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You forget that european VAT is cancelled with businesses upstream, that is, you can deduct the VAT charged to consumers with the VAT of your purchases so you o

You forget that european VAT is cancelled with businesses upstream, that is, you can deduct the VAT charged to consumers with the VAT of your purchases so you only owe the net amount. Also there is no unified european tax rate, there are some tax havens inside the EU.

ptaipale 10y ago
However, Google does not make very much purchases in EU, so there is not so much VAT to deduct, which means that much of the VAT is "real" tax revenue, not just a flow-through amount. This is simply because Google doesn't have a substantial part of its real operations in EU; it has sales offices, and in some countries it has data centers, but these are not such a big cost that the VAT would factor in by too much. The actual value of Google is in its business concept, IPR and brand name, none of which are substantially developed in Europe.
- javitury 10y ago
  > Google does not make very much purchases in EU, so there is not so much VAT to deduct I was arguing about the scheme that AnthonyMouse discussed. Also they can't recover all the other taxes "owed" to Spain by means of VAT. AnthonyMouse > So now there is an independent contractor in Spain that pays Google Ireland for ad space and resells it for just enough money to pay its own bills and makes no profits. If the VAT rate in Spain were higher than in Ireland the difference would stay in Spain. In that case marginal increse in the VAT rate would increase tax revenues, whereas and increase in income tax would not. But right now VAT is higher in Ireland(23%) than in Spain(21%) and increasing the VAT rate can have sideffects on the economy as a whole.