3 ms·

> "are not 'loopholes' they are standard tax regs for providing companies with access to the EU single market." Focusing on the legal technicalities of what co

> "are not 'loopholes' they are standard tax regs for providing companies with access to the EU single market." Focusing on the legal technicalities of what constitutes tax evasion/avoidance is kind of missing the point. The rule should be that you pay tax in the country that you earned the money, based on the tax laws of that country. Any games that involve laundering earnings through foreign subsidiaries in order to avoid paying tax that would be owed based on the tax laws of the place where profits were made is tax avoidance. I do not care whether laws have been put in place to encourage tax avoidance, that does not excuse the behavior.

moonchrome 11y ago
>The rule should be that you pay tax in the country that you earned the money, based on the tax laws of that country. So now instead of following one tax code and dealing with one tax authority you have to deal with 28. The whole point of EU is to cut down on stuff like that and reduce the cost of doing business between members.
- ZenoArrow 11y ago
  Yes, if you trade in 28 countries then you should have to deal with the laws chosen by 28 different governments. Trade harmonisation is one option a government can pursue, but the more you follow this path the further you give up the autonomy of the member state, in this case it's debatable whether the medicine is worse than the disease. Should also point out that despite the harmonisation goals of the EU, tax avoidance still occurs within the EU by exploiting differences that exist, such as the infamous Double Irish with a Dutch sandwich: http://www.investopedia.com/terms/d/double-irish-with-a-dutch-sandwich.asp http://www.investopedia.com/terms/d/double-irish-with-a-dutc...
  - moonchrome 11y ago
    > Yes, if you trade in 28 countries then you should have to deal with the laws chosen by 28 different governments. Except that increases the cost of doing business even further. The whole point of EU was increasing and simplifying trade and creating a open market so that Europe can be more competitive.
    - ZenoArrow 11y ago
      > "Except that increases the cost of doing business even further." Yes, but there's a tradeoff at play here between what's best for companies and what's best for the citizens of each of the countries. If a law protects the will of the citizens but also hinders companies then so be it. Company profits are not the be-all and end-all.
      - lucaspiller 11y ago
        This is exactly what the VAT MOSS regulations have done, and it's been a total failure. The only people it has really affected are small businesses who don't have the resources to deal with it, so it comes out of their bottom line.
        ZenoArrow 11y ago
        A failure? Sounds like if it's a failure it's because it's only a partial solution, it's not fair to have these tax laws if you still allow big business to circumvent them. If the loopholes can be closed can you see it working then?
- vacri 11y ago
  If it's too onerous, then don't trade there. Simple. Facebook is welcome to abandon Europe if paying fair tax is not to it's liking. Something else will rise in it's place. It's like the arguments against the Australian MRRT for the mining industry - a tax that only kicked in if you were making 5% or more profits[1]. "The miners will go to other countries!" was the shrill cry from the mining industry. Uh, no they won't, and not just because the resources are physically here. As long as it's still reasonably profitable, companies will keep doing business in a location. [1] In a monumentally bad bit of PR, the initial public-sell name for the Minerals Rent Resource Tax was... drumroll... the Super Tax.
SilasX 11y ago
I think the problem is that it's really hard to pin down, in a legally operational way, which country "really" produced the good, when intelligent people are trying to tax-optimize it all. Let's say you concoct a scheme (pretty sure this is typical) where you have the artwork for a movie actually done in the UK, but on paper, you write it up like your selling the British workers' output to Luxembourg, then having the latter work on it, then buying it back into the UK at a huge markup. Certainly, to an expert, it will be obvious that it's a sham to say any art was produced in Luxembourg. But this would have to be a distinction that can be seen by a tax accountant. All they see is, "Lux bought IP, UK bought their IP, seems legit". Edit: rewrite for clarity
- ZenoArrow 11y ago
  The application of taxation would vary depending on the type of tax, but if we're talking about sales taxes then these should apply in the country where the sale is made. This also includes business-to-business sales, so using your movie artwork example, if the artwork was "sold" in the UK, sales taxes from the UK would apply. It doesn't matter where the artists that produced the artwork were from.
  - SilasX 11y ago
    It's mainly an issue with corporate taxation. The scheme in the example wouldn't shift the sales tax (or VAT), but the UK firm could show zero profit while the low-taxed Luxembourg one would show huge profits, and it would be really hard to notice the sham when you're an expert on accountancy rather than IP or art. (Also just rewrote the example btw.)
    - ZenoArrow 11y ago
      Okay, so exploring this example further, do the UK company and the Luxembourg company need to have the same owners (or linked owners, e.g. family members) for this to work?
      - SilasX 11y ago

moonchrome 11y ago

>The rule should be that you pay tax in the country that you earned the money, based on the tax laws of that country. So now instead of following one tax code and dealing with one tax authority you have to deal with 28. The whole point of EU is to cut down on stuff like that and reduce the cost of doing business between members.

ZenoArrow 11y ago
Yes, if you trade in 28 countries then you should have to deal with the laws chosen by 28 different governments. Trade harmonisation is one option a government can pursue, but the more you follow this path the further you give up the autonomy of the member state, in this case it's debatable whether the medicine is worse than the disease. Should also point out that despite the harmonisation goals of the EU, tax avoidance still occurs within the EU by exploiting differences that exist, such as the infamous Double Irish with a Dutch sandwich: http://www.investopedia.com/terms/d/double-irish-with-a-dutch-sandwich.asp http://www.investopedia.com/terms/d/double-irish-with-a-dutc...
- moonchrome 11y ago
  > Yes, if you trade in 28 countries then you should have to deal with the laws chosen by 28 different governments. Except that increases the cost of doing business even further. The whole point of EU was increasing and simplifying trade and creating a open market so that Europe can be more competitive.
  - ZenoArrow 11y ago
    > "Except that increases the cost of doing business even further." Yes, but there's a tradeoff at play here between what's best for companies and what's best for the citizens of each of the countries. If a law protects the will of the citizens but also hinders companies then so be it. Company profits are not the be-all and end-all.
    - lucaspiller 11y ago
      This is exactly what the VAT MOSS regulations have done, and it's been a total failure. The only people it has really affected are small businesses who don't have the resources to deal with it, so it comes out of their bottom line.
      - ZenoArrow 11y ago
        A failure? Sounds like if it's a failure it's because it's only a partial solution, it's not fair to have these tax laws if you still allow big business to circumvent them. If the loopholes can be closed can you see it working then?
vacri 11y ago
If it's too onerous, then don't trade there. Simple. Facebook is welcome to abandon Europe if paying fair tax is not to it's liking. Something else will rise in it's place. It's like the arguments against the Australian MRRT for the mining industry - a tax that only kicked in if you were making 5% or more profits[1]. "The miners will go to other countries!" was the shrill cry from the mining industry. Uh, no they won't, and not just because the resources are physically here. As long as it's still reasonably profitable, companies will keep doing business in a location. [1] In a monumentally bad bit of PR, the initial public-sell name for the Minerals Rent Resource Tax was... drumroll... the Super Tax.

SilasX 11y ago

I think the problem is that it's really hard to pin down, in a legally operational way, which country "really" produced the good, when intelligent people are trying to tax-optimize it all. Let's say you concoct a scheme (pretty sure this is typical) where you have the artwork for a movie actually done in the UK, but on paper, you write it up like your selling the British workers' output to Luxembourg, then having the latter work on it, then buying it back into the UK at a huge markup. Certainly, to an expert, it will be obvious that it's a sham to say any art was produced in Luxembourg. But this would have to be a distinction that can be seen by a tax accountant. All they see is, "Lux bought IP, UK bought their IP, seems legit". Edit: rewrite for clarity

ZenoArrow 11y ago
The application of taxation would vary depending on the type of tax, but if we're talking about sales taxes then these should apply in the country where the sale is made. This also includes business-to-business sales, so using your movie artwork example, if the artwork was "sold" in the UK, sales taxes from the UK would apply. It doesn't matter where the artists that produced the artwork were from.
- SilasX 11y ago
  It's mainly an issue with corporate taxation. The scheme in the example wouldn't shift the sales tax (or VAT), but the UK firm could show zero profit while the low-taxed Luxembourg one would show huge profits, and it would be really hard to notice the sham when you're an expert on accountancy rather than IP or art. (Also just rewrote the example btw.)
  - ZenoArrow 11y ago
    Okay, so exploring this example further, do the UK company and the Luxembourg company need to have the same owners (or linked owners, e.g. family members) for this to work?
    - SilasX 11y ago