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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

#111

Post by jsty »

r00fus wrote: post #103
jsty wrote: post #98

Earlier quoted context omitted.

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?

IIRC, under EU VAT regs Google Ireland will charge and remit French VAT rates to the French treasury for digital content sold to consumers in France, so there's no imbalance there.

The big issue is that digital services, particularly advertising, are so insanely profitable that most governments would also like to get their hands on a proportion of the profits accruing from sales of digital services in their country. They see the fact that Ireland / Luxembourg are able to book all the profit in one jurisdiction as unfair. There's probably not a huge likelihood of that happening any time soon at an EU level, so France has gone with the next best option from their POV.

(Tax avoidance strategies that allow a large multinational to not pay much tax to their host country is a different kettle of fish, since most of the benefit of tackling those would probably accrue to the country of incorporation not France - e.g. the Apple settlement)

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

#112

Post by cpursley »

iguy wrote: post #84
cheerlessbog wrote: post #78

Earlier quoted context omitted.

That wouldn't prevent some of the shenanigans described above. For example, giving my IP away for cheap to a subsidiary in a low tax jurisdiction that actually performs the sale.

No, it would, that's the point. If your subsidiary in the Bahamas sells something in France, it pays French VAT.

Exactly!

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

#113

Post by throwaway_9168 »

Nimitz14 wrote: post #87
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…

It took me 5min of googling to find out VAT MOSS > MOSS means you don't need to register with tax authorities in every EU country you sell to, instead, you can register for VAT, file VAT returns and make payments in one single place. Sounds pretty great to me.

>> Sounds pretty great to me.

I see. Do you mind spending another 5 and tell the answer to this question: suppose someone sells online courses. And they don't themselves reside in the EU, but the have customers who do. Should they register for VAT?

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

#114

Post by cpursley »

lr4444lr wrote: post #88
cpursley wrote: post #60

Earlier quoted context omitted.

Banning tax evasion is easy. Just get rid of corporate income taxes and replace it with a sales tax. It's not like corporations pay taxes anyways; their customers do as tax is built into the cost of products.

... and you ban cash and all ad hoc barter networks. Good luck.

Make cash / ad hoc tax free. Want to avoid tax? Buy used!

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

#115

Post by iguy »

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…

On reflection, maybe I can answer my own question (but tell me if I'm wrong):

The EU rules demands that, in the market for beer (or trains or spyware) sold in France, the French govt. cannot favor French companies over Irish companies. The buyer must be free to buy from any of them on equal terms.

But it does not demand that the market for goods sold in Dublin is identical to the market for goods sold in Paris. Hence the VAT rates may differ, as may other more narrowly focused taxes, like on alcohol, or hotels. This tax is one more like that. A sin tax on spyware.

Edit: There remains the issue of deciding where a sale took place. Alcohol to be drunk in Paris has to be physically in Paris (even if the sin tax is collected long before the final sale), but an advertisement shown in Paris could have been bought by a company elsewhere. Why can't every French ad agency open a one-man office in Dublin to avoid this?

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

#116

Post by Marazan »

gizmo686 wrote: post #107
Marazan wrote: post #75

Earlier quoted context omitted.

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 an…

But what if the people 'engaged' in the selling of the cars are only tenuously engaged in the activity and are simply trying to game the law and rack up paper losses?

All the car buying and selling is racked up by agents working on their behalf and they pay absolutely no heed to buying a selling cars?

http://www.mynewsdesk.com/uk/hm-revenue-customs-hmrc/pressre...

https://www.theguardian.com/media/2014/feb/21/chris-moyles-u...

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

#117

Post by sbacic »

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…

> On the other hand, the really quite high threshold might well be subject to complaints on the basis of distorting the single market.

It probably should, but this is certainly not the first time a EU member country has tried (and gotten away with!) protectionism. Some other examples are stricter safety/quality standards that only (surprise!) local businesses' meet and government guarantee of private company debt (I have no idea how this is legal).

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

#118

Post by sbacic »

r00fus wrote: post #103
jsty wrote: post #98

Earlier quoted context omitted.

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?

If the imbalance is that an Irish company is more competitive than a French one, then no, not really.

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

#119

Post by ip26 »

snarf21 wrote: post #62
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?

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…

Suddenly it strikes me that one fix might be eliminating international subsidiaries. It's possible it would be hard to enforce in practice, but the crux of the problem is the absence of a competitive relationship & autonomy between these supposedly independent companies.

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

#120

Post by yann63 »

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?

Thanks a lot to all your answers.

My question was badly formulated. I meant to ask: why are we tolerating this situation?

Regardless of tax evasion / tax optimization or whatever is the wording, most people agree that these companies are not paying the amount of taxes they should. I get the why and how these companies are doing this. I just don't understand why we, as a society, accept that. Our society has never been so rich, yet we see decline in education, health, etc. I do think we should only have progress: more culture, better life, less work, etc.

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