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Italy Approves ‘Google Tax’ on Internet Companies

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Re: Italy Approves ‘Google Tax’ on Internet Companies

#51
post #27

Google became too greedy and this is the result of it. I, for one, in support of this law. You can't harvest billions of profit worldwide, then sneak it all through tax heavens and expect it to continue indefinitely. Someone will get weary of this practice. As a thought experiment, imagine the US reaction if Google was an Italian company - making loads of money in the US and paying 0 taxes :)

The point becomes moot if you eliminate corporate income tax. You want companies to pay salaries, not taxes.

How would this help Italian government? All income would flow up to the US and get eventually taxed there.

Re: Italy Approves ‘Google Tax’ on Internet Companies

#52
post #51

Earlier quoted context omitted.

The point becomes moot if you eliminate corporate income tax. You want companies to pay salaries, not taxes.

How would this help Italian government? All income would flow up to the US and get eventually taxed there.

As is the case with other products and services from other countries. Tax the local businesses that are benefitting from the ads and services.

Re: Italy Approves ‘Google Tax’ on Internet Companies

#53
post #3

Italy: always at the forefront of legislative innovation to kill the internet. Piratebay blocks? Check. Fighting encryption and anonimity? Check. Taxing the crap out of anything that moves? Check. Cutting investments in r&d and universities across thr board? Check. And then they wonder why their economy sucks.

This is a far too simplistic analysis of a multifaceted issue with no single answer. It's the kind of thing I'd expect to hear on Fox.

It's not an analysis, it's a rant, sure. BUT as an Italian, I've seen this over and over and it sickens me.

Italy is one of those very few countries where for years you couldn't legally run an open wifi spot - you had to file ID cards of each and every user, and send them to the police on request. Where the early cypherpunk scene was criminalised and associated with terrorism - the police would just sequester entire servers on a whim, just to collect SSH keys and mailing lists of activists. Where authorities cracked down hard on P2P while at the same time supporting a copyright regime that is much worse than the equivalent US one (the association of publishers and music labels is legally tasked of collecting royalties and copyright-related taxes, with no oversight whatsoever on where the money actually ends up). Where law-mandated DNS blocks were pioneered.

All this in a country with corruption and organised crime at levels unseen elsewhere in Europe, an economy that's been stalling for almost 20 years now, a huge anti-business bureaucracy, and gigantic public debt. It's like, "don't you have anything more urgent to worry about, rather than bothering our Net with laws so inane, even the EU will likely strike them down?"

If this sounds like something out of Fox, I invite you to watch any political talk-show on Italian TV. You think Fox is bad? HA!

The problem at hand is not complicated, but it's something that 1) must be solved at the European level (otherwise, why did we create a unified market?), 2) does not touch real revenues being siphoned to tax havens, which are the real problem -- does Apple sell ads or internet services? not really, but they're THE prime example of this problem, and still won't be touched by this law. It's the usual buffoonery devised by one of the worst political and economic elites in the developed world.

Re: Italy Approves ‘Google Tax’ on Internet Companies

#54
post #17
post #10

The biggest problem with this law is not its effect on google: the way it's written now forbids any Italian internet user from visualizing ads that were not purchased from an Italian company, and this applies to all websites. So while Google might be forced to comply, most international websites won't, rendering them automatically illegal in Italy, which is probably unenforceable. While I agree with the spirit of mak…

Have you read the law? Do it. Rendering is not illegal, but if you're an Italian company you can buy online ads only from another Italian company.

Pardon the italian

17-bis. Al decreto del Presidente della Repubblica 26 ottobre 1972, n. 633, dopo l'articolo 17 è inserito il seguente: «Art. 17-bis – 1. I soggetti passivi che intendano acquistare servizi on line sia mediante operazioni di commercio elettronico sia diretto che indiretto, anche attraverso centri media e operatori terzi, sono obbligati ad acquistarli da soggetti titolari di una partita IVA rilasciata dall'amministrazione finanziaria italiana.   2. Gli spazi pubblicitari on line e i link sponsorizzati che appaiono nelle pagine dei risultati dei motori di ricerca (servizi di search advertising), visualizzabili sul territorio italiano durante la visita di un sito internet o la fruizione di un servizio on line attraverso rete fissa o rete e dispositivi mobili, devono essere acquistati esclusivamente attraverso soggetti, quali editori, concessionarie pubblicitarie, motori di ricerca o altro operatore pubblicitario, titolari di partita IVA rilasciata dall'amministrazione finanziaria italiana. La presente disposizione si applica anche nel caso in cui l'operazione di compravendita sia stata effettuata mediante centri media, operatori terzi e soggetti inserzionisti.

Says here that the law applies to results visible on Italian territory.

Re: Italy Approves ‘Google Tax’ on Internet Companies

#55
post #35

Earlier quoted context omitted.

The point becomes moot if you eliminate corporate income tax. You want companies to pay salaries, not taxes.

Good point. Could you please remind us why this hasn't been done yet? Or where done?

Because then people who own the companies would simply keep the income in the company, and have the company pay as much of their expenses as possible as "business expenses." Essentially, they would get the benefits of the income without anyone actually paying taxes on it. The company would distribute the profits only when absolutely necessary.

Note: this scenario has already been envisioned by tax advisers. Common solutions include either converting corporations to flow-through entities for income tax purposes, or levying penalty rates of income tax on undistributed profits.

Re: Italy Approves ‘Google Tax’ on Internet Companies

#56

Earlier quoted context omitted.

>Just to be clear. On Italian sales, they aren't paying Italy taxes. They're not paying Ireland taxes where they claim the sales are to do a Double Irish. They're not paying Holland taxes where they route the money through to do the Dutch Sandwich. They're not paying the US taxes, they park the money in an offshore account and lobby congress to grant a tax asylum. I know that, and that is a problem. But even if they…

As far as I can see from this article, this law doesn't block German companies from serving German-served ads from German servers to Italians. It doesn't block anyone else outside Italy from serving any ads from anywhere to Italians. It only blocks Italian companies from using US/German-served ads.

>As far as I can see from this article, this law doesn't block German companies from serving German-served ads from German servers to Italians. It doesn't block anyone else outside Italy from serving any ads from anywhere to Italians. It only blocks Italian companies from using US/German-served ads.

Yes, you don't seem to be in disagreement with me. It doesn't block German companies from serving ads off of German servers, featuring Italian businesses. But they can only do so for free. They cannot be paid by the Italian businesses. I find this to be a rather ridiculous restriction on the purchase of services.

Especially if there is no exception allowing Italian companies to use German-served ads to target Germans.

Re: Italy Approves ‘Google Tax’ on Internet Companies

#57
post #35

Earlier quoted context omitted.

Good point. Could you please remind us why this hasn't been done yet? Or where done?

Because then people who own the companies would simply keep the income in the company, and have the company pay as much of their expenses as possible as "business expenses." Essentially, they would get the benefits of the income without anyone actually paying taxes on it. The company would distribute the profits only when absolutely necessary. Note: this scenario has already been envisioned by tax advisers. Common so…

That already happens. It's fraud, and we have enforcement against it.

Re: Italy Approves ‘Google Tax’ on Internet Companies

#58
post #49
post #14

Earlier quoted context omitted.

Regarding "piratebay blocks" and, more generically, DNS censorship: recently, RIPE published [1] usage estimations of 8.8.8.8 by country. It is estimated that 12% of Italian internet users has configured 8.8.8.8 on their machine, which I believe is an astonishing high number! I work at an Italian ISP and we ran some statistics ourselves and found that percentage to be around 5%, which is lower but still massive. If y…

> that means a considerable part of tech-savy users are not using their ISP's DNS (which breaks down many kind of things, among which CDNs). Is every CDN's depended on privileged position inside ISP's? DNS by design is on the edge of the network, and works perfectly fine regardless of who ask the server for a lookup. If the DNS server want to do geo-depended service, they only have to use geo-ip to figure out where a…

DNS requests do not specify who requests the IP address. So think of the problem a CDN has : it has to identify the requesting party's geographical location, based on where the request comes from.

If it comes from 8.8.8.8 then you've got no clue. If it comes from an ISPs recursive DNS you can guess : most ISPs have limited geographical reach. If it comes from Telecom Italia's DNS servers, it's either Italy or the middle east (and due to seabone, you will feed them the same entry point to the CDN)

When a request comes from Google (or for that matter, another global network like Level3) you have a problem. The request doesn't specify where the client is, and the request will be cached. So what do you do ? Which entrypoint do you feed it ? You're essentially stuck with anycast, and that has it's own problems.

Re: Italy Approves ‘Google Tax’ on Internet Companies

#59
post #36
post #7

Earlier quoted context omitted.

Maybe I'm wrong, but with this law Google is not able to sell ads in Italy. So if they still want to do that they need to open an Italian company and therefore pay taxes in Italy. So, for Italy at least, things would change.

Depends, what is taxed in Italy: profit or revenue? An italian subsidiary would have to pay its mother company for the services it provides (which is everything, since no user would be serviced from Italy). So the Italian company could easily make 0 (or very few) profit.

Doesn't matter. Italy is not a sovereign state, and has no legal control over inter-EU commerce any more than a US state has. They have signed over the right to make laws like this to the EU, which seems unlikely in the extreme to concur with their decision.

So despite being a law, it's (probably) not legal. I find it very hard to believe that there is anyone in the Italian parliament, which is filled with lawyers, that doesn't know this. They are merely voting in this law to appease constituents, and of course the targets of this law (not just Google, but any internet seller. It's just as much apple or microsoft or kickstarter.com) have zero incentives to point this out : they simply don't pay, knowing full well they can't be sued for this.

So constituents are "happy", lawyers get re-elected and nothing changes. There are no implications, everything will simply remain status-quo.

Re: Italy Approves ‘Google Tax’ on Internet Companies

#60
post #47

Earlier quoted context omitted.

You'll be surprised about the hassles to open an (Internet) company in Germany. They get the business mostly because they are cheap (and educated workforce, of course)

I don't know from first hand experience, but I've been told that it's relatively easy to open a UG (their version to an LLC/UK LTD) company and start working right away. Hiring and managing employees seems to be the hardest part.

Yes, the issues are mainly in hiring, labour code, and also privacy and IP issues.

Privacy is a big deal in Germany.

(And of course, doing all that in German, but in Berlin it's easy to do things in English. But not everybody speaks English)

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