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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 sal

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
    Yes. (Btw, might be more efficient for you to flesh out the implications of a question like that in same comment, so the exchange doesn't have to wait for the response if you want to pre-empt it.)
    - ZenoArrow 11y ago
      I don't mind waiting for responses, find it best to keep focused on only one or two points, hope that's alright. So if the companies are linked through their owners, could we not have more restrictions placed on sales made between companies that have the same/related owners? Could government bodies oversee such sales to check for market manipulation?
      - toyg 11y ago
        Welcome to the world of stooges. There is a queue of people ready to sign anything in exchange for quick cash. It's fairly common in Italy, and only caught when such intermediaries turn out to be exceptionally poor. Doing this cross-border becomes extremely difficult, unless you set up an EU-wide body charged with doing that, and you integrate databases, and before you know it, you have an EU body tasked with enforcing EU-wide fiscal policy, and somebody will have to set that policy, and a real EU government will be born. I would all be in favour of that, tbh; but I don't see it happening anytime soon across 28 countries.

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
  Yes. (Btw, might be more efficient for you to flesh out the implications of a question like that in same comment, so the exchange doesn't have to wait for the response if you want to pre-empt it.)
  - ZenoArrow 11y ago
    I don't mind waiting for responses, find it best to keep focused on only one or two points, hope that's alright. So if the companies are linked through their owners, could we not have more restrictions placed on sales made between companies that have the same/related owners? Could government bodies oversee such sales to check for market manipulation?
    - toyg 11y ago
      Welcome to the world of stooges. There is a queue of people ready to sign anything in exchange for quick cash. It's fairly common in Italy, and only caught when such intermediaries turn out to be exceptionally poor. Doing this cross-border becomes extremely difficult, unless you set up an EU-wide body charged with doing that, and you integrate databases, and before you know it, you have an EU body tasked with enforcing EU-wide fiscal policy, and somebody will have to set that policy, and a real EU government will be born. I would all be in favour of that, tbh; but I don't see it happening anytime soon across 28 countries.