. That's a right. But if you're doing business in France essentially, you can't make the French com…

Who says they don't have activities in Ireland? A lot of Google's employees are actually based in Ireland. > Just because you can do something "in general", you can't do it with the specific purpose of circumventing another legal obligation. Most countries have laws that say you can't do something JUST for tax purposes. You can, however, structure things in a tax friendly way, if there's a commercial motive to do so.

http://www.independent.ie/business/technology/google-hits-50...

Over 5k employees apparently.

Re: Google's Paris HQ raided in tax probe

#47

Post by tomp »

mike_hearn wrote: post #25
bambax wrote: post #20

Earlier quoted context omitted.

Don't know about American law, but in French the notion exists and is called "abus de droit"; just because you can do something "in general", you can't do it with the specific purpose of circumventing another legal obligation. For example, as an Irish company, you can open a subsidiary in France to do business in France. That's a right. But if you're doing business in France essentially, you can't make the French com…

For example, as an Irish company, you can open a subsidiary in France to do business in France. The whole point of the EU single market is that you do not have to do that. You can set up shop in Ireland and sell to the French market until the cows come home. You only owe Irish taxes (modulo the recent completely crazy VAT changes). Laws that say "forget the law, anything we think is unreasonable is illegal" are a gro…

> "forget the law, anything we think is unreasonable is illegal"

That's basically how all Anglo-Saxon (including the US) law, i.e. case law, looks like.

Re: Google's Paris HQ raided in tax probe

#48

Post by rahimnathwani »

bambax wrote: post #34
mike_hearn wrote: post #25

Earlier quoted context omitted.

For example, as an Irish company, you can open a subsidiary in France to do business in France. The whole point of the EU single market is that you do not have to do that. You can set up shop in Ireland and sell to the French market until the cows come home. You only owe Irish taxes (modulo the recent completely crazy VAT changes). Laws that say "forget the law, anything we think is unreasonable is illegal" are a gro…

You don't have to but you can; and apparently it's good politics too. Google made a big deal of its new office space in the center of Paris when they opened two years ago. Edit: of course, the right for an Irish company to do business anywhere in Europe is also one that can be abused. Separate companies are not needed for rights to be abused and offices to be raided.

Can only French companies open offices in the centre of Paris? Couldn't an Irish company rent office space just as easily?

Re: Google's Paris HQ raided in tax probe

#49

Post by tomp »

mike_hearn wrote: post #41
lloyd-christmas wrote: post #15

Earlier quoted context omitted.

Solution: Get rid of tax law as one of the major sub-industries of the legal profession. When I no longer need a lawyer to submit my taxes, I'll start caring about corporate tax loopholes.

This isn't really about tax loopholes. It's about France being uncompetitive and unwilling to change. Google advertisers sign contracts with a company in Ireland because Ireland decided to effectively not apply corporation taxes (i.e. use a low rate and allow a variety of schemes that reduce the real rate even further). They did this fully knowingly ... the policy has been popular with voters ... because they wanted…

It's completely within the right of Ireland and Irish citizens to promote investment by lowering the tax rates, as it is within the right of France and French citizens to tax companies that earn profits in France according to French tax law.

I really don't see a problem.

Re: Google's Paris HQ raided in tax probe

#50

Post by schoen »

rmc wrote: post #28
lloyd-christmas wrote: post #15

Earlier quoted context omitted.

Solution: Get rid of tax law as one of the major sub-industries of the legal profession. When I no longer need a lawyer to submit my taxes, I'll start caring about corporate tax loopholes.

Is this actually a thing in USA? Where you need a lawyer to do your taxes? Cause I'm in the EU, and this never happens.

Most individuals don't hire lawyers for their individual income tax filings in the U.S., but most large businesses do.

A lot of individuals do hire tax accountants who help them prepare their tax filings (and can advise them about their eligibility for certain tax benefits and statuses, including how to characterize certain income and expenses). Tax accountants are generally not lawyers, but have expertise about the tax system. However, I think this is only common for people who are wealthy, self-employed, own a house, own a business, or have some complication like having income in or living partly in multiple countries. I don't think it's very common for people who rent their homes and have only employment income from working for others.

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