3 ms·

While I do agree with the point that "govs should fix taxes, not corporations"... Still. It's a fact that (at least in the EU where I live) the majority of tax

by jitbit 9y ago

While I do agree with the point that "govs should fix taxes, not corporations"... Still. It's a fact that (at least in the EU where I live) the majority of tax burden ends up on small companies - mom & pop shops, little bakeries etc. Who simply can't afford these global tax avoidance tricks (or can't use them because they're "local") Not that this is wrong or right, just a fact you can't argue with. I run a small software shop in the EU (4 ppl) I know what I'm talking about.

pawelk 9y ago
So I live in Poland and it's not really a secret that small companies can and do optimize their taxes by registering in the UK (mostly self-employed professionals) or Czech Republic (small companies / family businesses). It's not like you can avoid taxes, but the difference for a self-employed programmer is non-trivial, like getting a 13th monthly salary every year. The Czech deal is done mostly for simpler tax code and better handling of car-related costs. I've seen many luxury cars on the roads with CZ license plates recently and I can guarantee it's not because a sudden influx of Czech tourists :) There are probably more schemes I am not aware of, but these two are popular enough that you get tons of adsense ads when looking for them (i.e. there are companies / accountants specializing in setting this up).
- jitbit 9y ago
  Yes, I know the UK drill... But how do you hire someone in Poland being a UK company? I thought that's not possible
  - pawelk 9y ago
    There are many Poles employed in the UK, so there has to be a way. It may get tricky when these workers do not live in the UK, but on the other hand there are many foreign companies operating in Poland and hiring people here. As I said the UK setup is mostly used for self-employment, so when you need a team mate they are most likely incorporated as well (either in Poland or the UK), so you just sign a B2B contract.
  - nielsole 9y ago
    Why would it not be possible? To my understanding that is pretty much what the EU is about. > The European Single Market, Internal Market or Common Market is a single market which seeks to guarantee the free movement of goods, capital, services, and labour – the "four freedoms" – within the European Union (EU). https://en.m.wikipedia.org/wiki/European_Single_Market https://en.m.wikipedia.org/wiki/European_Single_Market
- tluyben2 9y ago
  Is that setup legal over there? It is not in the EU countries I know about; the UK company would be seen as a defacto company in the country you actually reside and do the work (Poland for instance), unless; If you don't mind travelling then you can, very cheaply, pay very little to no tax being a small company. In many countries it is legal to do so.
Cakez0r 9y ago
I'd like to see some specific examples of tax avoidance tricks that Apple are using. There are a few mentions of how the "techniques aren't affordable for small business", but what are the techniques?
- belorn 9y ago
  Part of the scheme is to have a special deal with the government of Ireland (if you share the view of the European Commission) or to have a corporate structure located in Ireland but at the same time not be a tax resident in Ireland (view of the Ireland government). In 2010 Ireland also added a new law which partially forbids this, except for all existing companies such as apple.
- toyg 9y ago
  Basically they suck profits into Ireland, by stating in other EU countries that they will pay corporate taxes there; then in Ireland through "IP licensing fees" they paid all the money into a company that was declared not resident on the island for tax purposes, and was basically stateless - so not taxed. That company would then send this money to the various Caribbean shells they use as safes, when necessary, or just hang on it. When the EU told Ireland to stop this behaviour, Apple was pushed to declare a location for that stateless company; they picked one of the UK Channel Islands, a crown dependency with no taxes, and started funneling money through that. In the process, they got another special deal from the Irish government to keep a chunk of "IP ownership capital" on the island, which resulted in a much lower rate of tax on that money than they would have otherwise had to pay (but ever-so-slightly higher than if they had just put everything in Guernsey, so they could save a bit of face).
- deleted 9y ago
  [deleted]

by jitbit 9y ago

pawelk 9y ago

So I live in Poland and it's not really a secret that small companies can and do optimize their taxes by registering in the UK (mostly self-employed professionals) or Czech Republic (small companies / family businesses). It's not like you can avoid taxes, but the difference for a self-employed programmer is non-trivial, like getting a 13th monthly salary every year. The Czech deal is done mostly for simpler tax code and better handling of car-related costs. I've seen many luxury cars on the roads with CZ license plates recently and I can guarantee it's not because a sudden influx of Czech tourists :) There are probably more schemes I am not aware of, but these two are popular enough that you get tons of adsense ads when looking for them (i.e. there are companies / accountants specializing in setting this up).

jitbit 9y ago
Yes, I know the UK drill... But how do you hire someone in Poland being a UK company? I thought that's not possible
- pawelk 9y ago
  There are many Poles employed in the UK, so there has to be a way. It may get tricky when these workers do not live in the UK, but on the other hand there are many foreign companies operating in Poland and hiring people here. As I said the UK setup is mostly used for self-employment, so when you need a team mate they are most likely incorporated as well (either in Poland or the UK), so you just sign a B2B contract.
- nielsole 9y ago
  Why would it not be possible? To my understanding that is pretty much what the EU is about. > The European Single Market, Internal Market or Common Market is a single market which seeks to guarantee the free movement of goods, capital, services, and labour – the "four freedoms" – within the European Union (EU). https://en.m.wikipedia.org/wiki/European_Single_Market https://en.m.wikipedia.org/wiki/European_Single_Market
tluyben2 9y ago
Is that setup legal over there? It is not in the EU countries I know about; the UK company would be seen as a defacto company in the country you actually reside and do the work (Poland for instance), unless; If you don't mind travelling then you can, very cheaply, pay very little to no tax being a small company. In many countries it is legal to do so.

Cakez0r 9y ago

I'd like to see some specific examples of tax avoidance tricks that Apple are using. There are a few mentions of how the "techniques aren't affordable for small business", but what are the techniques?

belorn 9y ago
Part of the scheme is to have a special deal with the government of Ireland (if you share the view of the European Commission) or to have a corporate structure located in Ireland but at the same time not be a tax resident in Ireland (view of the Ireland government). In 2010 Ireland also added a new law which partially forbids this, except for all existing companies such as apple.
toyg 9y ago
Basically they suck profits into Ireland, by stating in other EU countries that they will pay corporate taxes there; then in Ireland through "IP licensing fees" they paid all the money into a company that was declared not resident on the island for tax purposes, and was basically stateless - so not taxed. That company would then send this money to the various Caribbean shells they use as safes, when necessary, or just hang on it. When the EU told Ireland to stop this behaviour, Apple was pushed to declare a location for that stateless company; they picked one of the UK Channel Islands, a crown dependency with no taxes, and started funneling money through that. In the process, they got another special deal from the Irish government to keep a chunk of "IP ownership capital" on the island, which resulted in a much lower rate of tax on that money than they would have otherwise had to pay (but ever-so-slightly higher than if they had just put everything in Guernsey, so they could save a bit of face).
deleted 9y ago
[deleted]