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EU lost up to €5.4B in tax revenues from Google, Facebook: report

reuters.com

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Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#61

Post by themihai »

seanieb wrote: post #28

"This resulted in estimated revenue losses for EU states, other than Ireland" What does this mean? Ireland is in the EU. It's like complaining France or Germany don't share their tax revenue proportionally with the rest of the EU states. Ireland and other EU states have sovereignty over their own tax laws. If you change that you will basically change what the EU is.

Ireland made some kind of special arrangements. For example Apple paid the full tax for products sold in Ireland but only aprox 1% or even less for the products sold in the rest of EU. It's like saying "come to Ireland" and pay no tax to the rest of EU. Ireland is happy because they cash in the tax for the products sold in Ireland plus an extra for the products sold in the rest of EU. If you ask me tax should be paid where the profit is generated.

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#62

Post by anonymousDan »

gaius wrote: post #55
sddfd wrote: post #36

Earlier quoted context omitted.

Not really. Ireland has some deals going with several digital multinationals. The guardian writes: "Google pays €47m in tax in Ireland on €22bn sales revenue" https://www.theguardian.com/business/2016/nov/04/google-pays...

Ireland is only able to charge such low corporation tax due to the generous subsidies it receives from the EU too.

Eh? Think you need to get your facts straight: https://amp.independent.ie/business/irish/ireland-contribute...

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#63

Post by Supernaut »

gaius wrote: post #55
sddfd wrote: post #36

Earlier quoted context omitted.

Not really. Ireland has some deals going with several digital multinationals. The guardian writes: "Google pays €47m in tax in Ireland on €22bn sales revenue" https://www.theguardian.com/business/2016/nov/04/google-pays...

Ireland is only able to charge such low corporation tax due to the generous subsidies it receives from the EU too.

Can we see some evidence for that claim? According to my research, Ireland is a net contributor to the EU budget. In 2014, the last year for which complete data is available, the country paid €168m more to the EU than it received in grants and payments.

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#64

Post by Neracked »

seanieb wrote: post #28

"This resulted in estimated revenue losses for EU states, other than Ireland" What does this mean? Ireland is in the EU. It's like complaining France or Germany don't share their tax revenue proportionally with the rest of the EU states. Ireland and other EU states have sovereignty over their own tax laws. If you change that you will basically change what the EU is.

Ireland is basically selling multinational corporations the right to avoid paying their taxes to other European countries in which they have significant activity.

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#65

Post by anonymousDan »

seanieb wrote: post #28

"This resulted in estimated revenue losses for EU states, other than Ireland" What does this mean? Ireland is in the EU. It's like complaining France or Germany don't share their tax revenue proportionally with the rest of the EU states. Ireland and other EU states have sovereignty over their own tax laws. If you change that you will basically change what the EU is.

What I want to understand is what happens in the opposite direction, i.e. what does the tax situation look like for e.g Volkswagen cars sold in the US? Do they pay a minimal amount of tax in the US with most of the profits repatriated to Germany? If so it's just a whiney tax grab by the French and Germans who are used to getting their own way in the EU.

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#66

Post by ryan-allen »

dangsmum wrote: post #41
latch wrote: post #13

Earlier quoted context omitted.

I get what you're saying, but I think it's fundamentally wrong for two reasons. First, it is "big" when you consider how that money could be used. Cynicism aside about funding wars and filling walls with cash, it could be used for substantive (read: big) social good Secondly, this is an important market. If they don't want to pay taxes, they have the legal option to not do business in Europe. So while you say "5B is…

"they have a legal option not todo do business in europe" Do you see any way to do that other than to prevent eu businesses buying ads from google? Because i think that might have a few severe unintented consequences for businesses in the eu, and have exactly zero impact on google.

It'd also open the market to a new competitor when people in the EU (and elsewhere) realised that they can't find local ads on Google.

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#67

Post by elgenie »

Taxing multinational corps is pretty difficult.

Let's say a parent company UsTech, which makes money from ads on a ubiquitous digital platform, has an Irish subsidiary UsTechDublin,LLC and a German subsidiary UsTechBerlin,GMBH. UsTechBerlin hosts a bunch of very well paid engineers who work on app performance and backend infrastructure efficiency; UsTechDublin hosts a bunch of low paid customer service reps that provide support to end users. Both offices clearly provide something of value that helps the parent company UsTech make money, but nobody has paid a (euro)cent to purchase ads from either the Irish or German offices while those offices have paid a bunch of money in salary and benefits. So, how much should they owe the tax man in each country?

That's up to UsTech. The "revenue" "earned" by UsTechDublin is an accounting-only transfer from UsTech for providing customer service. The "revenue" "earned" by UsTechBerlin is an accounting-only transfer from UsTech for performance improvements and infrastructure designs. If corporate tax rates in Germany and Ireland are higher than those in the US and UsTech accountants aren't total morons, the transfer payment to each subsidiary will be exactly enough to ensure that revenue matches expenses and there's no profit to be taxed on the books of either UsTechDublin or UsTechBerlin. If, on the other hand, the corporate tax rate in Ireland is lower than in the US and the corporate tax rate in Germany is higher then magically services of the customer service reps of UsTechDublin may be "sold" to UsTech at usurious rates while those of the software engineers of UsTechBerlin are "sold" for a pittance.

The "lost" tax revenue being claimed here is essentially saying that multinationals chose their transfer payments in such a way as to not have their profits appear in high-tax EU nations. Well … duh.

The problem is that it's hard to envision a governmental bureaucracy capable of challenging and very accurately assessing the true rates on intra-subsidiary transfers without it being breathtakingly large in scope and stifling to the functioning of the economy in question. Current rules for it [1] leave plenty of wiggle room.

[1] https://en.wikipedia.org/wiki/Transfer_pricing

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#68

Post by ringtail »

Oletros wrote: post #53
DannyBee wrote: post #32

Earlier quoted context omitted.

Which i'm sure they would happily burn to the ground if it meant they weren't taxed there. I don't think you want to go with the argument of physical presence. It rarely works well with any multinational.

> It rarely works well with any multinational. how many multinationals have left any big market just for taxation?

Are you saying Singapore Co cannot receive payments from French consumers unless they pay corporate income tax to French Govt ?

In other words, you are saying EU can deny its citizens right to buy foreign products ?

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#69

Post by [deleted] »

themihai wrote: post #60
Iv wrote: post #38

Earlier quoted context omitted.

There is a movement calling for tax harmonization in EU. I think this is a "what-if" scenario. "What if there were no internal competition between EU state to make a race to the bottom in terms of tax on profits?"

Well the issue is not the competition on tax, it's tax avoidance/evasion. You can't compete on tax with fiscal paradises that provide no infrastructure to operate a business. Most of the corporations within EU simply create shell companies in Luxembourg and artificially siphon off their profits so that they can pay 1% tax there instead of aprox 20% within EU. Luxembourg doesn't contribute with anything(i.e. infrastru…

[deleted]
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