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Spanish authorities raid Google offices over tax

333 points by cocotino 10y ago

SixSigma 10y ago
Google uses Bermuda (a British overseas territory) to avoid tax liability in the EU “Google has paid €8.8 billion in fees to Bermuda,” S&D group MEP Peter Simon complained. [1] The irony being that the current president of the European Commission, Jean-Claude Juncker, was Prime Minister of Luxembourg when his administration was organising the low tax environment. [2] [3] And now the EU claims that "the Anti Tax Avoidance Package is part of the Commission's ambitious agenda for fairer, simpler and more effective corporate taxation in the EU." [4] [1] http://www.euractiv.com/section/public-affairs/news/google-facebook-and-amazon-forced-to-face-meps-tax-questions/ http://www.euractiv.com/section/public-affairs/news/google-f... [2] https://en.wikipedia.org/wiki/Jean-Claude_Juncker https://en.wikipedia.org/wiki/Jean-Claude_Juncker [3] https://en.wikipedia.org/wiki/Luxembourg_Leaks https://en.wikipedia.org/wiki/Luxembourg_Leaks [4] http://ec.europa.eu/taxation_customs/taxation/company_tax/anti_tax_avoidance/index_en.htm http://ec.europa.eu/taxation_customs/taxation/company_tax/an...
- vmateixeira 10y ago
  Nice research, thanks for sharing!
- Kristine1975 10y ago
  If Google paid €8.8b in fees to avoid paying taxes, just how much taxes are we talking about? Also seconding vmateixeira: Thanks for your research!
  - germanier 10y ago
    Well, they paid these fees to their own company so nothing was lost for them.
  - spriggan3 10y ago
    So basically Google inc (in a tax haven) makes Google Spain pay for the use of the Google brand 8 billions. Google Spain never makes a profit since it needs to pay a fee for using the brand, thus never have to pay taxes on their huge profit, that's how they get away with it. Apple does it too, with Apple Ireland in Europe. Then Google US and Apple US just have to wait for a tax amnesty in the US in order to bring back oversea un-taxed profits.
    - relearn 10y ago
      >So basically Google inc (in a tax haven) makes Google Spain pay for the use of the Google brand 8 billions. Google Spain never makes a profit since it needs to pay a fee for using the brand, thus never have to pay taxes on their huge profit, that's how they get away with it. I've seen you post this several times. Do you have a source that I could read up on this?
      - leonhandreke 10y ago
        It's a bit more complicated than that, but yes, it seems that that's how it works: https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement
    - redorb 10y ago
      They most likely would be less taxed than un-taxed. My old boss used to say 'if you went looking and paid every tax you found that you might owe no one would be in business'. Of course there should be some middle ground.
  - slv77 10y ago
    Typically the firm creates a subsidiary that holds its intellectual property like patents, software and trademarks in a tax haven like Bermuda. Since there is no operations or R&D in those locations they may have little or no employees. The subsidiaries in the high tax jurisdictions then license the IP from the Bermuda entity which siphons off profits. Without the IP cross licensing deals the French subsidiary would have access to Google's IP at no cost which would inflate their profits enormously. To offset this Google would need to build R&D centers in each market. While either scenario would likely benefit France it wouldn't likely be beneficial to Google.
    - charlesdm 10y ago
      But how does not licensing IP make sense? That creates a whole set of new problems, i.e. why should affiliated parties allow IP to be licensed for free, where the same expenses would be tax deductible for unaffiliated parties?
      - pyrale 10y ago
        It makes sense to license the IP. Pushing the IP fees to the point that the subsidiary doesn't make money, not so much. Likewise, it makes sense to loan money to your subsidiaries so they can grow. But making large, unnecessary loans of money from tax havens to sink your subsidiary's profitability doesn't sound honest.
      - spangry 10y ago
        You've actually hit on the basic 'integrity rule' for these kinds of arrangements (at least in Australia): foreign related entities must charge on-shore related entities using 'arms-length' pricing (the 'transfer pricing' rule). Same goes for the interest rates on loans made by foreign related entities, because the interest is deductible against gross profits (the 'thin capitalisation' rule). I've simplified somewhat, but this is the basic thrust of the law. Companies will end up in court when their definition of an arms-length price/interest rate is significantly higher than what the national tax authority considers to be reasonable. However, having worked in the offshore tax-haven unit in the Australia Taxation Office (I even went on a tax raid once), and then subsequently worked in tax policy for a few years, I don't think things clear cut with google (and others). I'm not even sure that transfer pricing and thin cap are particularly relevant issues. In general, I think this issue is much bigger than a simple case of companies crossing the line on transfer pricing and thin cap rules. 'Tech capital' is extremely mobile; it can literally be moved from one country to another in a matter of hours. This creates strong incentives for countries to undercut each others' corporate tax rates to attract that capital. Tax havens (and Ireland) are extreme examples of this. The only way to extract any meaningful amount of tax from tech multinationals is through some kind of international agreement on minimum corporate tax rates (one that is ratified by countries representing a large enough proportion of the world economy). You'd also have to apply trade sanctions to any country, signatory or not, that goes below this minimum threshold. In short, it's unlikely google and others will have to pay their 'fair share' of tax any time soon. This might sound defeatist, but I think countries will need to shift their tax burden on to less mobile (and therefore, more economically efficient) bases, such as domestic consumption and land.
- alkonaut 10y ago
  How can this still be possible? Shouldn't all tax legislation be such that if you break the spirit of it by having internal transfers (royalties, fees, interest) to a low-tax area, then you are still taxed based on the business that you had in the country in question, and not based on the net sum (i.e. zero). The current state of tax law is that a billion dollar company pays almost no taxes but a million dollar company pays a lot. That can't be good for anyone (apart from the $1B company). Are countries, simply put, afraid to put an end to tax schemes like this, because it would just mean that Ikea or Google would pack up and leave?
  - zo1 10y ago
    "Are countries, simply put, afraid to put an end to tax schemes like this, because it would just mean that Ikea or Google would pack up and leave?" In an "odd" application of market-competition, that is precisely what happened. Countries where Google generally did business wanted to tax Google at some X. Then along came Ireland, or Google found Ireland, and saw that they could do some legal paperwork and pay Ireland's tax rate of X-Y instead of X in the "source" countries. The point I'm making is that Google did pack up and leave, and it will happen again unless really drastic actions are taken against them. I don't think anyone wants to do that, at this point. You either bully all countries from allowing loop holes such as this, even though they don't want to. Or you disallow Google from operating in your country if they don't pay taxes on the profit from "sales" you deem occurred in your country. Small countries that want/need that tax revenue from Google, even if it is X-Y, won't like it if you compel them into complying and causing Google to "pack up and leave". It also puts the "bullying" nature of whatever international body is tasked with enforcing this into light.
    - alkonaut 10y ago
      Seems like a reasonable thing to decide at international level. We have already more or less forced (or come to an agreement with) Switzerland to not hide "dark money". Getting some stronger wording in the tax legislation on EU level should be doable, but of course the Netherlands would squirm a bit.
    - ForHackernews 10y ago
- merb 10y ago
  Exactly the same man makes speeches that these agreements are bad. And that tax ways needs to be public. I only have german articles but this guy is really really akward.
  - kuschku 10y ago
    Well, he’s a career politician. Other career politicians you should know: David Cameron, Boris Johnson, Hillary Clinton, Barack Obama, Angela Merkel, etc. They do not have much of an own opinion they want to push – often they couldn’t care much, as both solutions would be okay for them. So they vote for whatever polls or lobbies say is popular or profitable. This isn’t necessarily bad – Merkel has been called at times the "walking infratest-dimap poll", specifically because she always pushed through whatever the people considered important according to polls. Kinda democracy, I guess. But, in general, it’s nothing awkward, or special – in fact, it’s the way most of politics has been in the past decades. And considering the alternatives of politicians that are still idealistic, which at the moment are only right-populists like Trump, Farage, Petry, Le Pen, I’m wondering if, for now, career politicians might not be the better solution.
  - deleted 10y ago
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deleted 10y ago
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sheraz 10y ago
Remember that Google was also raided in Paris almost exactly one month ago [1]. [1] - https://www.theguardian.com/technology/2016/may/24/google-offices-paris-raided-french-tax-authorities https://www.theguardian.com/technology/2016/may/24/google-of...
- Thimothy 10y ago
  I'm going to hazard a guess. The french did found something useful to crack google down in that raid and gave their buddies in Spain a nudge so they can combine the efforts and maybe strike a big one against the Double Irish.
  - ggggtez 10y ago
    I don't know. It's just as likely they found nothing and asked the Spanish to take a second crack at it. Irish tax law is stupid enough already. Europe sounds like they are jumping the gun.
  - _rpd 10y ago
    More likely someone said "The French are raiding them, why aren't you!?" at a dinner party.
chvid 10y ago
I wonder what they expect to find? Or whether it is just a display of force.
- dr_swe 10y ago
  "The Paris raid aimed to establish whether Google Ireland has a permanent base there, and whether the firm was meeting its tax obligations. It was part of a probe into aggravated tax fraud and organized laundering of the proceeds."
- dspillett 10y ago
  > I wonder what they expect to find? Paperwork that contradicts statements the company has made, which would be shredded long before an inspector's arrival should a more formal appointment be arranged. > Or whether it is just a display of force. This is usually a factor in such raids too, but it only works if there is a chance something might be found so they wouldn't do it purely as a show of force.
  - comboy 10y ago
    So, I'm not an expert in tax evasion, but if you give false statements to the tax office, why would you keep statements that can bring you down on paper in your office?
    - dspillett 10y ago
      Business as usual. The false statements are saying that "business as usual" is something else. If BaU isn't something else then the statement isn't false and there is nothing to find (the paperwork will match the statements made).
conradfr 10y ago
I heard someone related to the Paris office raid comment when that happened. She was saying that multinational corporations always say that their organization and tax schemes are legal but that in reality it's so complex and spread in multiple countries that nobody really knows for sure and so it's only legal by default.
- adrianN 10y ago
  Isn't that true for almost everything though? The laws are so complex that no normal citizen can understand them. Even lawyers seem to disagree now and then.
  - Trombone12 10y ago
    No, the laws are complex when dealing with complex situations and ownership graphs of companies can be basically any finite directed graph. But obviously most ownership is a simple two node thing with a single directed edge connecting the nodes. These are simple to decide if they are legal.
    - tvanantwerp 10y ago
      Unfortunately, law can still be complex in what seems like a simple situation. Statutes aren't exactly written with strongly-typed languages or run against integration tests before being passed. Laws are often vague and difficult to precisely interpret, and they usually have unintended consequences. This is true regardless of the complexity of the situation to which the law is applied.
      - ptaipale 10y ago
        Add to this words attributed to Napoleon Bonaparte: "A Constitution should be short and obscure." Tax raids are often a symptom of such legislative tradition where laws are written so as to allow authorities to apply loopholes to get their way (as opposed to loopholes for citizens or companies). In my country (Finland) there are practically none, and the tax collection procedure is very effective. This amount of control comes at a price, of course; regulation is predictable but there's a lot of it (and recently the development has been towards more and more rapid and unpredictable changes, often somewhat to do with how to apply EU regulations).
dagi3d 10y ago
Even Google Campus :/
josephg 10y ago
I would expect google to keep all financial documents inside Google Drive. In doing so, I wonder what is left in the office for the Spanish authorities to find in a raid? (Google is ruthlessly paperless internally.)
- Kristine1975 10y ago
  >Google is ruthlessly paperless internally. Not if they have to keep information on paper to comply with the law.
  - ocdtrekkie 10y ago
    I would also not be surprised to find that some of the financial department sorts of people Google employs are exceedingly old school or ordinary.
  - wklauss 10y ago
    This is the case. Spansish law requires companies to keep a copy of accounting books and register them periodically. That doesn't mean they have to be in paper form all the time, but they need to produce a copy if requested for tax auditing reasons. The "raid" goal is to prevent tampering of the files during the request.
  - rs999gti 10y ago
    > Not if they have to keep information on paper to comply with the law. This really means print on demand.
- ForHackernews 10y ago
  Google Docs sets browser cookies. If you have a surprise raid with logged-in workstations, you have access to Drive documents as well.
  - josu 10y ago
    Just to give some context, a few years ago the Spanish Police arrested the leaders of Anonymous [1]. As a Spaniard, my opinion is that this is just an intimidatory and political move. [1] http://www.cnet.com/news/spain-says-it-has-arrested-anonymous-hackers/ http://www.cnet.com/news/spain-says-it-has-arrested-anonymou...
Mieaou 10y ago
Good! Let all those Brexit refugee companies move their HQs to EU.
lazyant 10y ago
Google translate of http://www.elmundo.es/economia/2016/06/30/5774ead6ca4741db168b45c9.html http://www.elmundo.es/economia/2016/06/30/5774ead6ca4741db16... "the background of all these investigations are the lack of tax harmonization in the EU and tax strategy of the company, like others such as Apple or Twitter, for example. Sales declaring these firms in each country are unrelated to their actual billing. Subsidiaries in Spain-and other European countries act as agents of another parent company based in countries with lower tax burdens as Holland or Ireland. National subsidiaries taxed only by the minimum commissions they receive from their Dutch or Irish matrix, most of the turnover recorded paying minimum tax rates."
em3rgent0rdr 10y ago
Could this be why Google calendar is down? Is Google going Galt? :)
- 02102192121 10y ago
  What do you mean by that? Is Google going to pay all the "content" producing Galts that it profits off (and has never paid)?
jordanb 10y ago
Why can't Spanish (and French) authorities simply subpoena any info they need from Google? Is Google able to shield relevant data by keeping it in Ireland or the US?
- rtkwe 10y ago
  If they feared that Google might destroy evidence a raid makes sense over subpoenaing. It's also bigger and flashier so if the government wanted to make a show of it and 'send a message' (either to other companies or just seem to voters like they're being tough on companies dodging taxes (legally)) that's another reason that they'd go with a raid.
- deelowe 10y ago
  Because these raids are PR stunts. Tax laws are setup in such a way that by LEGALLY taking advantage of various incentives, a multinational company can vastly reduce it's tax burden. Individual countries are somewhat powerless to do anything b/c they'd have to have some sort of power to influence the tax laws of other countries (not going to happen). This is why there's so much talk over international agreements.
pfortuny 10y ago
Another PR stunt of the minister, Montoro. No more than that. He also makes public a lost of debtors to the IRS (which should be illegal but he gets away with anything). Edit: Spaniard here.
- cocotino 10y ago
  "should be illegal" means it is not. What exactly is your point? Shaming debtors of the country is not ok?
  - tinco 10y ago
    Well, I suppose anyone who is a debtor to the IRS is a criminal . In The Netherlands it isn't legal to use the full name of a criminal in any publication, so it could be that the EU is a bit different in the way it treats criminals.
    - deleted 10y ago
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    - pfortuny 10y ago
      You are innocent until a judge declares you are not. Even in tax evasion. Edit: sorry, I misunderstood your comment...
  - ghurtado 10y ago
    Given the current climate of corruption, fraud and tax evasion in Spain, there is no problem in my book with publicly shaming offenders and fraudsters, specially when most of them are elite actors or millionaires. The problem is that the names are being made public while they are "under investigation", which destroys the basic right of presumption of innocence, and (more importantly) they are being released by a Minister who belongs to an embattled and corrupt government, so it absolutely smells like the tax ministry is being used as a political weapon.
  - pfortuny 10y ago
    Shaming them is not legal because it is defamation and the authority (Montoro) is obliged to denounce it, not to make it public. Let the media make whatever is public, public, but not the minister. He has, several times, menaced the media (for example, "El Mundo", to "speak out about you")... I find that dirty. Edit: And a corruption of justice (presumption of innocence even for fiscal deeds). (See comments above): he is required by Law (since 2003) to make that list public. However he (coincidentally) started publishing it last year (election year...). From my point of view, this is pathetic.
KKKKkkkk1 10y ago
Spain shaking down Google, while the US shakes down VW. A trade war by any other name...
- myohan 10y ago
  the only difference is VW admitted wrongfulness
- cocotino 10y ago
  the fuck has Spain to do with VW
  - RobertoG 10y ago
    A lot actually: https://en.wikipedia.org/wiki/SEAT https://en.wikipedia.org/wiki/SEAT (Not that I agree with the grandparent)
- CydeWeys 10y ago
  I don't see how you can possibly make this comparison. What VW did is so much worse than legal but creative tax strategies. VW deserves to pay for all of the harm it did to the environment and our lungs.
  - kuschku 10y ago
    Yes, just like GM, BMW, Mitsubishi, Hyundai, Ford, Fiat do. All of which bought and used the exact same defeat device. So why is only VW being punished, and why almost 1.5 years after the EPA learnt about it?
    - CydeWeys 10y ago
      Do you have a source? Those are extraordinary claims. I'm not aware of any other cheating anywhere close to the magnitude of what VW did. Also, what "defeat device" are you talking about? VW's cheat was in software; it wasn't some specific device. And are you seriously surprised that it can take 1.5 years for a massive multi-billion dollar lawsuit to wind its way through federal courts? If you think 1.5 years is long, look at the Exxon-Valdez settlement, parts of which are still unpaid 28 years later!
noahmbarr 10y ago
This reminds me of Zooloander smashing the iMac on the ground trying to find file/folders
noahmbarr 10y ago
This reminds me of Zooloander smashing the iMac on the ground trying to find file/folders
ComodoHacker 10y ago
IMO Google is so rich and so profitable that it could afford to pay all taxes due in all countries fairly, without any "optimization", while staying profitable and not undermining any R&D program or long-term project.
- spacehome 10y ago
  As a Google shareholder, I'm quite happy that they optimize everything within the bounds of the law.
  - ComodoHacker 10y ago
    Monsters of such scale should be viewed from different points, including social responsibility. BTW why do you bother as a shareholder, do you receive any dividends?
    - spacehome 10y ago
      I don't have the slightest idea if they pay dividends. I own Google shares indirectly via ownership of index funds.
      - ComodoHacker 10y ago
        Google shares will grow regardless of how much taxes they pay. But they may fluctuate if tax evasion scandal breaks.
        spacehome 10y ago
        That's strawmanning my position. I would prefer they grow by 7.1% than 7%.
    - zig 10y ago
      It's very easy to look at Alphabet's financials and see that there are no preferred or common shareholder dividends. Since you haven't done that, I presume you are genuinely curious. There are probably a lot of reasons that people invest in corporations that don't pay a dividend. The "most obvious" is that you believe the company is growing. The organization will reinvest in itself -- instead of paying you a dividend -- and increase share price to a degree greater than you would have gotten with a quarterly dividend.
drzaiusapelord 10y ago
>Not sure why you're being downvoted. HN is pretty intolerant of anything that isn't the far left, which is a bit ironic for what's supposed to be an entrepreneurial forum. This change seemed to happen a year or two ago. I suspect HN has been fully "redditized" now with college identity politics being the prominent narrative. The drive-by downvotes are just a symptom of that.
- JoshTriplett 10y ago
  (Off-topic meta-conversation.) HN tends to downvote any political comments, especially comments that turn the discussion more political, even in a story that already tangentially touches on politics. The HN guidelines more-or-less document the former; the latter seems like a natural consequence. In general, politics is almost always off-topic here; there are many other places to discuss politics. (Personally, I tend to agree with http://lesswrong.com/lw/gw/politics_is_the_mindkiller/ http://lesswrong.com/lw/gw/politics_is_the_mindkiller/ .) Downvotes are a symptom of that: people downvote politics they disagree with and upvote politics they agree with. Politics, more so than many other topics, tends to bring out "downvote = disagree", not just "downvote = not a contribution". That's in addition to the people (myself often included) who downvote any comment that turns the discussion more political, because such comments typically reduce the quality and novelty of the discussion.
  - drzaiusapelord 10y ago
    >HN tends to downvote any political comments This is, by far, the most political site I go to. The top comments are often politicized and the top stories are typical social media "outrage" stories. I think you're painting a picture of HN that really doesn't exist, but did probably long ago. HN now suffers from the 'eternal September' many popular forums do. Techy forum participants are often high school and college students with far left anti-US views common in youth. Its no surprise that these viewpoints are the dominant narrative here. I imagine there are people who downvote all politics, but they are clearly a minority here. The downvote button is just a agree/disagree button in practice and shows an obvious political bias.
melenaboija 10y ago
I don't think there is a justification for big corporations to do what they do and they have to be pursued. I've been working for a bank in a tax haven in Europe and I've seen that financial engineering powerful people use has been a known and accepted tool for the governments for a while, and now that Europe is living a financial crisis governments start asking. These companies play in an absolutely different league than employees, self employed and small companies in Europe where they make you pay strictly all the taxes to mantain our social structure. They have big teams of lawyers, financial experts and advisors specialized in tax havens just to make grow their revenues in billions avoiding to pay taxes in the countries they have presence. Totally unfair for regular people like me. http://www.uspirgedfund.org/reports/usp/offshore-shell-games-2015 http://www.uspirgedfund.org/reports/usp/offshore-shell-games...
- wyager 10y ago
  Why are you blaming the companies for acting rationally, rather than the governments for creating absurd tax environments? I agree it's unfair, but I can't fault anyone for trying to legally minimize their tax burden. Tax law should just be simple enough that anyone can do it themselves.
  - bleepbloop22 10y ago
    Shouldn't blame the companies for lobbying and creating the tax laws either -- they're just acting rationally! Maybe we can blame people for behaving unethically instead of believing this shlock?
    - tim333 10y ago
      Blaming is of limited use. What we need is a solution to make things better. Something like a global tax office to deal with global companies might do it.
      - criley2 10y ago
        "Global tax office" You would quite literally see revolt / insurrection in the western world, especially America and other former anglo colonies, at the idea of a One World Tax Authority, which would rightfully be seen as a part of one world government, the so-called New World Order that conservatives have maintain DEFCON1 fear of for decades. Even if it did exist, if if you had a global tax authority with the weight of a global government to enforce it... that doesn't necessarily solve the problem. There are plenty of tax havens in American states despite a national legislature that could squash them. On big reason Americans were unrepresented in the Panama Papers leak is that Americans used on-shored havens. They had far less need of an offshore haven when current corporate tax rules allow you to incorporate and tax dodge in Delaware or another friendly state without leaving the country. If the US can't or won't control domestic tax havens, I'm not so sure a global government would have better luck. Plus, one world tax authority means one single target for corruption. The Googles of the world, with literal billions to spend, they'd hyper-focus on corrupting that authority to their desires.
danielonco 10y ago
Don't be evil
george_ciobanu 10y ago
This is ridiculous and a form of bullying. If you want multinationals to pay tax, fix the laws. Were they really expecting Google to fake anything? No, they were looking to cause bad press. Form international alliances and create a proper incentive structure if you want to collect.
- andrewprock 10y ago
  Google's tax avoidance is likewise ridiculous. Neither the bullying, nor the avoidance are illegal. If you support one, you should support the other.
  - deleted 10y ago
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nickbauman 10y ago
This all points back to the Multilateral Agreement on Investment, which reveals the intention of transnational corporations to try to limit sovereignty. It didn't pass but it's terrific object lesson (especially in the aftermath of Brexit). The irony is that the economic incompatibility thesis claims liberalization of capital tends to undermine free trade, because capital flows make very volatile markets, ultimately making it much harder for trade to take place. So what happens is the reaction to freeing up capital is increased protectionism which is what's generally happened since the '70s. https://en.wikipedia.org/wiki/Multilateral_Agreement_on_Investment https://en.wikipedia.org/wiki/Multilateral_Agreement_on_Inve...
iagooar 10y ago
Ironic, how a corrupt government tries to pursue corruption.
kafkaesq 10y ago
From El País, a little over an hour ago: In the case of the Spanish subsidiary, the Tax Office is analyzing why Google pays so little tax in Spain despite making multimillion-selling. With this action, the Agency's technical investigators seek to determine if the international structure of the world's leading Internet search engine is not legitimate. Toward this aim they will try to prove that functionality the group attributed to its Spanish subsidiary are less than they actually performed. The record is linked to an investigation into possible tax evasion. The company, known for its Internet search engine, has spent years in the crosshairs of Finance for its tax system, as part of their income managed through Ireland. Thus, it could be artificially reducing its business in Spain and lowering its tax bill. Tax Office searches Google Spain and Google Ireland for evidence of tax fraud http://economia.elpais.com/economia/2016/06/30/actualidad/1467280502_356974.html http://economia.elpais.com/economia/2016/06/30/actualidad/14...
peter303 10y ago
Panama Papers showed a significant fraction of EU officials stash money in low tax havens. Icelands PM resigned as a result. The Panama Papers was a leak of terabytes of documents from a legal office who sets up these corporations and accounts. Ironically the USA is a top tax haven due to anonymous shell corporations you can create in several states. Lots being stashed here due to anomymity and economic safety.
- tvanantwerp 10y ago
  The US is a pretty poor corporate tax haven. Our corporate rates are higher than pretty much everybody in the EU (including soon-to-be-out-of-the-EU Britain). It's one of the major contributing factors to corporate inversions (the moving of corporate headquarters out of the US) and companies like Apple not bringing overseas profits back to the US.
xchip 10y ago
Pay Google pay! As everyone else!!
ojosilva 10y ago
Actually, I find the bouncing around of fees and payments behind these internet companies very complex, and maybe even justified to some extent. The value-add that generates the taxable income is almost entirely elsewhere. Let's say Google Spain got €100M in revenue and had €20M local expenses (mostly sales, local support and localization). Now, say they owe €30M to US HQ for the service, servers, R&D, IP, support, etc... among other expenses. (For simplicity, let's suppose everything is hosted and originates in California.) That leaves Spain with €50M in profit, ready to be taxed by Spanish tax authorities. This sounds quite out of proportion. The great value-added is not in Spain, it's in the US. Google HQ could easily establish Google Spain owes €80M in service costs, thus local profit is nil. To me that's fair: corporate has the right to charge whatever they see fit for their services and collect profits accordingly. They way I see it, paying fees to the Bermudas is a US, not Spain, tax evasion problem.
- gshulegaard 10y ago
  Going to be honest, a little confused where the Bermudas or the US comes into this... Apparently this is regarding Google reporting the bulk of their sales out of Ireland and therefore not paying taxes in Europe? This is based on maybe a loophole where Google makes sure to have Ireland staff conclude all sales contracts...

333 points by cocotino 10y ago

Google uses Bermuda (a British overseas territory) to avoid tax liability in the EU “Google has paid €8.8 billion in fees to Bermuda,” S&D group MEP Peter Simon complained. [1] The irony being that the current president of the European Commission, Jean-Claude Juncker, was Prime Minister of Luxembourg when his administration was organising the low tax environment. [2] [3] And now the EU claims that "the Anti Tax Avoidance Package is part of the Commission's ambitious agenda for fairer, simpler and more effective corporate taxation in the EU." [4] [1] http://www.euractiv.com/section/public-affairs/news/google-facebook-and-amazon-forced-to-face-meps-tax-questions/ http://www.euractiv.com/section/public-affairs/news/google-f... [2] https://en.wikipedia.org/wiki/Jean-Claude_Juncker https://en.wikipedia.org/wiki/Jean-Claude_Juncker [3] https://en.wikipedia.org/wiki/Luxembourg_Leaks https://en.wikipedia.org/wiki/Luxembourg_Leaks [4] http://ec.europa.eu/taxation_customs/taxation/company_tax/anti_tax_avoidance/index_en.htm http://ec.europa.eu/taxation_customs/taxation/company_tax/an...

vmateixeira 10y ago
Nice research, thanks for sharing!
Kristine1975 10y ago
If Google paid €8.8b in fees to avoid paying taxes, just how much taxes are we talking about? Also seconding vmateixeira: Thanks for your research!
- germanier 10y ago
  Well, they paid these fees to their own company so nothing was lost for them.
- spriggan3 10y ago
  So basically Google inc (in a tax haven) makes Google Spain pay for the use of the Google brand 8 billions. Google Spain never makes a profit since it needs to pay a fee for using the brand, thus never have to pay taxes on their huge profit, that's how they get away with it. Apple does it too, with Apple Ireland in Europe. Then Google US and Apple US just have to wait for a tax amnesty in the US in order to bring back oversea un-taxed profits.
  - relearn 10y ago
    >So basically Google inc (in a tax haven) makes Google Spain pay for the use of the Google brand 8 billions. Google Spain never makes a profit since it needs to pay a fee for using the brand, thus never have to pay taxes on their huge profit, that's how they get away with it. I've seen you post this several times. Do you have a source that I could read up on this?
    - leonhandreke 10y ago
      It's a bit more complicated than that, but yes, it seems that that's how it works: https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement
  - redorb 10y ago
    They most likely would be less taxed than un-taxed. My old boss used to say 'if you went looking and paid every tax you found that you might owe no one would be in business'. Of course there should be some middle ground.
- slv77 10y ago
  Typically the firm creates a subsidiary that holds its intellectual property like patents, software and trademarks in a tax haven like Bermuda. Since there is no operations or R&D in those locations they may have little or no employees. The subsidiaries in the high tax jurisdictions then license the IP from the Bermuda entity which siphons off profits. Without the IP cross licensing deals the French subsidiary would have access to Google's IP at no cost which would inflate their profits enormously. To offset this Google would need to build R&D centers in each market. While either scenario would likely benefit France it wouldn't likely be beneficial to Google.
  - charlesdm 10y ago
    But how does not licensing IP make sense? That creates a whole set of new problems, i.e. why should affiliated parties allow IP to be licensed for free, where the same expenses would be tax deductible for unaffiliated parties?
    - pyrale 10y ago
      It makes sense to license the IP. Pushing the IP fees to the point that the subsidiary doesn't make money, not so much. Likewise, it makes sense to loan money to your subsidiaries so they can grow. But making large, unnecessary loans of money from tax havens to sink your subsidiary's profitability doesn't sound honest.
    - spangry 10y ago
      You've actually hit on the basic 'integrity rule' for these kinds of arrangements (at least in Australia): foreign related entities must charge on-shore related entities using 'arms-length' pricing (the 'transfer pricing' rule). Same goes for the interest rates on loans made by foreign related entities, because the interest is deductible against gross profits (the 'thin capitalisation' rule). I've simplified somewhat, but this is the basic thrust of the law. Companies will end up in court when their definition of an arms-length price/interest rate is significantly higher than what the national tax authority considers to be reasonable. However, having worked in the offshore tax-haven unit in the Australia Taxation Office (I even went on a tax raid once), and then subsequently worked in tax policy for a few years, I don't think things clear cut with google (and others). I'm not even sure that transfer pricing and thin cap are particularly relevant issues. In general, I think this issue is much bigger than a simple case of companies crossing the line on transfer pricing and thin cap rules. 'Tech capital' is extremely mobile; it can literally be moved from one country to another in a matter of hours. This creates strong incentives for countries to undercut each others' corporate tax rates to attract that capital. Tax havens (and Ireland) are extreme examples of this. The only way to extract any meaningful amount of tax from tech multinationals is through some kind of international agreement on minimum corporate tax rates (one that is ratified by countries representing a large enough proportion of the world economy). You'd also have to apply trade sanctions to any country, signatory or not, that goes below this minimum threshold. In short, it's unlikely google and others will have to pay their 'fair share' of tax any time soon. This might sound defeatist, but I think countries will need to shift their tax burden on to less mobile (and therefore, more economically efficient) bases, such as domestic consumption and land.
alkonaut 10y ago
How can this still be possible? Shouldn't all tax legislation be such that if you break the spirit of it by having internal transfers (royalties, fees, interest) to a low-tax area, then you are still taxed based on the business that you had in the country in question, and not based on the net sum (i.e. zero). The current state of tax law is that a billion dollar company pays almost no taxes but a million dollar company pays a lot. That can't be good for anyone (apart from the $1B company). Are countries, simply put, afraid to put an end to tax schemes like this, because it would just mean that Ikea or Google would pack up and leave?
- zo1 10y ago
  "Are countries, simply put, afraid to put an end to tax schemes like this, because it would just mean that Ikea or Google would pack up and leave?" In an "odd" application of market-competition, that is precisely what happened. Countries where Google generally did business wanted to tax Google at some X. Then along came Ireland, or Google found Ireland, and saw that they could do some legal paperwork and pay Ireland's tax rate of X-Y instead of X in the "source" countries. The point I'm making is that Google did pack up and leave, and it will happen again unless really drastic actions are taken against them. I don't think anyone wants to do that, at this point. You either bully all countries from allowing loop holes such as this, even though they don't want to. Or you disallow Google from operating in your country if they don't pay taxes on the profit from "sales" you deem occurred in your country. Small countries that want/need that tax revenue from Google, even if it is X-Y, won't like it if you compel them into complying and causing Google to "pack up and leave". It also puts the "bullying" nature of whatever international body is tasked with enforcing this into light.
  - alkonaut 10y ago
    Seems like a reasonable thing to decide at international level. We have already more or less forced (or come to an agreement with) Switzerland to not hide "dark money". Getting some stronger wording in the tax legislation on EU level should be doable, but of course the Netherlands would squirm a bit.
  - ForHackernews 10y ago
merb 10y ago
Exactly the same man makes speeches that these agreements are bad. And that tax ways needs to be public. I only have german articles but this guy is really really akward.
- kuschku 10y ago
  Well, he’s a career politician. Other career politicians you should know: David Cameron, Boris Johnson, Hillary Clinton, Barack Obama, Angela Merkel, etc. They do not have much of an own opinion they want to push – often they couldn’t care much, as both solutions would be okay for them. So they vote for whatever polls or lobbies say is popular or profitable. This isn’t necessarily bad – Merkel has been called at times the "walking infratest-dimap poll", specifically because she always pushed through whatever the people considered important according to polls. Kinda democracy, I guess. But, in general, it’s nothing awkward, or special – in fact, it’s the way most of politics has been in the past decades. And considering the alternatives of politicians that are still idealistic, which at the moment are only right-populists like Trump, Farage, Petry, Le Pen, I’m wondering if, for now, career politicians might not be the better solution.
- deleted 10y ago
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sheraz 10y ago

Remember that Google was also raided in Paris almost exactly one month ago [1]. [1] - https://www.theguardian.com/technology/2016/may/24/google-offices-paris-raided-french-tax-authorities https://www.theguardian.com/technology/2016/may/24/google-of...

Thimothy 10y ago
I'm going to hazard a guess. The french did found something useful to crack google down in that raid and gave their buddies in Spain a nudge so they can combine the efforts and maybe strike a big one against the Double Irish.
- ggggtez 10y ago
  I don't know. It's just as likely they found nothing and asked the Spanish to take a second crack at it. Irish tax law is stupid enough already. Europe sounds like they are jumping the gun.
- _rpd 10y ago
  More likely someone said "The French are raiding them, why aren't you!?" at a dinner party.

chvid 10y ago

I wonder what they expect to find? Or whether it is just a display of force.

dr_swe 10y ago
"The Paris raid aimed to establish whether Google Ireland has a permanent base there, and whether the firm was meeting its tax obligations. It was part of a probe into aggravated tax fraud and organized laundering of the proceeds."
dspillett 10y ago
> I wonder what they expect to find? Paperwork that contradicts statements the company has made, which would be shredded long before an inspector's arrival should a more formal appointment be arranged. > Or whether it is just a display of force. This is usually a factor in such raids too, but it only works if there is a chance something might be found so they wouldn't do it purely as a show of force.
- comboy 10y ago
  So, I'm not an expert in tax evasion, but if you give false statements to the tax office, why would you keep statements that can bring you down on paper in your office?
  - dspillett 10y ago
    Business as usual. The false statements are saying that "business as usual" is something else. If BaU isn't something else then the statement isn't false and there is nothing to find (the paperwork will match the statements made).

conradfr 10y ago

I heard someone related to the Paris office raid comment when that happened. She was saying that multinational corporations always say that their organization and tax schemes are legal but that in reality it's so complex and spread in multiple countries that nobody really knows for sure and so it's only legal by default.

adrianN 10y ago
Isn't that true for almost everything though? The laws are so complex that no normal citizen can understand them. Even lawyers seem to disagree now and then.
- Trombone12 10y ago
  No, the laws are complex when dealing with complex situations and ownership graphs of companies can be basically any finite directed graph. But obviously most ownership is a simple two node thing with a single directed edge connecting the nodes. These are simple to decide if they are legal.
  - tvanantwerp 10y ago
    Unfortunately, law can still be complex in what seems like a simple situation. Statutes aren't exactly written with strongly-typed languages or run against integration tests before being passed. Laws are often vague and difficult to precisely interpret, and they usually have unintended consequences. This is true regardless of the complexity of the situation to which the law is applied.
    - ptaipale 10y ago
      Add to this words attributed to Napoleon Bonaparte: "A Constitution should be short and obscure." Tax raids are often a symptom of such legislative tradition where laws are written so as to allow authorities to apply loopholes to get their way (as opposed to loopholes for citizens or companies). In my country (Finland) there are practically none, and the tax collection procedure is very effective. This amount of control comes at a price, of course; regulation is predictable but there's a lot of it (and recently the development has been towards more and more rapid and unpredictable changes, often somewhat to do with how to apply EU regulations).

dagi3d 10y ago

Even Google Campus :/

josephg 10y ago

I would expect google to keep all financial documents inside Google Drive. In doing so, I wonder what is left in the office for the Spanish authorities to find in a raid? (Google is ruthlessly paperless internally.)

Kristine1975 10y ago
>Google is ruthlessly paperless internally. Not if they have to keep information on paper to comply with the law.
- ocdtrekkie 10y ago
  I would also not be surprised to find that some of the financial department sorts of people Google employs are exceedingly old school or ordinary.
- wklauss 10y ago
  This is the case. Spansish law requires companies to keep a copy of accounting books and register them periodically. That doesn't mean they have to be in paper form all the time, but they need to produce a copy if requested for tax auditing reasons. The "raid" goal is to prevent tampering of the files during the request.
- rs999gti 10y ago
  > Not if they have to keep information on paper to comply with the law. This really means print on demand.
ForHackernews 10y ago
Google Docs sets browser cookies. If you have a surprise raid with logged-in workstations, you have access to Drive documents as well.
- josu 10y ago
  Just to give some context, a few years ago the Spanish Police arrested the leaders of Anonymous [1]. As a Spaniard, my opinion is that this is just an intimidatory and political move. [1] http://www.cnet.com/news/spain-says-it-has-arrested-anonymous-hackers/ http://www.cnet.com/news/spain-says-it-has-arrested-anonymou...

Mieaou 10y ago

Good! Let all those Brexit refugee companies move their HQs to EU.

lazyant 10y ago

Google translate of http://www.elmundo.es/economia/2016/06/30/5774ead6ca4741db168b45c9.html http://www.elmundo.es/economia/2016/06/30/5774ead6ca4741db16... "the background of all these investigations are the lack of tax harmonization in the EU and tax strategy of the company, like others such as Apple or Twitter, for example. Sales declaring these firms in each country are unrelated to their actual billing. Subsidiaries in Spain-and other European countries act as agents of another parent company based in countries with lower tax burdens as Holland or Ireland. National subsidiaries taxed only by the minimum commissions they receive from their Dutch or Irish matrix, most of the turnover recorded paying minimum tax rates."

em3rgent0rdr 10y ago

Could this be why Google calendar is down? Is Google going Galt? :)

02102192121 10y ago
What do you mean by that? Is Google going to pay all the "content" producing Galts that it profits off (and has never paid)?

jordanb 10y ago

Why can't Spanish (and French) authorities simply subpoena any info they need from Google? Is Google able to shield relevant data by keeping it in Ireland or the US?

rtkwe 10y ago
If they feared that Google might destroy evidence a raid makes sense over subpoenaing. It's also bigger and flashier so if the government wanted to make a show of it and 'send a message' (either to other companies or just seem to voters like they're being tough on companies dodging taxes (legally)) that's another reason that they'd go with a raid.
deelowe 10y ago
Because these raids are PR stunts. Tax laws are setup in such a way that by LEGALLY taking advantage of various incentives, a multinational company can vastly reduce it's tax burden. Individual countries are somewhat powerless to do anything b/c they'd have to have some sort of power to influence the tax laws of other countries (not going to happen). This is why there's so much talk over international agreements.

pfortuny 10y ago

Another PR stunt of the minister, Montoro. No more than that. He also makes public a lost of debtors to the IRS (which should be illegal but he gets away with anything). Edit: Spaniard here.

cocotino 10y ago
"should be illegal" means it is not. What exactly is your point? Shaming debtors of the country is not ok?
- tinco 10y ago
  Well, I suppose anyone who is a debtor to the IRS is a criminal . In The Netherlands it isn't legal to use the full name of a criminal in any publication, so it could be that the EU is a bit different in the way it treats criminals.
  - deleted 10y ago
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  - pfortuny 10y ago
    You are innocent until a judge declares you are not. Even in tax evasion. Edit: sorry, I misunderstood your comment...
- ghurtado 10y ago
  Given the current climate of corruption, fraud and tax evasion in Spain, there is no problem in my book with publicly shaming offenders and fraudsters, specially when most of them are elite actors or millionaires. The problem is that the names are being made public while they are "under investigation", which destroys the basic right of presumption of innocence, and (more importantly) they are being released by a Minister who belongs to an embattled and corrupt government, so it absolutely smells like the tax ministry is being used as a political weapon.
- pfortuny 10y ago
  Shaming them is not legal because it is defamation and the authority (Montoro) is obliged to denounce it, not to make it public. Let the media make whatever is public, public, but not the minister. He has, several times, menaced the media (for example, "El Mundo", to "speak out about you")... I find that dirty. Edit: And a corruption of justice (presumption of innocence even for fiscal deeds). (See comments above): he is required by Law (since 2003) to make that list public. However he (coincidentally) started publishing it last year (election year...). From my point of view, this is pathetic.

KKKKkkkk1 10y ago

Spain shaking down Google, while the US shakes down VW. A trade war by any other name...

myohan 10y ago
the only difference is VW admitted wrongfulness
cocotino 10y ago
the fuck has Spain to do with VW
- RobertoG 10y ago
  A lot actually: https://en.wikipedia.org/wiki/SEAT https://en.wikipedia.org/wiki/SEAT (Not that I agree with the grandparent)
CydeWeys 10y ago
I don't see how you can possibly make this comparison. What VW did is so much worse than legal but creative tax strategies. VW deserves to pay for all of the harm it did to the environment and our lungs.
- kuschku 10y ago
  Yes, just like GM, BMW, Mitsubishi, Hyundai, Ford, Fiat do. All of which bought and used the exact same defeat device. So why is only VW being punished, and why almost 1.5 years after the EPA learnt about it?
  - CydeWeys 10y ago
    Do you have a source? Those are extraordinary claims. I'm not aware of any other cheating anywhere close to the magnitude of what VW did. Also, what "defeat device" are you talking about? VW's cheat was in software; it wasn't some specific device. And are you seriously surprised that it can take 1.5 years for a massive multi-billion dollar lawsuit to wind its way through federal courts? If you think 1.5 years is long, look at the Exxon-Valdez settlement, parts of which are still unpaid 28 years later!

noahmbarr 10y ago

This reminds me of Zooloander smashing the iMac on the ground trying to find file/folders

noahmbarr 10y ago

This reminds me of Zooloander smashing the iMac on the ground trying to find file/folders

ComodoHacker 10y ago

IMO Google is so rich and so profitable that it could afford to pay all taxes due in all countries fairly, without any "optimization", while staying profitable and not undermining any R&D program or long-term project.

spacehome 10y ago
As a Google shareholder, I'm quite happy that they optimize everything within the bounds of the law.
- ComodoHacker 10y ago
  Monsters of such scale should be viewed from different points, including social responsibility. BTW why do you bother as a shareholder, do you receive any dividends?
  - spacehome 10y ago
    I don't have the slightest idea if they pay dividends. I own Google shares indirectly via ownership of index funds.
    - ComodoHacker 10y ago
      Google shares will grow regardless of how much taxes they pay. But they may fluctuate if tax evasion scandal breaks.
      - spacehome 10y ago
        That's strawmanning my position. I would prefer they grow by 7.1% than 7%.
  - zig 10y ago
    It's very easy to look at Alphabet's financials and see that there are no preferred or common shareholder dividends. Since you haven't done that, I presume you are genuinely curious. There are probably a lot of reasons that people invest in corporations that don't pay a dividend. The "most obvious" is that you believe the company is growing. The organization will reinvest in itself -- instead of paying you a dividend -- and increase share price to a degree greater than you would have gotten with a quarterly dividend.

drzaiusapelord 10y ago

>Not sure why you're being downvoted. HN is pretty intolerant of anything that isn't the far left, which is a bit ironic for what's supposed to be an entrepreneurial forum. This change seemed to happen a year or two ago. I suspect HN has been fully "redditized" now with college identity politics being the prominent narrative. The drive-by downvotes are just a symptom of that.

JoshTriplett 10y ago
(Off-topic meta-conversation.) HN tends to downvote any political comments, especially comments that turn the discussion more political, even in a story that already tangentially touches on politics. The HN guidelines more-or-less document the former; the latter seems like a natural consequence. In general, politics is almost always off-topic here; there are many other places to discuss politics. (Personally, I tend to agree with http://lesswrong.com/lw/gw/politics_is_the_mindkiller/ http://lesswrong.com/lw/gw/politics_is_the_mindkiller/ .) Downvotes are a symptom of that: people downvote politics they disagree with and upvote politics they agree with. Politics, more so than many other topics, tends to bring out "downvote = disagree", not just "downvote = not a contribution". That's in addition to the people (myself often included) who downvote any comment that turns the discussion more political, because such comments typically reduce the quality and novelty of the discussion.
- drzaiusapelord 10y ago
  >HN tends to downvote any political comments This is, by far, the most political site I go to. The top comments are often politicized and the top stories are typical social media "outrage" stories. I think you're painting a picture of HN that really doesn't exist, but did probably long ago. HN now suffers from the 'eternal September' many popular forums do. Techy forum participants are often high school and college students with far left anti-US views common in youth. Its no surprise that these viewpoints are the dominant narrative here. I imagine there are people who downvote all politics, but they are clearly a minority here. The downvote button is just a agree/disagree button in practice and shows an obvious political bias.

melenaboija 10y ago

I don't think there is a justification for big corporations to do what they do and they have to be pursued. I've been working for a bank in a tax haven in Europe and I've seen that financial engineering powerful people use has been a known and accepted tool for the governments for a while, and now that Europe is living a financial crisis governments start asking. These companies play in an absolutely different league than employees, self employed and small companies in Europe where they make you pay strictly all the taxes to mantain our social structure. They have big teams of lawyers, financial experts and advisors specialized in tax havens just to make grow their revenues in billions avoiding to pay taxes in the countries they have presence. Totally unfair for regular people like me. http://www.uspirgedfund.org/reports/usp/offshore-shell-games-2015 http://www.uspirgedfund.org/reports/usp/offshore-shell-games...

wyager 10y ago
Why are you blaming the companies for acting rationally, rather than the governments for creating absurd tax environments? I agree it's unfair, but I can't fault anyone for trying to legally minimize their tax burden. Tax law should just be simple enough that anyone can do it themselves.
- bleepbloop22 10y ago
  Shouldn't blame the companies for lobbying and creating the tax laws either -- they're just acting rationally! Maybe we can blame people for behaving unethically instead of believing this shlock?
  - tim333 10y ago
    Blaming is of limited use. What we need is a solution to make things better. Something like a global tax office to deal with global companies might do it.
    - criley2 10y ago
      "Global tax office" You would quite literally see revolt / insurrection in the western world, especially America and other former anglo colonies, at the idea of a One World Tax Authority, which would rightfully be seen as a part of one world government, the so-called New World Order that conservatives have maintain DEFCON1 fear of for decades. Even if it did exist, if if you had a global tax authority with the weight of a global government to enforce it... that doesn't necessarily solve the problem. There are plenty of tax havens in American states despite a national legislature that could squash them. On big reason Americans were unrepresented in the Panama Papers leak is that Americans used on-shored havens. They had far less need of an offshore haven when current corporate tax rules allow you to incorporate and tax dodge in Delaware or another friendly state without leaving the country. If the US can't or won't control domestic tax havens, I'm not so sure a global government would have better luck. Plus, one world tax authority means one single target for corruption. The Googles of the world, with literal billions to spend, they'd hyper-focus on corrupting that authority to their desires.

danielonco 10y ago

Don't be evil

george_ciobanu 10y ago

This is ridiculous and a form of bullying. If you want multinationals to pay tax, fix the laws. Were they really expecting Google to fake anything? No, they were looking to cause bad press. Form international alliances and create a proper incentive structure if you want to collect.

andrewprock 10y ago
Google's tax avoidance is likewise ridiculous. Neither the bullying, nor the avoidance are illegal. If you support one, you should support the other.
- deleted 10y ago
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nickbauman 10y ago

This all points back to the Multilateral Agreement on Investment, which reveals the intention of transnational corporations to try to limit sovereignty. It didn't pass but it's terrific object lesson (especially in the aftermath of Brexit). The irony is that the economic incompatibility thesis claims liberalization of capital tends to undermine free trade, because capital flows make very volatile markets, ultimately making it much harder for trade to take place. So what happens is the reaction to freeing up capital is increased protectionism which is what's generally happened since the '70s. https://en.wikipedia.org/wiki/Multilateral_Agreement_on_Investment https://en.wikipedia.org/wiki/Multilateral_Agreement_on_Inve...

iagooar 10y ago

Ironic, how a corrupt government tries to pursue corruption.

kafkaesq 10y ago

From El País, a little over an hour ago: In the case of the Spanish subsidiary, the Tax Office is analyzing why Google pays so little tax in Spain despite making multimillion-selling. With this action, the Agency's technical investigators seek to determine if the international structure of the world's leading Internet search engine is not legitimate. Toward this aim they will try to prove that functionality the group attributed to its Spanish subsidiary are less than they actually performed. The record is linked to an investigation into possible tax evasion. The company, known for its Internet search engine, has spent years in the crosshairs of Finance for its tax system, as part of their income managed through Ireland. Thus, it could be artificially reducing its business in Spain and lowering its tax bill. Tax Office searches Google Spain and Google Ireland for evidence of tax fraud http://economia.elpais.com/economia/2016/06/30/actualidad/1467280502_356974.html http://economia.elpais.com/economia/2016/06/30/actualidad/14...

peter303 10y ago

Panama Papers showed a significant fraction of EU officials stash money in low tax havens. Icelands PM resigned as a result. The Panama Papers was a leak of terabytes of documents from a legal office who sets up these corporations and accounts. Ironically the USA is a top tax haven due to anonymous shell corporations you can create in several states. Lots being stashed here due to anomymity and economic safety.

tvanantwerp 10y ago
The US is a pretty poor corporate tax haven. Our corporate rates are higher than pretty much everybody in the EU (including soon-to-be-out-of-the-EU Britain). It's one of the major contributing factors to corporate inversions (the moving of corporate headquarters out of the US) and companies like Apple not bringing overseas profits back to the US.

xchip 10y ago

Pay Google pay! As everyone else!!

ojosilva 10y ago

Actually, I find the bouncing around of fees and payments behind these internet companies very complex, and maybe even justified to some extent. The value-add that generates the taxable income is almost entirely elsewhere. Let's say Google Spain got €100M in revenue and had €20M local expenses (mostly sales, local support and localization). Now, say they owe €30M to US HQ for the service, servers, R&D, IP, support, etc... among other expenses. (For simplicity, let's suppose everything is hosted and originates in California.) That leaves Spain with €50M in profit, ready to be taxed by Spanish tax authorities. This sounds quite out of proportion. The great value-added is not in Spain, it's in the US. Google HQ could easily establish Google Spain owes €80M in service costs, thus local profit is nil. To me that's fair: corporate has the right to charge whatever they see fit for their services and collect profits accordingly. They way I see it, paying fees to the Bermudas is a US, not Spain, tax evasion problem.

gshulegaard 10y ago
Going to be honest, a little confused where the Bermudas or the US comes into this... Apparently this is regarding Google reporting the bulk of their sales out of Ireland and therefore not paying taxes in Europe? This is based on maybe a loophole where Google makes sure to have Ireland staff conclude all sales contracts...