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What right does the EU have to tax revenue (not even earnings) from money made on non-EU citizens? I could understand an argument that they have a right to levy

What right does the EU have to tax revenue (not even earnings) from money made on non-EU citizens? I could understand an argument that they have a right to levy a tax on money created by selling services to EU citizens, but global revenues? They mention Twitter as an example in the article, but Twitter's revenues for 2017 was $3.83 billion, and their net-earnings is mostly negative, or barely positive. So they'd be asking Twitter for money they don't even have. This seems too crazy to pass, like the Trump tariffs, it just seems to be a footgun.

cryptoz 9y ago
> What right does the EU have to tax revenue (not even earnings) from money made on non-EU citizens? Every right. Their government, their citizens, their laws. > but global revenues? These companies exist globally. They would be vastly smaller and have far less impact if they did not have EU citizens. Network effects matter and ignoring them is choosing to not understand the big picture. > So they'd be asking Twitter for money they don't even have. It doesn't strike me they would try to collect this retroactively! Also, I would argue that clearly Twitter should not exist at all if it cannot pay a reasonable tax in the areas where it operates. Edit: What right does Twitter have coming into the EU, collecting data on its citizens, earning revenues from that, and not paying tax? Seems insane to me. Edit 2: I guess all the downvotes trigger a switch, I'm not allowed to post any more on HN I guess. Bye all. Edit 3: To the replies below, I'm not "boxed in" by some silly argument. I'm just banned from replying.
- cromwellian 9y ago
  > Every right. Their government, their citizens, their laws. If a company doesn't have offices in your country, it's not yours. >These companies exist globally Well, maybe the net result is to get out of the EU then, if the costs of 3% of global revenues exceed profits. If you don't think a company that is mostly non-profit (Twitter) shouldn't exist, I feel that's a pretty pathetic position. So you're either a very greedy, high margin profit company,or the EU says you shouldn't exist?
  - crispyporkbites 9y ago
    Twitter is not a non profit by any stretch of the imagination. If a company sells a product (ad space in this instance) in a geography they are doing business there and should pay taxes there.
    - rmah 9y ago
      They do already. The EU proposal is that Twitter also pays taxes on that ad revenue, on a pro-rated basis, where the users reside. This is very different.
  - MrLeap 9y ago
    I like your fire. I think we would have fun debating things for days. You've boxed the parent into three positions. They're kind of orthogonal so it's hard to approach directly, but consider a hypothetical 4th position. What if the parent hypothetically thinks that twitter is acceptable collateral damage if it means fixing some other abuse, does that make him greedy? What if he gains nothing from it? I think I've just provided a way out of your boxes, if you disagree please let me know!
    - cromwellian 9y ago
      Do we make the word a better place of we cause the destruction of many life-style businesses that provide jobs, a public service, and aren't rapacious and create an environment where only the most aggressive and profitable companies can survive at all, but you get to exact a 3% tax on them? Let me provide an alternative hypothetical scenario: Major tech companies withdraw their businesses out of EU jurisdictions. They run sales and support remotely. They close down local offices. They host in clouds that sit on the border of EU territories, enough to provide low latency, but outside taxing authority. Now what? US Internet services still makes money, EU citizens still have access, but there's no corporate footprint. Do you really think with such huge traffic, if Google and Facebook and Twitter shutdown local offices and entities that businesses still won't advertise with them? Advertisers go where the audience is. The EU would then face a moment of truth about whether to bifurcate the internet like China did, erecting a Great Firewall of Europe, blocking access to properties that are not in compliance. Lest people think this is about my employer, read https://people.eecs.berkeley.edu/~daw/papers/privacy-compcon97-www/privacy-html.html https://people.eecs.berkeley.edu/~daw/papers/privacy-compcon... and search from "Cromwell", and you'll see reference to work I published in 1996. I heavy subscribe to John Perry Barlow's "Declaration of Independence" of Cyberspace. To me, the internet was the first new zone of human freedom in millenia that was completely free of state interference, and the "permissionless innovation" it enabled, where anyone could publish anything that was accessible to the whole world, shook me to my core as a young teen in the late 80s when I first go on the net. I think many people who came to the internet decades later perhaps don't have that sense of awe I do, that sense of its specialness. And this continual chipping away at that original Utopian dream with nationalistic, provincial concerns, is to me the unacceptable collateral damage. The collateral damage I'm willing to except is some people getting away with tax evasion, if it means more freedom is preserved and we don't end up with a splintered-net-of-a-thousand rules, where I need to be concerned about what the CCCP and Brussels and Congress thinks before I publish something.
- WillReplyfFood 9y ago
  Not to those who have show dead activated.
crispyporkbites 9y ago
These companies are operating in the EU and generating revenues from EU citizens, why wouldn’t they pay taxes on this? If these companies don’t want to pay tax in Europe, then don’t do business in Europe.
gt_ 9y ago
You are mischaracterizing the proposal. Let’s be clear: the EU has no intentions of enforcing taxation outside of their jurisdiction and of course they have every right to enforce taxes within it. It’s pretty normal stuff.
- 8note 9y ago
  even if they were taxing outside their borders, they determine access to something the tech companies want: European users.
  - conanbatt 9y ago
    Talk about walled gardens.
mtgx 9y ago
Nothing is really changing in terms of taxation. Technically, the difference is relatively small - being taxed a small percentage of revenue instead of a larger percentage of profit (yes I know it's debatable which would be ideal). The really big difference is they can actually enforce revenue-based taxation, because revenue in a country is directly tied to the number of users/customers in that country. Meanwhile, profit could be much more easily switched around in Google's accounting books, to the point it hardly had to pay any tax in the EU. One other thing, while many are accusing EU of doing this because of "envy", they're ignoring the fact that China is doing way worse against American companies. Not only are foreign companies taxed locally in China, and I don't think they get away with their accounting shenanigans over there, but China also basically demands that 50% of their assets over there are owned by a local company. Can you imagine if the EU said it needs to own 50% of Google or Amazon's assets on EU territory? And then throw in the much larger tariffs for foreign imports that China has. Why isn't the media focusing on that more?
- cromwellian 9y ago
  People are up in arms about China as well, and IMHO, the US and EU should take them to the WTO over unfair trade practices. But stop focusing on Google for a moment, and consider poor Twitter. Can they really afford this tax? If you're already losing money, or breaking even, why should you have to pay taxes on $$$/user earned in the US or Japan?
  - cryptoz 9y ago
    > consider poor Twitter. Can they really afford this tax? If they can't afford a simple tax on their business in a region then they shouldn't be doing business there or at all. What do you mean, "poor Twitter"? It's not a person. It doesn't have emotions or feelings. We don't need to treat it like a poor little snowflake and make sure it never melts. If Twitter can't handle being taxed then Twitter should die. That's capitalism. You don't get to reap the benefits of a region unsustainably and not aide in the development and growth of the region. Twitter in the EU without a tax is a parasite, not a business.

cryptoz 9y ago

> What right does the EU have to tax revenue (not even earnings) from money made on non-EU citizens? Every right. Their government, their citizens, their laws. > but global revenues? These companies exist globally. They would be vastly smaller and have far less impact if they did not have EU citizens. Network effects matter and ignoring them is choosing to not understand the big picture. > So they'd be asking Twitter for money they don't even have. It doesn't strike me they would try to collect this retroactively! Also, I would argue that clearly Twitter should not exist at all if it cannot pay a reasonable tax in the areas where it operates. Edit: What right does Twitter have coming into the EU, collecting data on its citizens, earning revenues from that, and not paying tax? Seems insane to me. Edit 2: I guess all the downvotes trigger a switch, I'm not allowed to post any more on HN I guess. Bye all. Edit 3: To the replies below, I'm not "boxed in" by some silly argument. I'm just banned from replying.

cromwellian 9y ago
> Every right. Their government, their citizens, their laws. If a company doesn't have offices in your country, it's not yours. >These companies exist globally Well, maybe the net result is to get out of the EU then, if the costs of 3% of global revenues exceed profits. If you don't think a company that is mostly non-profit (Twitter) shouldn't exist, I feel that's a pretty pathetic position. So you're either a very greedy, high margin profit company,or the EU says you shouldn't exist?
- crispyporkbites 9y ago
  Twitter is not a non profit by any stretch of the imagination. If a company sells a product (ad space in this instance) in a geography they are doing business there and should pay taxes there.
  - rmah 9y ago
    They do already. The EU proposal is that Twitter also pays taxes on that ad revenue, on a pro-rated basis, where the users reside. This is very different.
- MrLeap 9y ago
  I like your fire. I think we would have fun debating things for days. You've boxed the parent into three positions. They're kind of orthogonal so it's hard to approach directly, but consider a hypothetical 4th position. What if the parent hypothetically thinks that twitter is acceptable collateral damage if it means fixing some other abuse, does that make him greedy? What if he gains nothing from it? I think I've just provided a way out of your boxes, if you disagree please let me know!
  - cromwellian 9y ago
    Do we make the word a better place of we cause the destruction of many life-style businesses that provide jobs, a public service, and aren't rapacious and create an environment where only the most aggressive and profitable companies can survive at all, but you get to exact a 3% tax on them? Let me provide an alternative hypothetical scenario: Major tech companies withdraw their businesses out of EU jurisdictions. They run sales and support remotely. They close down local offices. They host in clouds that sit on the border of EU territories, enough to provide low latency, but outside taxing authority. Now what? US Internet services still makes money, EU citizens still have access, but there's no corporate footprint. Do you really think with such huge traffic, if Google and Facebook and Twitter shutdown local offices and entities that businesses still won't advertise with them? Advertisers go where the audience is. The EU would then face a moment of truth about whether to bifurcate the internet like China did, erecting a Great Firewall of Europe, blocking access to properties that are not in compliance. Lest people think this is about my employer, read https://people.eecs.berkeley.edu/~daw/papers/privacy-compcon97-www/privacy-html.html https://people.eecs.berkeley.edu/~daw/papers/privacy-compcon... and search from "Cromwell", and you'll see reference to work I published in 1996. I heavy subscribe to John Perry Barlow's "Declaration of Independence" of Cyberspace. To me, the internet was the first new zone of human freedom in millenia that was completely free of state interference, and the "permissionless innovation" it enabled, where anyone could publish anything that was accessible to the whole world, shook me to my core as a young teen in the late 80s when I first go on the net. I think many people who came to the internet decades later perhaps don't have that sense of awe I do, that sense of its specialness. And this continual chipping away at that original Utopian dream with nationalistic, provincial concerns, is to me the unacceptable collateral damage. The collateral damage I'm willing to except is some people getting away with tax evasion, if it means more freedom is preserved and we don't end up with a splintered-net-of-a-thousand rules, where I need to be concerned about what the CCCP and Brussels and Congress thinks before I publish something.
WillReplyfFood 9y ago
Not to those who have show dead activated.

crispyporkbites 9y ago

These companies are operating in the EU and generating revenues from EU citizens, why wouldn’t they pay taxes on this? If these companies don’t want to pay tax in Europe, then don’t do business in Europe.

gt_ 9y ago

You are mischaracterizing the proposal. Let’s be clear: the EU has no intentions of enforcing taxation outside of their jurisdiction and of course they have every right to enforce taxes within it. It’s pretty normal stuff.

8note 9y ago
even if they were taxing outside their borders, they determine access to something the tech companies want: European users.
- conanbatt 9y ago
  Talk about walled gardens.

mtgx 9y ago

Nothing is really changing in terms of taxation. Technically, the difference is relatively small - being taxed a small percentage of revenue instead of a larger percentage of profit (yes I know it's debatable which would be ideal). The really big difference is they can actually enforce revenue-based taxation, because revenue in a country is directly tied to the number of users/customers in that country. Meanwhile, profit could be much more easily switched around in Google's accounting books, to the point it hardly had to pay any tax in the EU. One other thing, while many are accusing EU of doing this because of "envy", they're ignoring the fact that China is doing way worse against American companies. Not only are foreign companies taxed locally in China, and I don't think they get away with their accounting shenanigans over there, but China also basically demands that 50% of their assets over there are owned by a local company. Can you imagine if the EU said it needs to own 50% of Google or Amazon's assets on EU territory? And then throw in the much larger tariffs for foreign imports that China has. Why isn't the media focusing on that more?

cromwellian 9y ago
People are up in arms about China as well, and IMHO, the US and EU should take them to the WTO over unfair trade practices. But stop focusing on Google for a moment, and consider poor Twitter. Can they really afford this tax? If you're already losing money, or breaking even, why should you have to pay taxes on $$$/user earned in the US or Japan?
- cryptoz 9y ago
  > consider poor Twitter. Can they really afford this tax? If they can't afford a simple tax on their business in a region then they shouldn't be doing business there or at all. What do you mean, "poor Twitter"? It's not a person. It doesn't have emotions or feelings. We don't need to treat it like a poor little snowflake and make sure it never melts. If Twitter can't handle being taxed then Twitter should die. That's capitalism. You don't get to reap the benefits of a region unsustainably and not aide in the development and growth of the region. Twitter in the EU without a tax is a parasite, not a business.