19 ms·

France, Germany, Italy, Spain seek to base taxes on digital giants' revenues

162 points by phiskk 9y ago

microcolonel 9y ago
The idea of a revenue tax of course contradicts the stated justifications for existing taxes on business: the funding of ephemeral services which contribute indirectly to the business's revenue. Google benefits from approximately no government infrastructure in France, Germany, Italy, or Spain, but they want to get their grubby hands on it nonetheless.
- Oletros 9y ago
  When Google or Apple declares losses in Spain having record revenues so they have fiscal benefits when that country has a very big crisis then we have a big problem. But hey, those countries ajust want to get their grubby hand in those poor companies.
  - microcolonel 9y ago
    Google is not responsible for the corrupt and decadent governments in countries they don't operate out of; they're hardly responsible for it where they do operate. When China manipulates the markets so much that they collapse, and when Sweden spends its way into poverty, it will not be Google's fault, nor their responsibility to pay for it.
    - Oletros 9y ago
      Are you saying that Apple or Google don't operate in Spain or France? What the heck has to do your claim of Spain or France being corrupt with Apple or Google declaring losses with record revenues?
      - microcolonel 9y ago
        > Are you saying that Apple or Google don't operate in Spain or France? While technically they do have offices in Spain and France, they are mainly service offices. The critical operations of Google are carried out in the United States, and to a (far) lesser extent, Canada, Japan, and various other places. > What the heck has to do your claim of Spain or France being corrupt with Apple or Google declaring losses with record revenues? It's called expenditure, the vast majority of the wealth Apple and Google generate involves spending a lot of the wealth they made in the past. This is explicitly protected by the tax codes of basically any nation worth doing business in. Spain, for example, has a rather meh economy, meanwhile the state is funneling public funds into things like a concentrated solar plant which will probably never generate more revenue than expenditure. If not corrupt, then that is at least decadent.
        Oletros 9y ago
        Ah, you're just joking, got it
        andrepd 9y ago
        > Spain, for example, has a rather meh economy, meanwhile the state is funneling public funds into things like a concentrated solar plant which will probably never generate more revenue than expenditure. If not corrupt, then that is at least decadent. I recommend you sit down, evaluate what you are saying, and try to figure out what on earth that has to do with corporate taxing.
        wooter 9y ago
        How is that not clear to you?
        andrepd 9y ago
        You don't agree with a project that a government is developing, so it's not legitimate for them to tax corporations. That's the only connection I can see.
    - andrepd 9y ago
      Decadent? I take issue. Google, like virtually every large corporation in the world, spends a significant amount of time and resources finding the optimal way to pay the least amount of taxes, through loopholes, borderline or actually illegal schemes, lobbying etc. We're supposed to blame the countries for being defrauded in this way, not the multinationals doing the defrauding? Come off it. You want to do business in a country, you abide by the laws of that country. Governments serve their citizens and their interests. Whatever is convenient for corporations has (or should have) _zero_ bearing on any decisions. In true liberal style: if they don't like the rules they're welcome to go elsewhere.
      - ben_w 9y ago
        I view tax codes like buggy software, lawful tax minimisation like zero day exploits — only difference is that the law is not above itself, so if the tax loophole is legal, then it's legal. That said, just because something is legal doesn't make it moral, but even though I think we agree on that, I'd have to argue loopholes are totally in the domain of legislators to fix — if I understand correctly, UK law requires tax payers to report any minimisation schemes they are party to. Does that have teeth? I don't know, but it's a thought.
        andrepd 9y ago
        That's not a wholly correct interpretation. Law codes aren't rigorous; there's room for "interpreting" the law, and what really matters in the end is intent ("spirit of the law" > "letter of the law"). At any rate, the news is about "patching" the exploits.
        pyrale 9y ago
        > I view tax codes like buggy software, lawful tax minimisation like zero day exploits I have it you view lobbying as having a hand in the code you subsequently exploit, and therefore a major ethics breach ?
        ben_w 9y ago
        Pretty much. I view corporations as non-human intelligences, so while it's totally unethical for a human to manipulate the law to their own ends, it's also something I expect corporations to perceive as acceptable, in as much as that makes sense (they will not shun each other for it) and in much the way we humans generally agree it's wrong to kill but we don't shun people for amputations or appendectomies. This is why I prefer democratic corporations, rare as they are, to pure capitalist ones — at least the metaphorical appendix has a vote.
  - ben_w 9y ago
    > just want to get their grubby hand in those poor companies I find it fascinating that such emotive language is used. Taxation is pretty much the least "grubby" hand a government has (military: give us all your stuff, legislature: do all our work for us, we will tell you what we think adequate compensation is); and these companies are not only not poor, they are among the richest on the planet and they got almost all of that wealth this century. But why won't anyone think of those poor, starving, unemployed, multi billion dollar international corporations? :P
    - Oletros 9y ago
      > I find it fascinating that such emotive language is used. I thought that the sarcastic tone was clear :)
      - ben_w 9y ago
        I hear it too often from people who say it in earnest, sorry. :)
- pjc50 9y ago
  They benefit from having the market; the entire set of infrastructure and society that makes it possible to make money there. Google has no divine right to sell into that market without taxes or tariffs any more than European companies have to sell into the US. But there's a very particularly European problem here, that of cross-state revenue recognition. A gross receipts tax or similar is one solution, which is also present in four US states: https://taxfoundation.org/state-corporate-income-tax-rates-and-brackets-2016/#_ftn2 https://taxfoundation.org/state-corporate-income-tax-rates-a...
  - microcolonel 9y ago
    The government is not the market, the people are the market. If the government is in the business of selling the public to multinational corporations, something is truly wrong.
    - deleted 9y ago
      [deleted]
    - deleted 9y ago
      [deleted]
    - pjc50 9y ago
      L'etat, c'est nous. (Yes, that's a joke in French, but I'm not really about to type a treatise on popular sovereignty in the Spanish constitution for two reasons. Firstly I'm on a phone, and secondly I know nothing about it) I do wish one day we could have a discussion that didn't have to argue the existence of gonvernment and taxation from first principles, but today is not that day.
      - 0x4a42 9y ago
        Oui !
        0x4a42 9y ago
        Getting downvoted because I agree with Lénine. :-/ This is too unfair. [0] https://www.youtube.com/watch?v=WmzOCtsZTW4 https://www.youtube.com/watch?v=WmzOCtsZTW4 [0]
- llukas 9y ago
  So you can take Googles content, intellectual property, or patents and do what you like? France, Germany, Italy or Spain law enforcement wont do anything? This is one of the key infrastructure that government provides and Google depends.
  - microcolonel 9y ago
    No, their courts are guided by treaty to expose citizens to action on the patents of other countries, just as courts in other countries are guided by those same treaties to expose theirs. As far as I understand, all treaties of this sort are bilateral.
    - pjc50 9y ago
      But those courts are still infrastructure, no?
      - Spivak 9y ago
        So if you operate a business in any country that has a treaty with France you should get a bill from the French government?
        llukas 9y ago
        If you offer services in France and accept payments from French citizens then you're pretty much operating in France. If not someone should figure out how to put a server on a satellite so they could claim no taxes are due as transaction is extraterrestrial.
        microcolonel 9y ago
        That would be exactly true. If your business's operating legal presence were in space, or on the open ocean, then you would pay no taxes, aside from consumption-side taxes in the countries you serve. Tell me how this would be anything but fair.
- the8472 9y ago
  > Google benefits from approximately no government infrastructure in France, Germany, Italy, or Spain They directly depend on the infrastructure to reach their customers. And they indirectly depend on the people having a high standard of living which also requires infrastructure. If your country is a 3rd-world shithole without infrastructure you'll have a very hard time selling your products which sit high on maslow's hierarchy.
  - microcolonel 9y ago
    Which infrastructure? What infrastructure in France, Germany, Italy, or Spain, which is used by Google to reach their customers, is built and/or maintained by the governments of those countries?
    - alkonaut 9y ago
      Not sure I understand the question. Isn't that "most of it"? I use a road to get to work. My work pay my salary. My salary pays amazon for crap delivered to my house. The package comes delivered on the same road. The internet connection I used to visit amazons page is delivered via fiber to my house, funded just like other infrastructure. So the road and fiber was very important for my society being a developed high-income one, which is why I'm buying crap from the internet in the first place.
      - ithkuil 9y ago
        All of those things you mentioned are already paid by somebody: the customer pays for your broadband and couriers pay for roads thorough their revenue taxes and tolls. However, the topic here is the indirect benefit of being a wealthy nation where you can have customers wealthy enough to care about your products in the first place. The argument is that this is the result of something the society or the government did and it whoever benefits from that must pay their share for the access to that benefit, possibly to keep or improve the conditions that lead that wealth in the first place.
        9y ago
- frostburg 9y ago
  Who do you think paid for the bulk of the infrastructure that makes internet access work in these countries? You're talking like a parody libertarian.
  - Spivak 9y ago
    So what I'm hearing is that if you operate a website that is accessible to any person in France you should get a bill from the French government since you benefited from their infrastructure. And Netflix should probably be getting billed from Verizon, Comcast, AT&T, L3, WOW, etc. too since they can only access their customers through their infrastructure.
    - frostburg 9y ago
      We're talking about taxation here. If you're generating profits there you're probably going to have to pay taxes, yes. But of course you're just deliberately misunderstanding.
- petre 9y ago
  They do benefit from using the network infrastructure, but I sort of agree with you that this is just money grabbing to make up for ever increasing government expenditures. If they do it to the tech giants they'll do it to everyone else. This is an experiment, just like Cyprus was with taking sums in excess of 100k euros out of people's accounts.
sddfd 9y ago
This is not about taxing revenues instead of profits. This is about taxing EU-wide profits in EU countries proportional to the revenues generated in that country. At the moment, many big tech companies use bookkeeping tricks to make it look like all their profit is generated in, for example, Ireland, while the revenue is generated in other EU counties. Unfortunately, Ireland has special tax rates for these companies (the legality of which is contested), so their EU-wide effective tax rate is often ~1%.
- jeffwass 9y ago
  Many American companies (including most or all YC startups) do the same, incorporating in the low-tax state of Delaware for favourable tax treatment even though the company's offices and bulk of revenue-generation are elsewhere.
  - immad 9y ago
    If you have headquarters in California you pay tax here as well as a bit in Delaware The reason to register in Delaware is because of business friendly courts there. I don't believe there is a tax advantage
    - dogma1138 9y ago
      The federal corporate tax can be up to 35%, which is the highest in the world outside of some literally banana republics. Delaware has a corporate tax rate of 8.7%, California has 8.84. So yes no one is incorporating in Delaware becuase of taxes, WA, TX, NV and a few others have zero corporate tax.
      - uiri 9y ago
        WA has business & occupation tax which functions like a corporate income tax but it is levied on revenue rather than profit.
        ericd 9y ago
cs702 9y ago
I wonder what the impact will be on these companies' ability to compete against entrenched players in those EU countries. For example, will this make Amazon's prices non-competitive with European bricks-and-mortar retailers? I also wonder what the impact will be on their stock prices, because taxes on top-line revenues have a disproportionate impact on profit margins. For example, a 5% tax on revenues would render Amazon unprofitable in the EU and would cut Google's 20%+ net profit margin by about a quarter in the region. Finally, if this goes through, will other jurisdictions around the world follow?
- the8472 9y ago
  > “The amounts raised would aim to reflect some of what these companies should be paying in terms of corporate tax,” the ministers said in the letter, first reported on by the Financial Times.
- JanSt 9y ago
  Currently these giants have to pay less than bricks-and-mortar retailers[1], which is why the system is unfair. Amazon pays less taxes on a book sold than a small 1-person shop across the street. Until very recently, they didn't pay taxes in some countries at all [2] [1] http://www.sueddeutsche.de/wirtschaft/steueroase-luxemburg-amazon-soll-weniger-als-ein-prozent-steuern-zahlen-1.2162444 http://www.sueddeutsche.de/wirtschaft/steueroase-luxemburg-a... [2] http://www.sueddeutsche.de/news/politik/eu-amazon-zahlt-jetzt-deutsche-steuern-dpa.urn-newsml-dpa-com-20090101-150524-99-01771 http://www.sueddeutsche.de/news/politik/eu-amazon-zahlt-jetz...
- open-source-ux 9y ago
  "...will this make Amazon's prices non-competitive" Amazon UK book prices are mostly full-price outside of the bestseller lists. It's been like this for a while (but it wasn't of course how Amazon started). So you could argue their prices are already non-competitive for many books. It doesn't seems to matter though since all their rivals (who undercut Amazon book prices) are on Amazon marketplace anyway, so Amazon still gets a cut of the sale. Win-win for Amazon. If you are in the UK, wordery.com is often a cheaper alternative than Amazon for many books. So is bookdepository.com, which is ironic given that it is owned by Amazon.
agumonkey 9y ago
I find the whole system lame. I feel web giants of today are not making the web better, just different, more structured and massive. Instead of taxing them to grab a share of their earnings (whether it makes sense or not), I'd be happier if more people would write longer and denser web page as it was until the late 90s. Give incentives for people to produce.
- wslh 9y ago
  > Give incentives for people to produce. Even in US there is only one Google, Facebook, Microsoft, Apple, etc. It seems like these global monopolies are a new phenomenon that requires to rethink past economic ideas.
  - agumonkey 9y ago
    Is this new ? USA split Rockefeller empire which was unbelievably huge too.
    - wslh 9y ago
      Yes, it is new because it is global, Rockefeller was a local phenomenon. Before you have monopolies per country and now these monopolies (or call them as you want) are centralized in US.
Nokinside 9y ago
There is room for innovation in taxation. We need new smart taxation for information economy. Taxing network externalizes and economic barriers for entry for example. Taxation could be used as natural pressure to correct market failures. Taxing revenue is not what EU countries propose, but it could be viable solution. Thinking aloud: If company has market share of X% of the population it pays tax from the revenue related to X. If retail company that has 30% market share pays 0.3% extra from its revenue compared to tiny company with just 10,000 customers, it would probably be enough to even out the field and limit barriers to entry.
- justinmk 9y ago
  > Taxation could be used as natural pressure to correct market failures. Taxation isn't natural. By the way, I'd like to remind everyone: when the state taxes something, the state now depends on that thing for its budget. > If retail company that has 30% market share pays 0.3% extra from its revenue compared to tiny company with just 10,000 customers, it would probably be enough to even out the field and limit barriers to entry. If you are really interested in barriers to entry, you can do a thought-experiment (or a real experiment): try to start a business. See where the friction is. And then ask yourself what the barriers were. Another thought-experiment: imagine if starting and running a business (which includes collecting revenue, paying employees, paying taxes, abiding by the law) were nearly zero-friction. If starting a business had very low artificial friction, then there would _actually_ be natural pressure against market incumbents.
  - Nokinside 9y ago
    I run business in Finland and pay high taxes. Friction is not the taxes. If it were, I would have moved my business to Estonia long time ago, it's just few hours away. I could do it over internet in few hours and start within days. There are different ways for countries compete as "business platforms". I'm not saying that some way is better than another, what I'm saying is that there are different strategies that can work. High taxes in Nordic countries work as form of evolutionary pressure. They harm low-tech low education requirement jobs and businesses. They drive them to China and to the third world. They help high-tech companies and skilled workers, because taxes pay for great education, safety nets general well-being. Within US different states have different strategies. High-tech hubs seem to tax more and provide more just like Nordic countries. Some states choose to compete with low regulation low pay jobs against Mexico, China and India. Good luck with that. https://en.wikipedia.org/wiki/State_tax_levels_in_the_United_States https://en.wikipedia.org/wiki/State_tax_levels_in_the_United...
albertgoeswoof 9y ago
> A French court ruled in July French court ruled that Google, now part of Alphabet Inc, was not liable to pay 1.1 billion euros ($1.3 billion) in back taxes because it had no “permanent establishment” in France and ran its operations there from Ireland. How strange. I didn't know Google were an Irish company. I see them when I connect to the internet from all over the world. It looks like Airbnb also have their EMEA HQ there, as do Apple, eBay, Facebook, IBM, HP, ..., ... I guess there must be a really big internet market in Ireland for all those guys to be focused on that location, right? On another note, I tried to pay my taxes through an off-shore location, but I quickly realised I would get jail time for tax evasion.
- eloff 9y ago
  That's illegal for a person to do, but legal for these big companies. Don't blame the companies for exploiting loopholes. Blame the law. Fix the law.
  - anothersham 9y ago
    So corporations are people only when it benefits them?
  - gribbly 9y ago
    Why do you think that law hasn't been fixed ...
    - sgt101 9y ago
      I have two sources and one line of reasoning. 1) Reading newspapers and watching the news gives me the impression that there are large numbers of people who are not happy with the current social contract. 2) Speaking to people in and outside of my community informs me that there are many people who are not happy with the current social contract. The line of reasoning I have is that there are simple ways that could readjust the flow of revenue and capital to enable the removal of many of the perceived injustices that other people cite when I speak with them or read of their experiences.
  - 9y ago
joshfraser 9y ago
Someone needs to start a company that offers transfer pricing as a service. Sign up and get a physical address, subsidiary corporations, bank accounts and even employees & board members in Ireland. Much of this can be shared infrastructure of course. If tax avoidance is going to be legal for the big guys, why not make it accessible to everyone?
- eternauta3k 9y ago
  I'm sure this exists. The Planet Money folks hired a similar service for some other tax haven.
  - joshfraser 9y ago
    There are tons of financial firms that will set it up for you on a consulting basis. Here in the bay area, Duff & Phelps work with a lot of the big tech companies. Don't know of anyone who's automated the process or turned it into a SAAS product yet (for obvious reasons).
- anonymousDan 9y ago
  Google Europe has 6000 employees in Dublin, so it is a bit unfair to cast it as some kind of brass plate operation.
  - joshfraser 9y ago
    At Google's level, transfer pricing is a negotiation game with tax authorities. Having that many employees based in Ireland helps Google's case for routing more revenue through a double-Irish arrangement and making profits disappear.
- csomar 9y ago
  Get paid through anon. crypto and spend through anon. debit cards? This is already a solved issue.
  - KGIII 9y ago
_up 9y ago
They always talk about taxing giants, but in the end we get market entry barriers for the small startups.
- Spivak 9y ago
  There are tons of laws and regulations that only affect companies above a certain size. Are these not satisfying?
deleted 9y ago
[deleted]
doener 9y ago
https://news.ycombinator.com/item?id=15207190 https://news.ycombinator.com/item?id=15207190
sfifs 9y ago
EU really needs to get into a fiscal and political union like India or the US instead of their current mish mash. That will take care of both tax gaming like this and stuff like refusal to take haircut on bad Greece debt to prop up the balance sheets of German and French banks.
polotics 9y ago
I am surprised no one mentioned the Dutch sandwich yet. Look it up: the EU is a taxation joke.

162 points by phiskk 9y ago

The idea of a revenue tax of course contradicts the stated justifications for existing taxes on business: the funding of ephemeral services which contribute indirectly to the business's revenue. Google benefits from approximately no government infrastructure in France, Germany, Italy, or Spain, but they want to get their grubby hands on it nonetheless.

Oletros 9y ago
When Google or Apple declares losses in Spain having record revenues so they have fiscal benefits when that country has a very big crisis then we have a big problem. But hey, those countries ajust want to get their grubby hand in those poor companies.
- microcolonel 9y ago
  Google is not responsible for the corrupt and decadent governments in countries they don't operate out of; they're hardly responsible for it where they do operate. When China manipulates the markets so much that they collapse, and when Sweden spends its way into poverty, it will not be Google's fault, nor their responsibility to pay for it.
  - Oletros 9y ago
    Are you saying that Apple or Google don't operate in Spain or France? What the heck has to do your claim of Spain or France being corrupt with Apple or Google declaring losses with record revenues?
    - microcolonel 9y ago
      > Are you saying that Apple or Google don't operate in Spain or France? While technically they do have offices in Spain and France, they are mainly service offices. The critical operations of Google are carried out in the United States, and to a (far) lesser extent, Canada, Japan, and various other places. > What the heck has to do your claim of Spain or France being corrupt with Apple or Google declaring losses with record revenues? It's called expenditure, the vast majority of the wealth Apple and Google generate involves spending a lot of the wealth they made in the past. This is explicitly protected by the tax codes of basically any nation worth doing business in. Spain, for example, has a rather meh economy, meanwhile the state is funneling public funds into things like a concentrated solar plant which will probably never generate more revenue than expenditure. If not corrupt, then that is at least decadent.
      - Oletros 9y ago
        Ah, you're just joking, got it
      - andrepd 9y ago
        > Spain, for example, has a rather meh economy, meanwhile the state is funneling public funds into things like a concentrated solar plant which will probably never generate more revenue than expenditure. If not corrupt, then that is at least decadent. I recommend you sit down, evaluate what you are saying, and try to figure out what on earth that has to do with corporate taxing.
        wooter 9y ago
        How is that not clear to you?
        andrepd 9y ago
        You don't agree with a project that a government is developing, so it's not legitimate for them to tax corporations. That's the only connection I can see.
  - andrepd 9y ago
    Decadent? I take issue. Google, like virtually every large corporation in the world, spends a significant amount of time and resources finding the optimal way to pay the least amount of taxes, through loopholes, borderline or actually illegal schemes, lobbying etc. We're supposed to blame the countries for being defrauded in this way, not the multinationals doing the defrauding? Come off it. You want to do business in a country, you abide by the laws of that country. Governments serve their citizens and their interests. Whatever is convenient for corporations has (or should have) _zero_ bearing on any decisions. In true liberal style: if they don't like the rules they're welcome to go elsewhere.
    - ben_w 9y ago
      I view tax codes like buggy software, lawful tax minimisation like zero day exploits — only difference is that the law is not above itself, so if the tax loophole is legal, then it's legal. That said, just because something is legal doesn't make it moral, but even though I think we agree on that, I'd have to argue loopholes are totally in the domain of legislators to fix — if I understand correctly, UK law requires tax payers to report any minimisation schemes they are party to. Does that have teeth? I don't know, but it's a thought.
      - andrepd 9y ago
        That's not a wholly correct interpretation. Law codes aren't rigorous; there's room for "interpreting" the law, and what really matters in the end is intent ("spirit of the law" > "letter of the law"). At any rate, the news is about "patching" the exploits.
      - pyrale 9y ago
        > I view tax codes like buggy software, lawful tax minimisation like zero day exploits I have it you view lobbying as having a hand in the code you subsequently exploit, and therefore a major ethics breach ?
        ben_w 9y ago
        Pretty much. I view corporations as non-human intelligences, so while it's totally unethical for a human to manipulate the law to their own ends, it's also something I expect corporations to perceive as acceptable, in as much as that makes sense (they will not shun each other for it) and in much the way we humans generally agree it's wrong to kill but we don't shun people for amputations or appendectomies. This is why I prefer democratic corporations, rare as they are, to pure capitalist ones — at least the metaphorical appendix has a vote.
- ben_w 9y ago
  > just want to get their grubby hand in those poor companies I find it fascinating that such emotive language is used. Taxation is pretty much the least "grubby" hand a government has (military: give us all your stuff, legislature: do all our work for us, we will tell you what we think adequate compensation is); and these companies are not only not poor, they are among the richest on the planet and they got almost all of that wealth this century. But why won't anyone think of those poor, starving, unemployed, multi billion dollar international corporations? :P
  - Oletros 9y ago
    > I find it fascinating that such emotive language is used. I thought that the sarcastic tone was clear :)
    - ben_w 9y ago
      I hear it too often from people who say it in earnest, sorry. :)
pjc50 9y ago
They benefit from having the market; the entire set of infrastructure and society that makes it possible to make money there. Google has no divine right to sell into that market without taxes or tariffs any more than European companies have to sell into the US. But there's a very particularly European problem here, that of cross-state revenue recognition. A gross receipts tax or similar is one solution, which is also present in four US states: https://taxfoundation.org/state-corporate-income-tax-rates-and-brackets-2016/#_ftn2 https://taxfoundation.org/state-corporate-income-tax-rates-a...
- microcolonel 9y ago
  The government is not the market, the people are the market. If the government is in the business of selling the public to multinational corporations, something is truly wrong.
  - deleted 9y ago
    [deleted]
  - deleted 9y ago
    [deleted]
  - pjc50 9y ago
    L'etat, c'est nous. (Yes, that's a joke in French, but I'm not really about to type a treatise on popular sovereignty in the Spanish constitution for two reasons. Firstly I'm on a phone, and secondly I know nothing about it) I do wish one day we could have a discussion that didn't have to argue the existence of gonvernment and taxation from first principles, but today is not that day.
    - 0x4a42 9y ago
      Oui !
      - 0x4a42 9y ago
        Getting downvoted because I agree with Lénine. :-/ This is too unfair. [0] https://www.youtube.com/watch?v=WmzOCtsZTW4 https://www.youtube.com/watch?v=WmzOCtsZTW4 [0]
llukas 9y ago
So you can take Googles content, intellectual property, or patents and do what you like? France, Germany, Italy or Spain law enforcement wont do anything? This is one of the key infrastructure that government provides and Google depends.
- microcolonel 9y ago
  No, their courts are guided by treaty to expose citizens to action on the patents of other countries, just as courts in other countries are guided by those same treaties to expose theirs. As far as I understand, all treaties of this sort are bilateral.
  - pjc50 9y ago
    But those courts are still infrastructure, no?
    - Spivak 9y ago
      So if you operate a business in any country that has a treaty with France you should get a bill from the French government?
      - llukas 9y ago
        If you offer services in France and accept payments from French citizens then you're pretty much operating in France. If not someone should figure out how to put a server on a satellite so they could claim no taxes are due as transaction is extraterrestrial.
        microcolonel 9y ago
        That would be exactly true. If your business's operating legal presence were in space, or on the open ocean, then you would pay no taxes, aside from consumption-side taxes in the countries you serve. Tell me how this would be anything but fair.
the8472 9y ago
> Google benefits from approximately no government infrastructure in France, Germany, Italy, or Spain They directly depend on the infrastructure to reach their customers. And they indirectly depend on the people having a high standard of living which also requires infrastructure. If your country is a 3rd-world shithole without infrastructure you'll have a very hard time selling your products which sit high on maslow's hierarchy.
- microcolonel 9y ago
  Which infrastructure? What infrastructure in France, Germany, Italy, or Spain, which is used by Google to reach their customers, is built and/or maintained by the governments of those countries?
  - alkonaut 9y ago
    Not sure I understand the question. Isn't that "most of it"? I use a road to get to work. My work pay my salary. My salary pays amazon for crap delivered to my house. The package comes delivered on the same road. The internet connection I used to visit amazons page is delivered via fiber to my house, funded just like other infrastructure. So the road and fiber was very important for my society being a developed high-income one, which is why I'm buying crap from the internet in the first place.
    - ithkuil 9y ago
      All of those things you mentioned are already paid by somebody: the customer pays for your broadband and couriers pay for roads thorough their revenue taxes and tolls. However, the topic here is the indirect benefit of being a wealthy nation where you can have customers wealthy enough to care about your products in the first place. The argument is that this is the result of something the society or the government did and it whoever benefits from that must pay their share for the access to that benefit, possibly to keep or improve the conditions that lead that wealth in the first place.
      - 9y ago
frostburg 9y ago
Who do you think paid for the bulk of the infrastructure that makes internet access work in these countries? You're talking like a parody libertarian.
- Spivak 9y ago
  So what I'm hearing is that if you operate a website that is accessible to any person in France you should get a bill from the French government since you benefited from their infrastructure. And Netflix should probably be getting billed from Verizon, Comcast, AT&T, L3, WOW, etc. too since they can only access their customers through their infrastructure.
  - frostburg 9y ago
    We're talking about taxation here. If you're generating profits there you're probably going to have to pay taxes, yes. But of course you're just deliberately misunderstanding.
petre 9y ago
They do benefit from using the network infrastructure, but I sort of agree with you that this is just money grabbing to make up for ever increasing government expenditures. If they do it to the tech giants they'll do it to everyone else. This is an experiment, just like Cyprus was with taking sums in excess of 100k euros out of people's accounts.

sddfd 9y ago

This is not about taxing revenues instead of profits. This is about taxing EU-wide profits in EU countries proportional to the revenues generated in that country. At the moment, many big tech companies use bookkeeping tricks to make it look like all their profit is generated in, for example, Ireland, while the revenue is generated in other EU counties. Unfortunately, Ireland has special tax rates for these companies (the legality of which is contested), so their EU-wide effective tax rate is often ~1%.

jeffwass 9y ago
Many American companies (including most or all YC startups) do the same, incorporating in the low-tax state of Delaware for favourable tax treatment even though the company's offices and bulk of revenue-generation are elsewhere.
- immad 9y ago
  If you have headquarters in California you pay tax here as well as a bit in Delaware The reason to register in Delaware is because of business friendly courts there. I don't believe there is a tax advantage
  - dogma1138 9y ago
    The federal corporate tax can be up to 35%, which is the highest in the world outside of some literally banana republics. Delaware has a corporate tax rate of 8.7%, California has 8.84. So yes no one is incorporating in Delaware becuase of taxes, WA, TX, NV and a few others have zero corporate tax.
    - uiri 9y ago
      WA has business & occupation tax which functions like a corporate income tax but it is levied on revenue rather than profit.
      - ericd 9y ago

cs702 9y ago

I wonder what the impact will be on these companies' ability to compete against entrenched players in those EU countries. For example, will this make Amazon's prices non-competitive with European bricks-and-mortar retailers? I also wonder what the impact will be on their stock prices, because taxes on top-line revenues have a disproportionate impact on profit margins. For example, a 5% tax on revenues would render Amazon unprofitable in the EU and would cut Google's 20%+ net profit margin by about a quarter in the region. Finally, if this goes through, will other jurisdictions around the world follow?

the8472 9y ago
> “The amounts raised would aim to reflect some of what these companies should be paying in terms of corporate tax,” the ministers said in the letter, first reported on by the Financial Times.
JanSt 9y ago
Currently these giants have to pay less than bricks-and-mortar retailers[1], which is why the system is unfair. Amazon pays less taxes on a book sold than a small 1-person shop across the street. Until very recently, they didn't pay taxes in some countries at all [2] [1] http://www.sueddeutsche.de/wirtschaft/steueroase-luxemburg-amazon-soll-weniger-als-ein-prozent-steuern-zahlen-1.2162444 http://www.sueddeutsche.de/wirtschaft/steueroase-luxemburg-a... [2] http://www.sueddeutsche.de/news/politik/eu-amazon-zahlt-jetzt-deutsche-steuern-dpa.urn-newsml-dpa-com-20090101-150524-99-01771 http://www.sueddeutsche.de/news/politik/eu-amazon-zahlt-jetz...
open-source-ux 9y ago
"...will this make Amazon's prices non-competitive" Amazon UK book prices are mostly full-price outside of the bestseller lists. It's been like this for a while (but it wasn't of course how Amazon started). So you could argue their prices are already non-competitive for many books. It doesn't seems to matter though since all their rivals (who undercut Amazon book prices) are on Amazon marketplace anyway, so Amazon still gets a cut of the sale. Win-win for Amazon. If you are in the UK, wordery.com is often a cheaper alternative than Amazon for many books. So is bookdepository.com, which is ironic given that it is owned by Amazon.

agumonkey 9y ago

I find the whole system lame. I feel web giants of today are not making the web better, just different, more structured and massive. Instead of taxing them to grab a share of their earnings (whether it makes sense or not), I'd be happier if more people would write longer and denser web page as it was until the late 90s. Give incentives for people to produce.

wslh 9y ago
> Give incentives for people to produce. Even in US there is only one Google, Facebook, Microsoft, Apple, etc. It seems like these global monopolies are a new phenomenon that requires to rethink past economic ideas.
- agumonkey 9y ago
  Is this new ? USA split Rockefeller empire which was unbelievably huge too.
  - wslh 9y ago
    Yes, it is new because it is global, Rockefeller was a local phenomenon. Before you have monopolies per country and now these monopolies (or call them as you want) are centralized in US.

Nokinside 9y ago

There is room for innovation in taxation. We need new smart taxation for information economy. Taxing network externalizes and economic barriers for entry for example. Taxation could be used as natural pressure to correct market failures. Taxing revenue is not what EU countries propose, but it could be viable solution. Thinking aloud: If company has market share of X% of the population it pays tax from the revenue related to X. If retail company that has 30% market share pays 0.3% extra from its revenue compared to tiny company with just 10,000 customers, it would probably be enough to even out the field and limit barriers to entry.

justinmk 9y ago
> Taxation could be used as natural pressure to correct market failures. Taxation isn't natural. By the way, I'd like to remind everyone: when the state taxes something, the state now depends on that thing for its budget. > If retail company that has 30% market share pays 0.3% extra from its revenue compared to tiny company with just 10,000 customers, it would probably be enough to even out the field and limit barriers to entry. If you are really interested in barriers to entry, you can do a thought-experiment (or a real experiment): try to start a business. See where the friction is. And then ask yourself what the barriers were. Another thought-experiment: imagine if starting and running a business (which includes collecting revenue, paying employees, paying taxes, abiding by the law) were nearly zero-friction. If starting a business had very low artificial friction, then there would _actually_ be natural pressure against market incumbents.
- Nokinside 9y ago
  I run business in Finland and pay high taxes. Friction is not the taxes. If it were, I would have moved my business to Estonia long time ago, it's just few hours away. I could do it over internet in few hours and start within days. There are different ways for countries compete as "business platforms". I'm not saying that some way is better than another, what I'm saying is that there are different strategies that can work. High taxes in Nordic countries work as form of evolutionary pressure. They harm low-tech low education requirement jobs and businesses. They drive them to China and to the third world. They help high-tech companies and skilled workers, because taxes pay for great education, safety nets general well-being. Within US different states have different strategies. High-tech hubs seem to tax more and provide more just like Nordic countries. Some states choose to compete with low regulation low pay jobs against Mexico, China and India. Good luck with that. https://en.wikipedia.org/wiki/State_tax_levels_in_the_United_States https://en.wikipedia.org/wiki/State_tax_levels_in_the_United...

albertgoeswoof 9y ago

> A French court ruled in July French court ruled that Google, now part of Alphabet Inc, was not liable to pay 1.1 billion euros ($1.3 billion) in back taxes because it had no “permanent establishment” in France and ran its operations there from Ireland. How strange. I didn't know Google were an Irish company. I see them when I connect to the internet from all over the world. It looks like Airbnb also have their EMEA HQ there, as do Apple, eBay, Facebook, IBM, HP, ..., ... I guess there must be a really big internet market in Ireland for all those guys to be focused on that location, right? On another note, I tried to pay my taxes through an off-shore location, but I quickly realised I would get jail time for tax evasion.

eloff 9y ago
That's illegal for a person to do, but legal for these big companies. Don't blame the companies for exploiting loopholes. Blame the law. Fix the law.
- anothersham 9y ago
  So corporations are people only when it benefits them?
- gribbly 9y ago
  Why do you think that law hasn't been fixed ...
  - sgt101 9y ago
    I have two sources and one line of reasoning. 1) Reading newspapers and watching the news gives me the impression that there are large numbers of people who are not happy with the current social contract. 2) Speaking to people in and outside of my community informs me that there are many people who are not happy with the current social contract. The line of reasoning I have is that there are simple ways that could readjust the flow of revenue and capital to enable the removal of many of the perceived injustices that other people cite when I speak with them or read of their experiences.
- 9y ago

joshfraser 9y ago

Someone needs to start a company that offers transfer pricing as a service. Sign up and get a physical address, subsidiary corporations, bank accounts and even employees & board members in Ireland. Much of this can be shared infrastructure of course. If tax avoidance is going to be legal for the big guys, why not make it accessible to everyone?

eternauta3k 9y ago
I'm sure this exists. The Planet Money folks hired a similar service for some other tax haven.
- joshfraser 9y ago
  There are tons of financial firms that will set it up for you on a consulting basis. Here in the bay area, Duff & Phelps work with a lot of the big tech companies. Don't know of anyone who's automated the process or turned it into a SAAS product yet (for obvious reasons).
anonymousDan 9y ago
Google Europe has 6000 employees in Dublin, so it is a bit unfair to cast it as some kind of brass plate operation.
- joshfraser 9y ago
  At Google's level, transfer pricing is a negotiation game with tax authorities. Having that many employees based in Ireland helps Google's case for routing more revenue through a double-Irish arrangement and making profits disappear.
csomar 9y ago
Get paid through anon. crypto and spend through anon. debit cards? This is already a solved issue.
- KGIII 9y ago

_up 9y ago

They always talk about taxing giants, but in the end we get market entry barriers for the small startups.

Spivak 9y ago
There are tons of laws and regulations that only affect companies above a certain size. Are these not satisfying?

deleted 9y ago

[deleted]

doener 9y ago

https://news.ycombinator.com/item?id=15207190 https://news.ycombinator.com/item?id=15207190

sfifs 9y ago

EU really needs to get into a fiscal and political union like India or the US instead of their current mish mash. That will take care of both tax gaming like this and stuff like refusal to take haircut on bad Greece debt to prop up the balance sheets of German and French banks.

polotics 9y ago

I am surprised no one mentioned the Dutch sandwich yet. Look it up: the EU is a taxation joke.