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Spanish authorities raid Google offices over tax

reuters.com

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Re: Spanish authorities raid Google offices over tax

#21

Post by ForHackernews »

zo1 wrote: post #13
alkonaut wrote: post #10

Earlier quoted context omitted.

How can this still be possible? Shouldn't all tax legislation be such that if you break the spirit of it by having internal transfers (royalties, fees, interest) to a low-tax area, then you are still taxed based on the business that you had in the country in question, and not based on the net sum (i.e. zero). The current state of tax law is that a billion dollar company pays almost no taxes but a million dollar compa…

" Are countries, simply put, afraid to put an end to tax schemes like this, because it would just mean that Ikea or Google would pack up and leave? " In an "odd" application of market-competition, that is precisely what happened. Countries where Google generally did business wanted to tax Google at some X. Then along came Ireland, or Google found Ireland, and saw that they could do some legal paperwork and pay Irelan…

It seems like they should just assess tax liability based on something other than where a company locates its headquarters.

Maybe in order to do business in jurisdiction X, where "doing business" == "selling ads" in Google's case, you have to pay taxes to X.

Re: Spanish authorities raid Google offices over tax

#22

Post by ForHackernews »

josephg wrote: post #16

I would expect google to keep all financial documents inside Google Drive. In doing so, I wonder what is left in the office for the Spanish authorities to find in a raid? (Google is ruthlessly paperless internally.)

Google Docs sets browser cookies. If you have a surprise raid with logged-in workstations, you have access to Drive documents as well.

Re: Spanish authorities raid Google offices over tax

#23

Post by kuschku »

merb wrote: post #19
SixSigma wrote: post #2

Google uses Bermuda (a British overseas territory) to avoid tax liability in the EU “Google has paid €8.8 billion in fees to Bermuda,” S&D group MEP Peter Simon complained. [1] The irony being that the current president of the European Commission, Jean-Claude Juncker, was Prime Minister of Luxembourg when his administration was organising the low tax environment. [2] [3] And now the EU claims that "the Anti Tax Avoid…

Exactly the same man makes speeches that these agreements are bad. And that tax ways needs to be public. I only have german articles but this guy is really really akward.

Well, he’s a career politician.

Other career politicians you should know: David Cameron, Boris Johnson, Hillary Clinton, Barack Obama, Angela Merkel, etc.

They do not have much of an own opinion they want to push – often they couldn’t care much, as both solutions would be okay for them.

So they vote for whatever polls or lobbies say is popular or profitable.

This isn’t necessarily bad – Merkel has been called at times the "walking infratest-dimap poll", specifically because she always pushed through whatever the people considered important according to polls. Kinda democracy, I guess.

But, in general, it’s nothing awkward, or special – in fact, it’s the way most of politics has been in the past decades.

And considering the alternatives of politicians that are still idealistic, which at the moment are only right-populists like Trump, Farage, Petry, Le Pen, I’m wondering if, for now, career politicians might not be the better solution.

Re: Spanish authorities raid Google offices over tax

#24

Post by spriggan3 »

zo1 wrote: post #13
alkonaut wrote: post #10

Earlier quoted context omitted.

How can this still be possible? Shouldn't all tax legislation be such that if you break the spirit of it by having internal transfers (royalties, fees, interest) to a low-tax area, then you are still taxed based on the business that you had in the country in question, and not based on the net sum (i.e. zero). The current state of tax law is that a billion dollar company pays almost no taxes but a million dollar compa…

" Are countries, simply put, afraid to put an end to tax schemes like this, because it would just mean that Ikea or Google would pack up and leave? " In an "odd" application of market-competition, that is precisely what happened. Countries where Google generally did business wanted to tax Google at some X. Then along came Ireland, or Google found Ireland, and saw that they could do some legal paperwork and pay Irelan…

> The point I'm making is that Google did pack up and leave

No they did not. There is a Google Spain and a Google France. They can't escape the Spanish law or the french law if they have an office in these countries, no matter where Google trully is incorporated, and there is an obvious reason why they have officies in these countries.

So what Google Spain and Google France do is that they pay huge fees to Google Ireland for the use of Google brand, so they never make a profit officially, then the money is ex filtrated from Google Ireland to tax havens.

But they did not leave Spain nor France.

Re: Spanish authorities raid Google offices over tax

#25

Post by charlesdm »

alkonaut wrote: post #10
SixSigma wrote: post #2

Google uses Bermuda (a British overseas territory) to avoid tax liability in the EU “Google has paid €8.8 billion in fees to Bermuda,” S&D group MEP Peter Simon complained. [1] The irony being that the current president of the European Commission, Jean-Claude Juncker, was Prime Minister of Luxembourg when his administration was organising the low tax environment. [2] [3] And now the EU claims that "the Anti Tax Avoid…

How can this still be possible? Shouldn't all tax legislation be such that if you break the spirit of it by having internal transfers (royalties, fees, interest) to a low-tax area, then you are still taxed based on the business that you had in the country in question, and not based on the net sum (i.e. zero). The current state of tax law is that a billion dollar company pays almost no taxes but a million dollar compa…

A royalty, by default, is still payment for something. Take two identical cars, one with the Audi brand, and one without. What's the brand value now then? You should be able to deduct a part of your profit if said IP is held in a lower tax jurisdiction, which will almost always be the case, since multinationals have bases in many different countries.

Re: Spanish authorities raid Google offices over tax

#26

Post by anonymousDan »

zo1 wrote: post #13
alkonaut wrote: post #10

Earlier quoted context omitted.

How can this still be possible? Shouldn't all tax legislation be such that if you break the spirit of it by having internal transfers (royalties, fees, interest) to a low-tax area, then you are still taxed based on the business that you had in the country in question, and not based on the net sum (i.e. zero). The current state of tax law is that a billion dollar company pays almost no taxes but a million dollar compa…

" Are countries, simply put, afraid to put an end to tax schemes like this, because it would just mean that Ikea or Google would pack up and leave? " In an "odd" application of market-competition, that is precisely what happened. Countries where Google generally did business wanted to tax Google at some X. Then along came Ireland, or Google found Ireland, and saw that they could do some legal paperwork and pay Irelan…

"Then along came Ireland."

This is utter nonsense. The problem is US tax repatriation laws introduced during the Clinton administration that allow US companies to leave their profits offshore in countries such as Bermuda or the Cayman Islands. Since they are only taxable on repatriation to the US, they pay no tax on them. Instead, they pressure Congress to introduce 'one-off' tax amnesties that allow them to repatriate at a much lower rate. This problem could be solved tomorrow if US politicians rescinded those tax laws. Ireland has no legal right to tax those profits, since they are earned by parent US company e.g. Google US. Which is perfectly correct, since the foundation of most of those profits are the intellectual property created primarily by the parent company. Don't let US politicians pull the wool over your eyes that this is a problem over which they have no control. In case you're interested, here's a good article that gives more background: http://www.rollingstone.com/politics/news/the-biggest-tax-sc...

Re: Spanish authorities raid Google offices over tax

#27

Post by josu »

ForHackernews wrote: post #22
josephg wrote: post #16

I would expect google to keep all financial documents inside Google Drive. In doing so, I wonder what is left in the office for the Spanish authorities to find in a raid? (Google is ruthlessly paperless internally.)

Google Docs sets browser cookies. If you have a surprise raid with logged-in workstations, you have access to Drive documents as well.

Just to give some context, a few years ago the Spanish Police arrested the leaders of Anonymous [1]. As a Spaniard, my opinion is that this is just an intimidatory and political move.

[1] http://www.cnet.com/news/spain-says-it-has-arrested-anonymou...

Re: Spanish authorities raid Google offices over tax

#28

Post by kuschku »

tobias3 wrote: post #18
alkonaut wrote: post #10

Earlier quoted context omitted.

How can this still be possible? Shouldn't all tax legislation be such that if you break the spirit of it by having internal transfers (royalties, fees, interest) to a low-tax area, then you are still taxed based on the business that you had in the country in question, and not based on the net sum (i.e. zero). The current state of tax law is that a billion dollar company pays almost no taxes but a million dollar compa…

Just yesterday they put a whistleblower which published such tax evasion schemes in connection with Luxembourg into prison (LuxLeaks). They ruled that illegal state aid, because the Luxembourg tax authorities actively helped the companies setting up this scheme. The then prime minister and ex-finance minister of Luxembourg Jean-Claude Juncker is now EU Commision president. So either he is incompetent and did not know…

> With the EU leadership being corrupt or incometent, it is no wonder the big companies are dancing circles around the national tax authorities.

Well, it’s more like the EU can not do anything while the national authorities can veto them, and the national authorities still have the competence for that, and the right-populists in the EU are proposing even less power for the EU authorities.

Re: Spanish authorities raid Google offices over tax

#29

Post by slv77 »

Kristine1975 wrote: post #7
SixSigma wrote: post #2

Google uses Bermuda (a British overseas territory) to avoid tax liability in the EU “Google has paid €8.8 billion in fees to Bermuda,” S&D group MEP Peter Simon complained. [1] The irony being that the current president of the European Commission, Jean-Claude Juncker, was Prime Minister of Luxembourg when his administration was organising the low tax environment. [2] [3] And now the EU claims that "the Anti Tax Avoid…

If Google paid €8.8b in fees to avoid paying taxes, just how much taxes are we talking about? Also seconding vmateixeira: Thanks for your research!

Typically the firm creates a subsidiary that holds its intellectual property like patents, software and trademarks in a tax haven like Bermuda. Since there is no operations or R&D in those locations they may have little or no employees.

The subsidiaries in the high tax jurisdictions then license the IP from the Bermuda entity which siphons off profits.

Without the IP cross licensing deals the French subsidiary would have access to Google's IP at no cost which would inflate their profits enormously. To offset this Google would need to build R&D centers in each market.

While either scenario would likely benefit France it wouldn't likely be beneficial to Google.

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