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France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

reuters.com

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Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#71

Post by charlesdm »

csomar wrote: post #70
toast0 wrote: post #60

Earlier quoted context omitted.

The problem with a person doing this style of tax avoidance is that the barrier to entrance is much higher than the gain. Assuming general principals of US tax law, if you're already working as an independent contractor, you could legally set up a local company and an overseas company, have the local company bill the client, pay you a reasonable amount, and pay the overseas company the remainder for the use of its na…

The scheme you are suggesting is money laundering. The reason it might work for some big names is that those have stronger reasons to bill the off-shore jurisdictions. For example, a Starbucks LLC in "NewTown","Small-EU-Country" is fine billing an "off-shore" company for the use of Starbucks name. The same is not fine if you are opening a local coffee shop.

His example wasn't perfect. But say you create an app. You can definitely hold those intellectual property rights (+ sell it on the App Store) through a foreign company.

Different countries have different laws to combat the use of foreign companies, though. It might end up not being worth it because there are other costs associated with setting up an entity (e.g. some substance requirements)

Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#72

Post by csomar »

charlesdm wrote: post #69
toast0 wrote: post #60

Earlier quoted context omitted.

The problem with a person doing this style of tax avoidance is that the barrier to entrance is much higher than the gain. Assuming general principals of US tax law, if you're already working as an independent contractor, you could legally set up a local company and an overseas company, have the local company bill the client, pay you a reasonable amount, and pay the overseas company the remainder for the use of its na…

Yes, if you're making $50k a year. But not if you're an entrepreneur pulling in $1m a year. Everything involving intellectual property rights is generally very fluid and easy to move around. A smaller scale example would be living life as a perpetual traveller°: an internet based entrepreneur who makes $200k a year and bases him/herself in a jurisdiction that does not tax income. Or who travels around between countri…

How does this apply to other countries? Aren't you supposed to get residence in some country before losing the residence connection of your original country?

That being said, there are countries with loose taxation like Thailand where you can establish residence and avoid taxes as long as you are not operating in the country itself.

Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#73

Post by andrepd »

wooter wrote: post #50
andrepd wrote: post #21

Earlier quoted context omitted.

> Spain, for example, has a rather meh economy, meanwhile the state is funneling public funds into things like a concentrated solar plant which will probably never generate more revenue than expenditure. If not corrupt, then that is at least decadent. I recommend you sit down, evaluate what you are saying, and try to figure out what on earth that has to do with corporate taxing.

How is that not clear to you?

You don't agree with a project that a government is developing, so it's not legitimate for them to tax corporations. That's the only connection I can see.

Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#75

Post by literallycancer »

albertgoeswoof wrote: post #38

> A French court ruled in July French court ruled that Google, now part of Alphabet Inc, was not liable to pay 1.1 billion euros ($1.3 billion) in back taxes because it had no “permanent establishment” in France and ran its operations there from Ireland. How strange. I didn't know Google were an Irish company. I see them when I connect to the internet from all over the world. It looks like Airbnb also have their EMEA…

Not a tax advice or whatever. No idea if this works, but at the very least it seems like it used to. Do your own research. Just my 2c.

Here's what you can do. Be self-employed in a certain EU country. Have a company (or any other structure, hell, make it a non-profit if you want). The company finds clients, pays you for the work, bills the clients etc. Since you are self-employed you choose the flat exemption (wouldn't want self-employed people to worry about paperwork :D), so you are only taxed on 40% of your revenue. This works out to about 12% including healthcare, etc. The company pays you exactly the maximum limit for the tax exemption, invests the rest into whatever you want, nice office, job training, business trips (i.e. vacation), ends up with 0 profit.

Depending on the country where your clients are, you might be forced to pay a some taxes there, but eh, you can live with that.

Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#76

Post by csomar »

joshfraser wrote: post #52

Someone needs to start a company that offers transfer pricing as a service. Sign up and get a physical address, subsidiary corporations, bank accounts and even employees & board members in Ireland. Much of this can be shared infrastructure of course. If tax avoidance is going to be legal for the big guys, why not make it accessible to everyone?

Get paid through anon. crypto and spend through anon. debit cards? This is already a solved issue.

Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#78

Post by charlesdm »

csomar wrote: post #72
charlesdm wrote: post #69

Earlier quoted context omitted.

Yes, if you're making $50k a year. But not if you're an entrepreneur pulling in $1m a year. Everything involving intellectual property rights is generally very fluid and easy to move around. A smaller scale example would be living life as a perpetual traveller°: an internet based entrepreneur who makes $200k a year and bases him/herself in a jurisdiction that does not tax income. Or who travels around between countri…

How does this apply to other countries? Aren't you supposed to get residence in some country before losing the residence connection of your original country? That being said, there are countries with loose taxation like Thailand where you can establish residence and avoid taxes as long as you are not operating in the country itself.

Not really, but it's better to have official residency somewhere, though. Some countries are quite flexible on residency, however. Cyprus offers residency after spending 60 days per year in the country, and exempts foreign income from tax. In Malta you can get residency by paying €20k a year (no requirement to spend any time in the country), and foreign income is also exempt from tax, etc.

> That being said, there are countries with loose taxation like Thailand where you can establish residence and avoid taxes as long as you are not operating in the country itself.

I believe you can run foreign companies from Thailand without having to pay tax there, as they have no CFC laws. So the example the poster above gave basically applies, but you would book all your income in ForeignCo and take a small salary in the Thai company from fees you charge ForeignCo. That's essentially a zero tax country then.

Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#79

Post by hkmurakami »

csomar wrote: post #66
sddfd wrote: post #16

This is not about taxing revenues instead of profits. This is about taxing EU-wide profits in EU countries proportional to the revenues generated in that country. At the moment, many big tech companies use bookkeeping tricks to make it look like all their profit is generated in, for example, Ireland, while the revenue is generated in other EU counties. Unfortunately, Ireland has special tax rates for these companies…

Can you explain what are these tricks? Asking for a friend. A link is fine too.

It's been widely reported on by major news outlets over the years. Dutch Sandwitch (now defunct?) was one of them.

Re: France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

#80

Post by rtpg »

csomar wrote: post #66
sddfd wrote: post #16

This is not about taxing revenues instead of profits. This is about taxing EU-wide profits in EU countries proportional to the revenues generated in that country. At the moment, many big tech companies use bookkeeping tricks to make it look like all their profit is generated in, for example, Ireland, while the revenue is generated in other EU counties. Unfortunately, Ireland has special tax rates for these companies…

Can you explain what are these tricks? Asking for a friend. A link is fine too.

Basic trick:

- Apple France is actually just a distributor for Apple Ireland

- Apple Ireland sells Apple France an iPhone at MSRP

- Apple France makes basically no profit because it sells "at cost"

- Apple Ireland books a profit for an iPhone sold in France

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