Spanish authorities raid Google offices over tax • Hacker News Board

Re: Spanish authorities raid Google offices over tax

#231

Post by ransom1538 » Thu, Jun 30, 2016, 5:38 PM UTC

melenaboija wrote: post #111

I don't think there is a justification for big corporations to do what they do and they have to be pursued. I've been working for a bank in a tax haven in Europe and I've seen that financial engineering powerful people use has been a known and accepted tool for the governments for a while, and now that Europe is living a financial crisis governments start asking. These companies play in an absolutely different league…

Tax cheats.

26 U.S. Code § 7201 - Attempt to evade or defeat tax:

"Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law"

I have worked at companies performing the "double-irish". True, they aren't prosecuted. But legal? Because a british lawyer says it is? 26 U.S. Code § 7201 is extremely easy to read and meant to be very vague. It isn't complicated. They "could be viewed as" breaking the US law and that is enough for some IRS investigators. Why they don't? Further: https://upload.wikimedia.org/wikipedia/commons/c/c3/Double_I...

The above info graphic clearly shows an attempt to defeat the US the 26 U.S. Code § 7201. This is not only illegal but morally reprehensible.

Re: Spanish authorities raid Google offices over tax

#232

Post by varjag » Thu, Jun 30, 2016, 5:38 PM UTC

aianus wrote: post #160

spriggan3 wrote: post #24

Earlier quoted context omitted.

> 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 Ire…

Google Search and Adwords are not developed in Spain or France. In effect these subsidiaries are just local distributors for a US product. If Apple sells an iPhone (developed in the US and built in China) to retailers in Paris, should they have to pay French income tax on the entire profit of the phone? Of course not, that's ridiculous, even if the retailer is an Apple subsidiary.

> Google Search and Adwords are not developed in Spain or France. In effect these subsidiaries are just local distributors for a US product.

Neither they are developed in Ireland, but they chose to pay their tax there. Perhaps that's significant.

Re: Spanish authorities raid Google offices over tax

#233

Post by euyyn » Thu, Jun 30, 2016, 5:39 PM UTC

pfortuny wrote: post #115

peralta wrote: post #103

Earlier quoted context omitted.

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.

You are right. However, as with everything, he (Montoro) does as he wishes: they started doing this just last year... the Law comes from 2003. Last year we started the cycle of these lists. Last year was... election year! Edit: last year, not two ago.

You're aware that Montoro hasn't been the only minister since 2003, right?

Re: Spanish authorities raid Google offices over tax

#234

Post by venomsnake » Thu, Jun 30, 2016, 5:43 PM UTC

effie wrote: post #226

venomsnake wrote: post #205

Earlier quoted context omitted.

They are not theft, because a human does not have innate property rights(or any other kinds of rights for that matter). All your rights are provided and guaranteed by the state.

In the western society, people do have rights in fact, even if not granted formally by some government. This is because vast majority of other people respect those rights, without needing government to tell them. For example, most people accept my right to wear red shoes. Nobody really gave me that right; it is obvious. Similarly for the right to private ownership, the right to express myself and the right to move.

State != government. Also try putting brown shirt in Germany on whose shoulder there is red band with white circle. In which circle inside there is black painting in the shape of bent cross ... and we will see exactly what the western government of Germany thinks of your fashion choices and your freedom to express yourself. Hint - your right to move may be somewhat in peril.

Re: Spanish authorities raid Google offices over tax

#235

Post by antr » Thu, Jun 30, 2016, 5:48 PM UTC

simonh wrote: post #227

antr wrote: post #168

Earlier quoted context omitted.

I'm an energy investor and get to work with tax advisors and lawyers very often in order to maximise tax structures and cash repatriation. Everything we do is approved by tax authorities and positively seen by our shareholders. I agree to a certain extent with you that companies are acting rationally. I can assure you it's my responsibility to make the best use of these tools. However, the direct and indirect pressur…

Ok, but that's not tax avoidance because the companies are absolutely following government rules. Given the choice of having billions of dollars of investment in their country and thousands of jobs but no corporate tax; or no investment and no jobs and no tax, those governments are making a rational choice. The real problem comes when these deals disadvantage local businesses competing with the big foreign conglomera…

who said tax avoidance?

Re: Spanish authorities raid Google offices over tax

#236

Post by spangry » Thu, Jun 30, 2016, 5:48 PM UTC

charlesdm wrote: post #41

slv77 wrote: post #29

Earlier quoted context omitted.

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…

But how does not licensing IP make sense? That creates a whole set of new problems, i.e. why should affiliated parties allow IP to be licensed for free, where the same expenses would be tax deductible for unaffiliated parties?

You've actually hit on the basic 'integrity rule' for these kinds of arrangements (at least in Australia): foreign related entities must charge on-shore related entities using 'arms-length' pricing (the 'transfer pricing' rule). Same goes for the interest rates on loans made by foreign related entities, because the interest is deductible against gross profits (the 'thin capitalisation' rule). I've simplified somewhat, but this is the basic thrust of the law.

Companies will end up in court when their definition of an arms-length price/interest rate is significantly higher than what the national tax authority considers to be reasonable. However, having worked in the offshore tax-haven unit in the Australia Taxation Office (I even went on a tax raid once), and then subsequently worked in tax policy for a few years, I don't think things clear cut with google (and others). I'm not even sure that transfer pricing and thin cap are particularly relevant issues.

In general, I think this issue is much bigger than a simple case of companies crossing the line on transfer pricing and thin cap rules. 'Tech capital' is extremely mobile; it can literally be moved from one country to another in a matter of hours. This creates strong incentives for countries to undercut each others' corporate tax rates to attract that capital. Tax havens (and Ireland) are extreme examples of this. The only way to extract any meaningful amount of tax from tech multinationals is through some kind of international agreement on minimum corporate tax rates (one that is ratified by countries representing a large enough proportion of the world economy). You'd also have to apply trade sanctions to any country, signatory or not, that goes below this minimum threshold.

In short, it's unlikely google and others will have to pay their 'fair share' of tax any time soon. This might sound defeatist, but I think countries will need to shift their tax burden on to less mobile (and therefore, more economically efficient) bases, such as domestic consumption and land.

Re: Spanish authorities raid Google offices over tax

#237

Post by pdkl95 » Thu, Jun 30, 2016, 5:49 PM UTC

JoshTriplett wrote: post #105

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…

> In general, politics is almost always off-topic here

This attitude is one of the most damaging flaws in tech culture. There is this idea that engineering, design, and sometimes even business are somehow outside of politics, which is absolutely incorrect.

Politics is simply how humans interact to negotiate the mechanics of society. Creating a good or service has political consequences. Often these consequences are small, but modern technology has had an amplifying affect on political consequences that has grown rapidly. Silicon Valley culture even has a word that recognizes this: "disruption".

As politics is increasingly important in technology, traditional powers have started to fight back. A good example is the current drama over encryption (Apple/FBI, WhatsApp/India, etc); giving people the ability to communicate without government (or other) eavesdropping is not only a political act, it's also a significant shift in power that upsets the traditional political equilibrium. Local tax law is merely the current battlefield.

When you create something that affects people - even in small ways - you are taking a political position. Pretending that your work is somehow outside of politics doesn't make technology and engineering politically neutral. Ignoring politics is still a political statement; you're saying you don't care about the political consequences, which is irresponsible.

> there are many other places to discuss politics

HN is exactly the place that the politics of technology should be discussed.

> reduce the quality ... of the discussion

While I agree that rudeness, personal attacks, and other low-quality rhetoric should be discouraged, remember that attempting to silence political discussion is itself a political statement. You aren't removing politics completely; you're de facto stating that any point of view outside the status quo shouldn't be heard.

--

There is "no neutral ground in a burning world"[1]. Please consider and discuss (politely) the political consequences of technology as we integrate it into our lives. If you don't, someone else will.

[1] https://media.ccc.de/v/30C3_-_5491_-_en_-_saal_1_-_201312272... (transcript: http://opentranscripts.org/transcript/no-neutral-ground-burn... )

Re: Spanish authorities raid Google offices over tax

#238

Post by hueving » Thu, Jun 30, 2016, 5:52 PM UTC

bobwaycott wrote: post #224

downandout wrote: post #201

Earlier quoted context omitted.

There are legitimate discussions that can be had about the specific strategies that companies should use to maximize shareholder value. For example, paying higher wages might mean better employees and ultimately more profits despite the increased costs. Long-term investments in R&D might result in higher overall value for the company, despite the short-term hit to the balance sheet. However, I don't think a legitimat…

That you cannot think of such an argument doesn't mean much. That such possible arguments wouldn't obtain "legitimacy" in your mind explains far more about your conception of the role of business in society. There are no optional taxes—any company that actively seeks ways to avoid taxes is not dealing justly or ethically with the society in which it exists. The same goes for citizens. A healthy and just society canno…

You are free to overpay on your taxes as well. I assume based on your reasoning that you give the government your entire income minus expenses.

Governments have the ability to levy taxes. If they need money they should levy a tax. It's that simple. There is no 'right amount' that a company should be paying that is more than the law requires them to pay.

Re: Spanish authorities raid Google offices over tax

#239

Post by _rpd » Thu, Jun 30, 2016, 5:52 PM UTC

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.

More likely someone said "The French are raiding them, why aren't you!?" at a dinner party.

Re: Spanish authorities raid Google offices over tax

#240

Post by downandout » Thu, Jun 30, 2016, 5:52 PM UTC

bobwaycott wrote: post #224

downandout wrote: post #201

Earlier quoted context omitted.

There are legitimate discussions that can be had about the specific strategies that companies should use to maximize shareholder value. For example, paying higher wages might mean better employees and ultimately more profits despite the increased costs. Long-term investments in R&D might result in higher overall value for the company, despite the short-term hit to the balance sheet. However, I don't think a legitimat…

That you cannot think of such an argument doesn't mean much. That such possible arguments wouldn't obtain "legitimacy" in your mind explains far more about your conception of the role of business in society. There are no optional taxes—any company that actively seeks ways to avoid taxes is not dealing justly or ethically with the society in which it exists. The same goes for citizens. A healthy and just society canno…

You're entitled to your opinion (even if expressed in an insulting way, as you did here), and I'm certain that there are ways for you to maximize your personal tax bill to help satisfy the social responsibility that you feel others have. Lead by doing. However, I don't think you'll find tax maximization strategies in use at any major corporation, now or at any time in the future, and I'd expect shareholder lawsuits if they were ever utilized.