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Starbucks and Fiat Chrysler tax deals 'illegal' in Europe

95 points by tellarin 11y ago

jedrek 11y ago
Good. I don't understand why companies need to be bribed to come to markets. Want to sell your goods, great, pay the same taxes every other company pays. This is nothing more than government subsidies for specific private companies.
- ZeroGravitas 11y ago
  It might actually be a good thing for the taxpayers of that country when looked at narrowly, which is often why these deals are done, but if every EU nation does it to their neighbour then overall it's a classic case of "race to the bottom" and taxpayers all across the EU will lose out.
  - pjmlp 11y ago
    Specially when companies play the game "trick the government", like e.g. Nokia. They moved their plant from Germany to Romania, got the "Company of the Year" award from the Romanian government and about two years later moved the factory again to an Asian country. In the process they got two angry governments and now they are as they are.
    - ptaipale 11y ago
      They didn't really "move" plants around; they were expanding production on different markets to meet needs on these countries and continents, and also withdrawing manufacturing in some places (the big mistake in Germany, I understand, was the purchase and attempted conversion of an old television factory in Bochum). While I don't fully understand the case with the Romanian plant and why it was shut down so soon, what Nokia is now has little to do with their plant management strategy (except that I think it was efficient as long as plants were needed) and everything to do with senior management's product decisions (not production management). (FWIW, Nokia is currently a profitable company, just not in the phone terminal business.)
      - deleted 11y ago
        [deleted]
      - TeMPOraL 11y ago
        > They didn't really "move" plants around; they were expanding production on different markets to meet needs on these countries and continents, and also withdrawing manufacturing in some places Ah, the tactical decisions. "We're not retreating, we're just advancing in a different direction."
        ptaipale 11y ago
        Indeed. For another example, the trade union of horse carriage drivers for People's Co-Op Stores in Finland (Elanto) is still on strike (which started in 1930 and never ended). They just moved on to advance in a different direction (i.e. started driving lorries, and the union eventually merged/became part of the local "teamsters" union).
    - distances 11y ago
      There were no angry governments, that is just your sour grapes about the globalization. Finland lost production to Germany, Germany to Romania, and Romania to Asia, and blaming a single company is quite naive. Nokia's downfall was due to software issues, and certainly had nothing to do with improved efficiency thanks to production optimization.
      - pjmlp 11y ago
        Which just proves you are not located in NRW German state nor in Romania.
    - lucio 11y ago
      So companies should be forced at gunpoint to produce on a specific country?
      - furyg3 11y ago
        I think the Swedish and Romanian taxpayers were held at gunpoint in this scenario
        lucio 11y ago
        By their own governments I assume. If you want to do an experimental check: just try to not pay taxes for a while, and you'll find yourself at the wrong end of a govt. gun eventually.
        TeMPOraL 11y ago
        > By their own governments I assume. Which itself was held at gunpoint by Moloch[0]. That's how it works - everyone has to play and lose because those who don't play lose first to those who do. [0] - http://slatestarcodex.com/2014/07/30/meditations-on-moloch/ http://slatestarcodex.com/2014/07/30/meditations-on-moloch/
  - AnthonyMouse 11y ago
    > It might actually be a good thing for the taxpayers of that country when looked at narrowly, which is often why these deals are done, but if every EU nation does it to their neighbour then overall it's a classic case of "race to the bottom" and taxpayers all across the EU will lose out. The problem is that countries refusing to compete with each other doesn't actually help all of them. Countries like Germany have strong infrastructure, high availability of qualified labor, etc. If Romania had the same taxes as Germany then who would expand into Romania? And of course taking taxes off the table would just shift the issue to spending. If you required countries to have a uniform (presumably high) tax rate then they could just spend the money on things that encourage companies to expand there and you're right back to the same situation. Countries compete with each other to attract capital. The only way to stop that is to prevent the movement of capital across national borders, which is a completely unrealistic bad idea.
    - VSerge 11y ago
      To answer your question, everyone interested in paying much lower salaries to their workforce may decide to locate a factory in Romania. Market size, cost of operation, infrastructure, neighboring markets, and many more factors play an important role in such decisions. Taxes are far from being the most meaningful factor, and governments dumb enough to offer such deals are acting disgracefully towards both their tax-paying citizenry and their EU partners who don't engage in this race to the bottom.
      - AnthonyMouse 11y ago
        > To answer your question, everyone interested in paying much lower salaries to their workforce may decide to locate a factory in Romania. Market size, cost of operation, infrastructure, neighboring markets, and many more factors play an important role in such decisions. Of course there are many factors that go into it. What matters is how the country stacks up on balance. Countries that stack up unfavorably have no financial capacity to address their shortcomings because you can't build infrastructure or education with no money and governments can't collect money with no tax base. What they can do is lower taxes to attract investment so they can get 5% of something instead of 30% of nothing. Their primary alternative for attracting investment is to abandon safety and environmental regulations, which is not better.
  - commandar 11y ago
    An example I can think of offhand is AMD (now Global Foundaries) choosing to locate one of their new fabs in Dresden after being offered lucrative tax benefits by the German government. AMD got to save money on the fab, Germany got long term economic investment in the former east. It was pretty much a win-win deal.
- sjehay 11y ago
  Incentives are generally designed to attract inward investment and job creation, rather than to persuade companies to sell into the market (i.e. please set up your factory/European HQ here, regardless of where you're actually going to sell most of your goods)
  - ptaipale 11y ago
    Why should factory or headquarters be where the goods are sold? The whole point of EU is free movement of capital, goods and manpower. Farms are where there is fields, sun and irrigation; factories are where there is raw material, logistics and energy; headquarter functions are where there is capability to handle legal and financial questions. Goods and services are sold where there is customers. This is the very point of EU, so if we don't want that to happen, isn't the most logical step to disband EU immediately?
    - TeMPOraL 11y ago
      The EU is in the strange semi-state - in some ways united, in others still a set of separate nations. This ain't different than the states in the US - they compete for private investments too.
    - pjc50 11y ago
      "free movement of capital, goods and manpower": but not taxation. There's no real counterbalancing mechanism to the downsides of such movement. The EU can't work without US-style federalism and the erasure of national identities. So yes, it probably should be disbanded. Edit: or at least abolish Luxembourg, which is a stupid statelet left over from the treaty of Utrecht: http://ftalphaville.ft.com/2015/10/21/2142483/the-case-against-luxembourg/ http://ftalphaville.ft.com/2015/10/21/2142483/the-case-again...
      - icebraining 11y ago
        "US-style federalism"? The politics and $1B+ in tax breaks and perks paid by Nevada to get the Gigafactory say otherwise.
- Shivetya 11y ago
  I have no problem if an area is trying to land a major contributor to the area in jobs and future revenues. Giving tax breaks to get such tend to pay back in that you get support businesses cropping up to support the original beneficiary. These deals however just don't appear to provide any benefit to the areas affected, only to the companies. Is there a big pool of political contributions in countries like these? Do they have the equivalent of PACs and such?
  - the-dude 11y ago
    Starbucks has a roastery in The Netherlands, so that means jobs at least.
    - gizi 11y ago
      Modern business only hires profiles that are in short supply already. So, they went to The Netherlands to exacerbate the shortages of skilled labour while doing nothing for the insufficiently skilled unemployed ones. "Jobs" are never a valid motivation to do anything, because the ones who don't have them, will never have them.
      - xixi77 11y ago
        Does coffee roasting really require that high-skill labor?
    - s73v3r 11y ago
      How many jobs? If you were to divide the amount of the tax break by the number of jobs, how much would the government have ended up paying per job?
  - IkmoIkmo 11y ago
    > I have no problem if an area is trying to land a major contributor to the area in jobs and future revenues. Giving tax breaks to get such tend to pay back in that you get support businesses cropping up to support the original beneficiary. That's not really the issue. The issue is that these were tax deals done behind closed doors between government and businesses rather than the government creating a tax policy for all that is transparent and applied uniformly and fairly to all businesses, they created a tax policy for all except a handful of companies that could get private deals. And that usually leads to bad results after a while. Yes it makes sense to have tax policy that treats different businesses differently. And it makes sense for there to be some flexibility and to be able to negotiate on certain things in a transparent and fair manner (e.g. a business 'negotiating' over whether it applies for a sustainable energy tax benefit if it invests in a new green energy tech that happened to fall outside of the parameters of the sustainable energy programme the government created a few years ago when said tech didn't exist, there's some flexibility there to expand the programme for that particular company that makes sense. Such a negotiation fits with the aim of the tax programme, is transparent and will affect everyone equally who applies for it afterwards). But simply negotiating some special tax rate just for you that doesn't apply to anyone else, in a backroom deal that isn't officially known to anyone else, that's shady and corrupt, the kind of practices you expect from poor countries struggling with institutional development. How you actually spend the money (e.g. to improve the area affected) is another topic altogether. But in its first principle these tax deals made no sense.
- ryanlol 11y ago
  How the hell is corporate tax relevant to companies coming to markets and selling their goods? You're probably thinking of VAT.
SixSigma 11y ago
We should value companies not by earnings but by tax contributions.
- seanmcdirmid 11y ago
  You are personally welcome to value publicly traded companies by their tax contributions and not by their profits. You might be a bit burned, however, when you go to trade your stocks with other people that do not share your values. And that's capitalism.
- detaro 11y ago
  Hm.... cap dividends relative to tax payments?
  - tobltobs 11y ago
    Or just tax dividends with a not neglect-able rate.
- xixi77 11y ago
  Hmm, what kind of a mechanism do you have in mind for this? :)
  - SixSigma 11y ago
    In the EU VAT returns (Sales tax) are made monthly so we could have a monthly index of those. Employee wages are taxed weekly / monthly both income tax and national insurance (which are used for social welfare etc.) and employers contribute to national insurance - these could be reported. We give companies limited debt liability in exchange for the social good they perform through their activities, a concept introduced in the 19thC. It is announced daily on the news the value of the stock exchanges, I don't think it is entirely crazy to do the same for contributions to the society that bears the cost of default.
hellofunk 11y ago
There are a lot of stories lately that throw the idea of "union" in "European Union" into question. The tax discrepancies are just part of the picture; the varied immigration policies are also getting a lot of attention. Hopefully the EU can find a way to see itself as a truly unified whole, which would be of great benefit to the world.
- im3w1l 11y ago
  The European Union is very diverse, with many different peoples and cultures and languages. This can be a source of strength but we also have to be mindful of our different needs. We saw that during the "PIIGS" crisis. The Mediterranean countries badly needed to inflate their currencies to alleviate their crippling debt burden. Germany on the other hand wanted a strong currency. Because they all had the same currency only of those two parties could win. That was Germany and we still see the repercussions in the southern Europe.
- programmernews3 11y ago
  The failure of the EU is becoming more apparent each day. They cannot even account for most of their own spending[1], so they should definitely NOT be given more power. For the union to work the richer nations must accept lower standards of living which is completely wrong (unless you are one of the poorer states). The migration issue is a welcome demonstration of the farce. Rules, such as the Schengen agreement, are broken unilaterally and the views of the people are ignored. The European Union is a post-democratic state.[2] [1] - http://www.telegraph.co.uk/news/worldnews/europe/eu/9657673/Audit-seriously-undermines-credibility-of-EU-spending.html http://www.telegraph.co.uk/news/worldnews/europe/eu/9657673/... [2] - http://www.breitbart.com/london/2015/10/13/dont-take-mandate-people-eu-commissioner-tells-anti-poverty-campaigner/ http://www.breitbart.com/london/2015/10/13/dont-take-mandate...
ricw 11y ago
Up to €30 million repayments since 2012? Is that it? these companies have billions of revenue and yet that's all they have to pay? How about fining them and the countries for doing so? This just seems wholly unfair. This may be a small step in getting global players to play fairer, but from what I can tell this is still cheating the system and depriving countries and their citizens of badly needed tax income. All while competing unfairly with smaller non-global companies. I don't get why the EU still hasn't managed to get this under control.
- ryanlol 11y ago
  Do you know what corporate tax is?
- lucio 11y ago
  tax-income is first "taken" from the citizens, then the government produces services with mediocre-to-bad performance. It is generally mediocre-to-bad because there are no customer-pressure to excellence in govt. provided services. People do not pay directly, services seems to be "free", so everybody accept them as they are and nobody complains. (e.g. DMV) Starbucks must produce a good and consistent product or go broke. Governments can produce abismal services and nothing happens.
  - _delirium 11y ago
    Maybe this is a problem with your government, rather than government in general? The government produces quite good services in many European countries, especially in northern Europe. And large companies generally have very poor service. Example: I used to live in Denmark, where the healthcare system is run by the government, and now I live in the USA, where it isn't. For me, the Danish system was far more user-friendly.
    - lucio 11y ago
      You are correct. In my country the services are abismal and corruption is rampant. I guess in Denmark there are better morals and/or a sane idealism and services are better. Culture plays a fundamental role.
bpodgursky 11y ago
In 100 years we're going to look back and realize what a waste of time and effort corporate income taxes are. And what amount of time was wasted trying to levy and avoid them. In the end, you can recover the same money by taxing dividends and income accordingly, and it's far more difficult to hide those (a person's residency is less ambiguous than a corporation; and while you can try to play games, with proper enforcement you will end up in jail for doing it). Of course any politician will get castigated for suggesting removing the tax entirely, but that's just politics and not sound economic policy.
- ownagefool 11y ago
  It's also unfair to smaller local businesses who cant use the same loopholes and are automatically disadvantaged against their larger competitors.
  - toyg 11y ago
    That, I agree. Progressive taxation is an intractable problem because on one side you want to make the rich pay more, and on the other you don't want to discourage growth or the black economy; but it's a problem that has to be addressed. It's simply not true that Apple and a mom&pop store are the same "concept" under the rule of law, you need arbitrary thresholds to distinguish them, and it's a very imperfect art.
- AnthonyMouse 11y ago
  > In the end, you can recover the same money by taxing dividends and income accordingly, and it's far more difficult to hide those Don't forget VAT. People think of VAT as a consumption tax and corporate income tax as an income tax, but they're essentially the same thing because one entity's consumption is the next one's income. The primary difference between them is what happens at the jurisdictional border and that difference is why VAT is collectable and corporate income tax isn't.
- netcan 11y ago
  I kind of agree, but with all sorts of hesitation. I agree that corporate tax is nearly impossible to police fairly or sanely and that this suggests something is broke deeper down. OTOH, I don't think you achieve the same result with taxing dividends. First, I assume you mean capital gains or any income from investment. Just like corporation tax, this is full of loopholes, avoidance strategies and illegal but undetected non-payment. The latter moreso. The crux of the matter is that when you have a greater control over ownership structures and the like, you can work around whatever definitions tax law puts in place. I suspect that a clean fix of corporate tax, if it can be found at all, will be find in fundamentals of corporate law like the definition of a corporation and its rights. When it comes down to it, the legal entities that make up Google and incur (or don't) tax liabilities are pretty different from the entity in reality. All the transactions, fees and such between those "companies" are a lie.
gizmo 11y ago
Just for the record, the Netherlands has been proudly advertising their tax deals for years. See this presentation[1], slide 12. Right from the horses mouth: Reason 7 [to have a holding company in Holland]: Fiscal climate: Very competitive tax climate from its far-reaching tax treaty network to the possibility to conclude socalled[sic] advance tax rulings. Utterly blatant. And notice the logo of Starbucks next to it. The Dutch government advertises that Starbucks pays practically nothing in tax, in order to undercut other EU countries. These tax deals usually take the form of a fixed tax guarantee: the company agrees to place their holding company in the Netherlands and pay X euros in tax for the next N years (2 to 5), regardless of their actual revenue or profit. For the Dutch government this is just free tax revenue and if they don't make a sweetheart deal with the multinational the holding company would end up in Luxembourg or Ireland instead. This way the multinational can make the countries fight for the most preposterously low offer. [1]: https://www.rijksoverheid.nl/binaries/rijksoverheid/documenten/publicaties/2014/05/09/presentatie-over-het-nederlandse-vestigingsklimaat/presentatie-over-het-nederlandse-vestigingsklimaat.pdf https://www.rijksoverheid.nl/binaries/rijksoverheid/document...
- solidangle 11y ago
  Starbucks also promised to create jobs in the Netherlands by locating their European coffee bean processing plant there. Extra jobs and tax revenue sounds like a pretty good deal to me.
  - Drakim 11y ago
    The problem is the "race to the bottom" as countries have to offer better and better deals to outbid each other. It's a tragedy of the commons issue.
    - stevesearer 11y ago
      Just throwing this out there with no idea of the reality of it, but maybe it is a good thing to have some downward pressure on tax rates from large multinationals because without that it could end up just being a 'race to the top' with countries continually ratcheting up rates unchecked.
forrestthewoods 11y ago
Sounds like the states should be on the hook rather than the corporations. Sneaky sneaky Netherlands and Luxembourg. Betraying your own union for self gain! How unsocial of y'all.
- TeMPOraL 11y ago
  Indeed; as a matter of fact, they should be. This is a textbook coordination problem.

95 points by tellarin 11y ago

Good. I don't understand why companies need to be bribed to come to markets. Want to sell your goods, great, pay the same taxes every other company pays. This is nothing more than government subsidies for specific private companies.

ZeroGravitas 11y ago
It might actually be a good thing for the taxpayers of that country when looked at narrowly, which is often why these deals are done, but if every EU nation does it to their neighbour then overall it's a classic case of "race to the bottom" and taxpayers all across the EU will lose out.
- pjmlp 11y ago
  Specially when companies play the game "trick the government", like e.g. Nokia. They moved their plant from Germany to Romania, got the "Company of the Year" award from the Romanian government and about two years later moved the factory again to an Asian country. In the process they got two angry governments and now they are as they are.
  - ptaipale 11y ago
    They didn't really "move" plants around; they were expanding production on different markets to meet needs on these countries and continents, and also withdrawing manufacturing in some places (the big mistake in Germany, I understand, was the purchase and attempted conversion of an old television factory in Bochum). While I don't fully understand the case with the Romanian plant and why it was shut down so soon, what Nokia is now has little to do with their plant management strategy (except that I think it was efficient as long as plants were needed) and everything to do with senior management's product decisions (not production management). (FWIW, Nokia is currently a profitable company, just not in the phone terminal business.)
    - deleted 11y ago
      [deleted]
    - TeMPOraL 11y ago
      > They didn't really "move" plants around; they were expanding production on different markets to meet needs on these countries and continents, and also withdrawing manufacturing in some places Ah, the tactical decisions. "We're not retreating, we're just advancing in a different direction."
      - ptaipale 11y ago
        Indeed. For another example, the trade union of horse carriage drivers for People's Co-Op Stores in Finland (Elanto) is still on strike (which started in 1930 and never ended). They just moved on to advance in a different direction (i.e. started driving lorries, and the union eventually merged/became part of the local "teamsters" union).
  - distances 11y ago
    There were no angry governments, that is just your sour grapes about the globalization. Finland lost production to Germany, Germany to Romania, and Romania to Asia, and blaming a single company is quite naive. Nokia's downfall was due to software issues, and certainly had nothing to do with improved efficiency thanks to production optimization.
    - pjmlp 11y ago
      Which just proves you are not located in NRW German state nor in Romania.
  - lucio 11y ago
    So companies should be forced at gunpoint to produce on a specific country?
    - furyg3 11y ago
      I think the Swedish and Romanian taxpayers were held at gunpoint in this scenario
      - lucio 11y ago
        By their own governments I assume. If you want to do an experimental check: just try to not pay taxes for a while, and you'll find yourself at the wrong end of a govt. gun eventually.
        TeMPOraL 11y ago
        > By their own governments I assume. Which itself was held at gunpoint by Moloch[0]. That's how it works - everyone has to play and lose because those who don't play lose first to those who do. [0] - http://slatestarcodex.com/2014/07/30/meditations-on-moloch/ http://slatestarcodex.com/2014/07/30/meditations-on-moloch/
- AnthonyMouse 11y ago
  > It might actually be a good thing for the taxpayers of that country when looked at narrowly, which is often why these deals are done, but if every EU nation does it to their neighbour then overall it's a classic case of "race to the bottom" and taxpayers all across the EU will lose out. The problem is that countries refusing to compete with each other doesn't actually help all of them. Countries like Germany have strong infrastructure, high availability of qualified labor, etc. If Romania had the same taxes as Germany then who would expand into Romania? And of course taking taxes off the table would just shift the issue to spending. If you required countries to have a uniform (presumably high) tax rate then they could just spend the money on things that encourage companies to expand there and you're right back to the same situation. Countries compete with each other to attract capital. The only way to stop that is to prevent the movement of capital across national borders, which is a completely unrealistic bad idea.
  - VSerge 11y ago
    To answer your question, everyone interested in paying much lower salaries to their workforce may decide to locate a factory in Romania. Market size, cost of operation, infrastructure, neighboring markets, and many more factors play an important role in such decisions. Taxes are far from being the most meaningful factor, and governments dumb enough to offer such deals are acting disgracefully towards both their tax-paying citizenry and their EU partners who don't engage in this race to the bottom.
    - AnthonyMouse 11y ago
      > To answer your question, everyone interested in paying much lower salaries to their workforce may decide to locate a factory in Romania. Market size, cost of operation, infrastructure, neighboring markets, and many more factors play an important role in such decisions. Of course there are many factors that go into it. What matters is how the country stacks up on balance. Countries that stack up unfavorably have no financial capacity to address their shortcomings because you can't build infrastructure or education with no money and governments can't collect money with no tax base. What they can do is lower taxes to attract investment so they can get 5% of something instead of 30% of nothing. Their primary alternative for attracting investment is to abandon safety and environmental regulations, which is not better.
- commandar 11y ago
  An example I can think of offhand is AMD (now Global Foundaries) choosing to locate one of their new fabs in Dresden after being offered lucrative tax benefits by the German government. AMD got to save money on the fab, Germany got long term economic investment in the former east. It was pretty much a win-win deal.
sjehay 11y ago
Incentives are generally designed to attract inward investment and job creation, rather than to persuade companies to sell into the market (i.e. please set up your factory/European HQ here, regardless of where you're actually going to sell most of your goods)
- ptaipale 11y ago
  Why should factory or headquarters be where the goods are sold? The whole point of EU is free movement of capital, goods and manpower. Farms are where there is fields, sun and irrigation; factories are where there is raw material, logistics and energy; headquarter functions are where there is capability to handle legal and financial questions. Goods and services are sold where there is customers. This is the very point of EU, so if we don't want that to happen, isn't the most logical step to disband EU immediately?
  - TeMPOraL 11y ago
    The EU is in the strange semi-state - in some ways united, in others still a set of separate nations. This ain't different than the states in the US - they compete for private investments too.
  - pjc50 11y ago
    "free movement of capital, goods and manpower": but not taxation. There's no real counterbalancing mechanism to the downsides of such movement. The EU can't work without US-style federalism and the erasure of national identities. So yes, it probably should be disbanded. Edit: or at least abolish Luxembourg, which is a stupid statelet left over from the treaty of Utrecht: http://ftalphaville.ft.com/2015/10/21/2142483/the-case-against-luxembourg/ http://ftalphaville.ft.com/2015/10/21/2142483/the-case-again...
    - icebraining 11y ago
      "US-style federalism"? The politics and $1B+ in tax breaks and perks paid by Nevada to get the Gigafactory say otherwise.
Shivetya 11y ago
I have no problem if an area is trying to land a major contributor to the area in jobs and future revenues. Giving tax breaks to get such tend to pay back in that you get support businesses cropping up to support the original beneficiary. These deals however just don't appear to provide any benefit to the areas affected, only to the companies. Is there a big pool of political contributions in countries like these? Do they have the equivalent of PACs and such?
- the-dude 11y ago
  Starbucks has a roastery in The Netherlands, so that means jobs at least.
  - gizi 11y ago
    Modern business only hires profiles that are in short supply already. So, they went to The Netherlands to exacerbate the shortages of skilled labour while doing nothing for the insufficiently skilled unemployed ones. "Jobs" are never a valid motivation to do anything, because the ones who don't have them, will never have them.
    - xixi77 11y ago
      Does coffee roasting really require that high-skill labor?
  - s73v3r 11y ago
    How many jobs? If you were to divide the amount of the tax break by the number of jobs, how much would the government have ended up paying per job?
- IkmoIkmo 11y ago
  > I have no problem if an area is trying to land a major contributor to the area in jobs and future revenues. Giving tax breaks to get such tend to pay back in that you get support businesses cropping up to support the original beneficiary. That's not really the issue. The issue is that these were tax deals done behind closed doors between government and businesses rather than the government creating a tax policy for all that is transparent and applied uniformly and fairly to all businesses, they created a tax policy for all except a handful of companies that could get private deals. And that usually leads to bad results after a while. Yes it makes sense to have tax policy that treats different businesses differently. And it makes sense for there to be some flexibility and to be able to negotiate on certain things in a transparent and fair manner (e.g. a business 'negotiating' over whether it applies for a sustainable energy tax benefit if it invests in a new green energy tech that happened to fall outside of the parameters of the sustainable energy programme the government created a few years ago when said tech didn't exist, there's some flexibility there to expand the programme for that particular company that makes sense. Such a negotiation fits with the aim of the tax programme, is transparent and will affect everyone equally who applies for it afterwards). But simply negotiating some special tax rate just for you that doesn't apply to anyone else, in a backroom deal that isn't officially known to anyone else, that's shady and corrupt, the kind of practices you expect from poor countries struggling with institutional development. How you actually spend the money (e.g. to improve the area affected) is another topic altogether. But in its first principle these tax deals made no sense.
ryanlol 11y ago
How the hell is corporate tax relevant to companies coming to markets and selling their goods? You're probably thinking of VAT.

SixSigma 11y ago

We should value companies not by earnings but by tax contributions.

seanmcdirmid 11y ago
You are personally welcome to value publicly traded companies by their tax contributions and not by their profits. You might be a bit burned, however, when you go to trade your stocks with other people that do not share your values. And that's capitalism.
detaro 11y ago
Hm.... cap dividends relative to tax payments?
- tobltobs 11y ago
  Or just tax dividends with a not neglect-able rate.
xixi77 11y ago
Hmm, what kind of a mechanism do you have in mind for this? :)
- SixSigma 11y ago
  In the EU VAT returns (Sales tax) are made monthly so we could have a monthly index of those. Employee wages are taxed weekly / monthly both income tax and national insurance (which are used for social welfare etc.) and employers contribute to national insurance - these could be reported. We give companies limited debt liability in exchange for the social good they perform through their activities, a concept introduced in the 19thC. It is announced daily on the news the value of the stock exchanges, I don't think it is entirely crazy to do the same for contributions to the society that bears the cost of default.

hellofunk 11y ago

There are a lot of stories lately that throw the idea of "union" in "European Union" into question. The tax discrepancies are just part of the picture; the varied immigration policies are also getting a lot of attention. Hopefully the EU can find a way to see itself as a truly unified whole, which would be of great benefit to the world.

im3w1l 11y ago
The European Union is very diverse, with many different peoples and cultures and languages. This can be a source of strength but we also have to be mindful of our different needs. We saw that during the "PIIGS" crisis. The Mediterranean countries badly needed to inflate their currencies to alleviate their crippling debt burden. Germany on the other hand wanted a strong currency. Because they all had the same currency only of those two parties could win. That was Germany and we still see the repercussions in the southern Europe.
programmernews3 11y ago
The failure of the EU is becoming more apparent each day. They cannot even account for most of their own spending[1], so they should definitely NOT be given more power. For the union to work the richer nations must accept lower standards of living which is completely wrong (unless you are one of the poorer states). The migration issue is a welcome demonstration of the farce. Rules, such as the Schengen agreement, are broken unilaterally and the views of the people are ignored. The European Union is a post-democratic state.[2] [1] - http://www.telegraph.co.uk/news/worldnews/europe/eu/9657673/Audit-seriously-undermines-credibility-of-EU-spending.html http://www.telegraph.co.uk/news/worldnews/europe/eu/9657673/... [2] - http://www.breitbart.com/london/2015/10/13/dont-take-mandate-people-eu-commissioner-tells-anti-poverty-campaigner/ http://www.breitbart.com/london/2015/10/13/dont-take-mandate...

ricw 11y ago

Up to €30 million repayments since 2012? Is that it? these companies have billions of revenue and yet that's all they have to pay? How about fining them and the countries for doing so? This just seems wholly unfair. This may be a small step in getting global players to play fairer, but from what I can tell this is still cheating the system and depriving countries and their citizens of badly needed tax income. All while competing unfairly with smaller non-global companies. I don't get why the EU still hasn't managed to get this under control.

ryanlol 11y ago
Do you know what corporate tax is?
lucio 11y ago
tax-income is first "taken" from the citizens, then the government produces services with mediocre-to-bad performance. It is generally mediocre-to-bad because there are no customer-pressure to excellence in govt. provided services. People do not pay directly, services seems to be "free", so everybody accept them as they are and nobody complains. (e.g. DMV) Starbucks must produce a good and consistent product or go broke. Governments can produce abismal services and nothing happens.
- _delirium 11y ago
  Maybe this is a problem with your government, rather than government in general? The government produces quite good services in many European countries, especially in northern Europe. And large companies generally have very poor service. Example: I used to live in Denmark, where the healthcare system is run by the government, and now I live in the USA, where it isn't. For me, the Danish system was far more user-friendly.
  - lucio 11y ago
    You are correct. In my country the services are abismal and corruption is rampant. I guess in Denmark there are better morals and/or a sane idealism and services are better. Culture plays a fundamental role.

bpodgursky 11y ago

In 100 years we're going to look back and realize what a waste of time and effort corporate income taxes are. And what amount of time was wasted trying to levy and avoid them. In the end, you can recover the same money by taxing dividends and income accordingly, and it's far more difficult to hide those (a person's residency is less ambiguous than a corporation; and while you can try to play games, with proper enforcement you will end up in jail for doing it). Of course any politician will get castigated for suggesting removing the tax entirely, but that's just politics and not sound economic policy.

ownagefool 11y ago
It's also unfair to smaller local businesses who cant use the same loopholes and are automatically disadvantaged against their larger competitors.
- toyg 11y ago
  That, I agree. Progressive taxation is an intractable problem because on one side you want to make the rich pay more, and on the other you don't want to discourage growth or the black economy; but it's a problem that has to be addressed. It's simply not true that Apple and a mom&pop store are the same "concept" under the rule of law, you need arbitrary thresholds to distinguish them, and it's a very imperfect art.
AnthonyMouse 11y ago
> In the end, you can recover the same money by taxing dividends and income accordingly, and it's far more difficult to hide those Don't forget VAT. People think of VAT as a consumption tax and corporate income tax as an income tax, but they're essentially the same thing because one entity's consumption is the next one's income. The primary difference between them is what happens at the jurisdictional border and that difference is why VAT is collectable and corporate income tax isn't.
netcan 11y ago
I kind of agree, but with all sorts of hesitation. I agree that corporate tax is nearly impossible to police fairly or sanely and that this suggests something is broke deeper down. OTOH, I don't think you achieve the same result with taxing dividends. First, I assume you mean capital gains or any income from investment. Just like corporation tax, this is full of loopholes, avoidance strategies and illegal but undetected non-payment. The latter moreso. The crux of the matter is that when you have a greater control over ownership structures and the like, you can work around whatever definitions tax law puts in place. I suspect that a clean fix of corporate tax, if it can be found at all, will be find in fundamentals of corporate law like the definition of a corporation and its rights. When it comes down to it, the legal entities that make up Google and incur (or don't) tax liabilities are pretty different from the entity in reality. All the transactions, fees and such between those "companies" are a lie.

gizmo 11y ago

Just for the record, the Netherlands has been proudly advertising their tax deals for years. See this presentation[1], slide 12. Right from the horses mouth: Reason 7 [to have a holding company in Holland]: Fiscal climate: Very competitive tax climate from its far-reaching tax treaty network to the possibility to conclude socalled[sic] advance tax rulings. Utterly blatant. And notice the logo of Starbucks next to it. The Dutch government advertises that Starbucks pays practically nothing in tax, in order to undercut other EU countries. These tax deals usually take the form of a fixed tax guarantee: the company agrees to place their holding company in the Netherlands and pay X euros in tax for the next N years (2 to 5), regardless of their actual revenue or profit. For the Dutch government this is just free tax revenue and if they don't make a sweetheart deal with the multinational the holding company would end up in Luxembourg or Ireland instead. This way the multinational can make the countries fight for the most preposterously low offer. [1]: https://www.rijksoverheid.nl/binaries/rijksoverheid/documenten/publicaties/2014/05/09/presentatie-over-het-nederlandse-vestigingsklimaat/presentatie-over-het-nederlandse-vestigingsklimaat.pdf https://www.rijksoverheid.nl/binaries/rijksoverheid/document...

solidangle 11y ago
Starbucks also promised to create jobs in the Netherlands by locating their European coffee bean processing plant there. Extra jobs and tax revenue sounds like a pretty good deal to me.
- Drakim 11y ago
  The problem is the "race to the bottom" as countries have to offer better and better deals to outbid each other. It's a tragedy of the commons issue.
  - stevesearer 11y ago
    Just throwing this out there with no idea of the reality of it, but maybe it is a good thing to have some downward pressure on tax rates from large multinationals because without that it could end up just being a 'race to the top' with countries continually ratcheting up rates unchecked.

forrestthewoods 11y ago

Sounds like the states should be on the hook rather than the corporations. Sneaky sneaky Netherlands and Luxembourg. Betraying your own union for self gain! How unsocial of y'all.

TeMPOraL 11y ago
Indeed; as a matter of fact, they should be. This is a textbook coordination problem.