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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

#101

Post by collyw »

drzaiusapelord wrote: post #83
conradfr wrote: post #8

I heard someone related to the Paris office raid comment when that happened. She was saying that multinational corporations always say that their organization and tax schemes are legal but that in reality it's so complex and spread in multiple countries that nobody really knows for sure and so it's only legal by default.

> so it's only legal by default. The idea that bureaucrats can make enough laws that we know exactly what action ever taken in the future is "illegal or not" is pure Orwellian. Most things in life are legal by default. This is no different.

Actually I read somewhere that it differs by country. I think the UK is legal by default unless the law specifically makes it illegal. While in Germany its illegal by default unless it is specifically made legal. (I am no expert, it was probably a comment I read on here).

Re: Spanish authorities raid Google offices over tax

#102

Post by AnthonyMouse »

alkonaut wrote: post #69
AnthonyMouse wrote: post #33

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 based on the net sum (i.e. zero). How would that even work? The costs are actually costs. Imagine it was actually a dozen different companies. On…

> How would that even work? The costs are actually costs. I'm not sure how it would work. Corporate income taxes don't make much sense in itself of course. The profits could be taxed as cap gains and everyone would be happy - so long as companies weren't multinational. The problem here is that a company may be making a huge profit in some country by using resources paid for by tax money in that country (such as roads…

> The only solution to this problem if you do have corporate income tax is to establish how much profits Uber actually made in each country, and have the profits taxed correspondingly.

The problem is that's not how profit works. There is no "in each country" to calculate. They paid $15B to employees in 20 countries and then made $20B in revenue from 20 countries. There is then $5B of international profit, but how much of the profit belongs in each country is completely arbitrary. There is no objective reason that it should be where the software was developed vs. where the software is used vs. where the owner of the company lives etc.

The standard they try to use for these things is what would be negotiated in arms length transactions, i.e. as if each of the subsidiaries had separate ownership. So one entity pays $1000 to develop software, another can make $1200 in revenue if they buy the software, what price do they negotiate? It's ostensibly going to be something between $1000 and $1200, but whether it's $1020 or $1180 is down to the negotiating skill of the parties. Both numbers are completely reasonable and might be seen in actual transactions. But the difference determines where 90% of the total profits go! It's clearly then going to be quite plausible to arrange for the profits to end up where you want them, which is what happens.

Re: Spanish authorities raid Google offices over tax

#103

Post by peralta »

pfortuny wrote: post #60

Another PR stunt of the minister, Montoro. No more than that. He also makes public a lost of debtors to the IRS (which should be illegal but he gets away with anything). Edit: Spaniard here.

It might be PR, but he's just basically following the law and not breaking it. Spanish IRS (Hacienda) must publish the list of debtors who owe more than €1M by law.

Re: Spanish authorities raid Google offices over tax

#104

Post by Bromskloss »

Kristine1975 wrote: post #72
Bromskloss wrote: post #49

Earlier quoted context omitted.

I would love to see a police force bursting in, and smoke immediately starting to rise from every computer. I mean, you could do it it software too, but it would look cool and send a signal to the officers. :-) Or you could keep the door locked.

Destruction of evidence?

Maybe so. If you just want the effect, you could release smoke just for show, without actually destroying anything.

Re: Spanish authorities raid Google offices over tax

#105

Post by JoshTriplett »

drzaiusapelord wrote: post #98

>Not sure why you're being downvoted. HN is pretty intolerant of anything that isn't the far left, which is a bit ironic for what's supposed to be an entrepreneurial forum. This change seemed to happen a year or two ago. I suspect HN has been fully "redditized" now with college identity politics being the prominent narrative. The drive-by downvotes are just a symptom of that.

(Off-topic meta-conversation.)

HN tends to downvote any political comments, especially comments that turn the discussion more political, even in a story that already tangentially touches on politics. The HN guidelines more-or-less document the former; the latter seems like a natural consequence. In general, politics is almost always off-topic here; there are many other places to discuss politics.

(Personally, I tend to agree with http://lesswrong.com/lw/gw/politics_is_the_mindkiller/ .)

Downvotes are a symptom of that: people downvote politics they disagree with and upvote politics they agree with. Politics, more so than many other topics, tends to bring out "downvote = disagree", not just "downvote = not a contribution". That's in addition to the people (myself often included) who downvote any comment that turns the discussion more political, because such comments typically reduce the quality and novelty of the discussion.

Re: Spanish authorities raid Google offices over tax

#106

Post by deelowe »

ComodoHacker wrote: post #96

IMO Google is so rich and so profitable that it could afford to pay all taxes due in all countries fairly, without any "optimization", while staying profitable and not undermining any R&D program or long-term project.

Google's infrastructure is almost all custom. There's a lot of people who would be out of a job if there was suddenly a >30% premium added to Google's infrastructure when compared to OEMs. If you want the laws to change, change the laws. The issue is the government, not the companies that are simply playing by the rules.

Re: Spanish authorities raid Google offices over tax

#107

Post by ggggtez »

Thimothy wrote: post #94
sheraz wrote: post #5

Remember that Google was also raided in Paris almost exactly one month ago [1]. [1] - https://www.theguardian.com/technology/2016/may/24/google-of...

I'm going to hazard a guess. The french did found something useful to crack google down in that raid and gave their buddies in Spain a nudge so they can combine the efforts and maybe strike a big one against the Double Irish.

I don't know. It's just as likely they found nothing and asked the Spanish to take a second crack at it. Irish tax law is stupid enough already. Europe sounds like they are jumping the gun.

Re: Spanish authorities raid Google offices over tax

#108

Post by ComodoHacker »

spacehome wrote: post #99
ComodoHacker wrote: post #96

IMO Google is so rich and so profitable that it could afford to pay all taxes due in all countries fairly, without any "optimization", while staying profitable and not undermining any R&D program or long-term project.

As a Google shareholder, I'm quite happy that they optimize everything within the bounds of the law.

Monsters of such scale should be viewed from different points, including social responsibility.

BTW why do you bother as a shareholder, do you receive any dividends?

Re: Spanish authorities raid Google offices over tax

#109

Post by AnthonyMouse »

defen wrote: post #74
AnthonyMouse wrote: post #33

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 based on the net sum (i.e. zero). How would that even work? The costs are actually costs. Imagine it was actually a dozen different companies. On…

> Which is fine, but isn't an income tax and isn't a tax on Google. It kind of is, though, isn't it? The online ad market is theoretically super efficient - if the market clearing price for an ad is $1, and then you add a 10% sales tax, it no longer makes sense to bid / pay $1 for that ad, knowing that you will be out of pocket $1.10. Instead you would bid about 90-91 cents, knowing that it would get marked up to $1…

> It kind of is, though, isn't it? The online ad market is theoretically super efficient - if the market clearing price for an ad is $1, and then you add a 10% sales tax, it no longer makes sense to bid / pay $1 for that ad, knowing that you will be out of pocket $1.10. Instead you would bid about 90-91 cents, knowing that it would get marked up to $1 with tax. Net effect is that Google only makes 90 cents on that ad instead of a dollar, even though they aren't directly paying the tax.

Not if you have to bid against people in other jurisdictions for the same ad spaces. Then the people in the taxing jurisdiction have to bid the market price or lose the auction to someone in another place that doesn't impose the tax. In theory this could have a negative impact on ad prices, but it isn't going to be anything like the entire amount of the tax.

Re: Spanish authorities raid Google offices over tax

#110

Post by scarecrowbob »

CaptSpify wrote: post #92
pyrale wrote: post #89

Earlier quoted context omitted.

I'm not sure the solution to google being perceived by states as running tax laundering schemes is to adopt anti-investigation measures.

How was his question anti-investigation?

The question isn't, but being paperless and cloud-based seems like it would make it more difficult to investigate for the folks investigating.
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