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France Plans 5% Digital Tax as Governments Chase Internet Giants

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Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#101

Post by gamblor956 »

alkonaut wrote: post #68
snarf21 wrote: post #62

Earlier quoted context omitted.

As others have said, it isn't evasion but avoidance. The issue is that there a lot of ways to put the money on the books wherever you want it. Let's say you want to sell mobile phones. You could create one company in France that builds, buys and sells phones. In this case it becomes pretty clear it is a French company and all the money will be taxed in France. But let's say you have that same company and split it up…

The difference between avoidance and evasion is only relevant if you have tax law interpreted to the letter only. Tax law should be interpreted by the lawmakers intention and companies should be ready to be fined or uptaxed if authorities find they pay less taxes than is reasonable given global profits and relative turnover within their jurisdiction. Constructs such as paying “royalties” to parent companies, or takin…

Enforcement of tax law is based on the spirit of the law, not just the text. Things which are legal for a few years could become illegal the best without any change in the tax laws themselves, though this is only a real risk if you structure your activities within the letter of the law but not the intent of the law.

(I'm a tax lawyer.)

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#102

Post by bobl »

TomVDB wrote: post #61
bobl wrote: post #59

Earlier quoted context omitted.

Europe is losing ~globalization and we are fighting over the scraps. Which European country do you think will be overall obviously better in ten years? And not in the sense that "everything gets better", but in the sense of having a high rate of success in converting progress to prosperity. I don't know of any.

What exactly are they losing?

Essentially competitiveness. Countries that are, or at least aspires to be, competitive would be restricting foreign companies and invest in infrastructure. While Europe is doing the opposite. We are selling our companies and restricting the building of infrastructure.

And while you can point to specific examples, like startups, that are successful in Europe it is mostly an illustration of how much we are leaving on the table.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#103

Post by r00fus »

jsty wrote: post #98
iguy wrote: post #79

Can anyone comment on how this interacts with the idea of the single market? Why can Google Ireland Ltd. be charged a special tax for doing business in France? In my (limited) understanding I thought this was not supposed to happen, and that most goods and services could automatically be sold EU-wide. France could not charge import duties on Guinness trucks, nor demand that beer good enough to be sold in Ireland is n…

There is already a difference in tax (VAT) rates based on the consumer's location. This move would be distinct from import duties or product standards in that it's not really creating a clear barrier to sales across the single market. On the other hand, the really quite high threshold might well be subject to complaints on the basis of distorting the single market. All the large multinationals that would hit the thre…

Wouldn’t it be more accurate to say that it’s correcting an imbalance?

Google operates in France but is able to undercut France businesses for digital content sold to French people ( merchandise is traceable ) because it happens to have an Ireland operation?

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#105

Post by sbacic »

TomVDB wrote: post #61
bobl wrote: post #59

Earlier quoted context omitted.

Europe is losing ~globalization and we are fighting over the scraps. Which European country do you think will be overall obviously better in ten years? And not in the sense that "everything gets better", but in the sense of having a high rate of success in converting progress to prosperity. I don't know of any.

What exactly are they losing?

As a European, I feel like the EU, in general, is on the losing side of globalization.

There is not a single European internet company in the top 15. I think part of the reason for this is cultural (aversion to risk), part of it is due to the environment (relatively low salaries for IT, limited access to venture capital) and a part of it is due to bad policies being enacted by the EU - most notably the EU VAT on digital services, the GDPR and now the Copyright directive.

When it comes to digital services, Europe is seen as a place to sell things, not make them. This state of affairs has left Germany and France bitter over the success of American tech giants, particularly as they put ever increasing pressure on local businesses. So the EU reacted in pretty much the only way it knows how - by introducing legislation against said businesses. This had the unintentional consequence of targeting European tech startups as well, making Europe an even worse place to start a new business than it already was. Instead of a single digital market, you have 28 different national markets, each with their own rules and regulation, only ~11 of which are actually interesting due to their size and purchasing power.

At the same time, austerity policies enacted after the 2008 recession have resulted in cuts in the scope and quality of public services. Prices for most goods and services are rather high. The middle and lower classes are particularly hard hit, leaving many to wonder whether globalization is worth it.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#106

Post by meuk »

crazygringo wrote: post #74
alkonaut wrote: post #68

Earlier quoted context omitted.

The difference between avoidance and evasion is only relevant if you have tax law interpreted to the letter only. Tax law should be interpreted by the lawmakers intention and companies should be ready to be fined or uptaxed if authorities find they pay less taxes than is reasonable given global profits and relative turnover within their jurisdiction. Constructs such as paying “royalties” to parent companies, or takin…

That would be a nightmare. First, tax laws don't have clear intentions to begin with -- if a tax law passes with 51 out of 100 votes in the legislature, all 51 representatives could be supporting the "letter" of the law for 51 different actual intentions, many of which might not be noble in the first place (e.g. give a particular local factory a tax break to win more votes next election). Second, because of this, "in…

I don't think it is unheard of to have a judge interpret the intention of a law.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#107

Post by gizmo686 »

Marazan wrote: post #75
nradov wrote: post #69

Earlier quoted context omitted.

It's unreasonable to expect judges to divine lawmakers' intent on subtle issues of tax policy. If lawmakers want a tax to work a certain way then they need to just write that down so that it's clear to everyone.

You liter ally put it in a preamble. Like, if you say "this tax break is intended solely for people who sell second hand cars" then you don't have to spend 100 pages exactly specifying every nuance to 100% prevent people not selling second hand cars from taking advantage of it. Ots called principles based tax code and it works. I was initially high sceptical of the idea but, based on outcomes, it is a vastly superior…

If it is that simple, you can add a clause to the law that makes selling second hand cars a requirement.

Then you have to clarify how much of your expanses are eligable. Just those directly involved in the sale? Upkeep of your main facility? Upkeep of your satalite corporate offices? Your finance division?

What if you sell new and used cars? What if you are actually a battery manufacturer that makes and sells cars and also buys back and resales used cars?

What if you are a software engineer who sells your current car every 6 months?

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#108

Post by Proven »

yann63 wrote: post #2

Couldn't we just ban tax evasion? What makes it so hard? (honest question) A recent European study has shown that the more company win money, the less they pay in taxes (in percentage). Is it because of bad laws? Corrupt politicians? Something else?

> Is it because of bad laws?

No, it's because of the good laws. Taxation is theft.

And it's not called tax evasion but tax planning. No one is obliged to pay more than the minimum.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#109

Post by sbacic »

laurentl wrote: post #89
throwaway_9168 wrote: post #76

This reminds me of a horrible tax I came to know of recently - something called the EU VAT MOSS on digital goods. Apparently, it is supposed to target giants like Amazon who route money via multiple countries to evade taxes. Not surprisingly, this ends up affecting the smallest players most drastically. Worst, the glib language used to describe who should pay the tax is utterly confusing. As always, this means the ac…

I didn’t know what this was, so I checked ( https://europa.eu/youreurope/business/taxation/vat/vat-digit... ). Long story short: MOSS stands for “mini one stop shop” and looks explicitely designed to make it easier to sell across the EU . > The Mini One-Stop-Shop (MOSS Scheme) enables you to supply digital services within the EU without the need to register in each EU country you supply to. It can be used by both EU-…

I can sell services domestically up to a limit of about 40,000 euros before I need to register and account for VAT. If I make even a single EU sale, I must immediately register for VAT and pay tax on that sale, either through MOSS or directly to the country my customer is in. The EU is now "generously" considering introducing a limit of 10,000 euros before you need to register for VAT.

I also need to disagree with the parent poster - the rules for what is and is not a digital service are relatively clear - but not clear enough that your local tax officials understand it, apparently. I've had situation where my local tax agency incorrectly interpreted that my services (freelance software development) could be construed as being digital services and thus could fall under this scheme.

Due to this and various other reasons, I am considering emigrating from Europe - some back of the napkin calculations show that I could live a comfortable middle to upper middle class lifestyle in other parts of the world just on the tax difference.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#110

Post by throwaway_9168 »

laurentl wrote: post #89
throwaway_9168 wrote: post #76

This reminds me of a horrible tax I came to know of recently - something called the EU VAT MOSS on digital goods. Apparently, it is supposed to target giants like Amazon who route money via multiple countries to evade taxes. Not surprisingly, this ends up affecting the smallest players most drastically. Worst, the glib language used to describe who should pay the tax is utterly confusing. As always, this means the ac…

I didn’t know what this was, so I checked ( https://europa.eu/youreurope/business/taxation/vat/vat-digit... ). Long story short: MOSS stands for “mini one stop shop” and looks explicitely designed to make it easier to sell across the EU . > The Mini One-Stop-Shop (MOSS Scheme) enables you to supply digital services within the EU without the need to register in each EU country you supply to. It can be used by both EU-…

The fine print around who actually needs to pay. A very simple example - say you sell online courses. Should you register for VAT?
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