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Uber used 50 Dutch shell companies to dodge taxes
- setum 5y agoWho is to blame Uber or inferior lawmakers?
- artificial 5y agoIt’s easy to hate the player instead of the game.
- yunohn 5y agoI hate this retort - usually players don’t get to decide the game’s rules. Tax law is full of loopholes intentionally created for the elite, politicians, and corporations.
- jeltz 5y agoYeah, I too hate it. Just because something is legal does not make it moral. We could use the same argument for the bankers who caused the subrime mortgage crash or for dictators who rob their own countries blind.
- madsbuch 5y agoThe death of morale... It's OK to commit fraud, kill, and rape as long as you can do it within a loophole in the law. Of cause it is a societal destructive way to see the world as a game.
- solarkraft 5y agoAre billions-valued companies really expected by anyone to be beholden to any morals? If so, why?
- cygx 5y agoBecause companies are run by people? Shell companies don't just spawn on their own...
- jiriknesl 5y agoPaying lower taxes is nothing like kill or rape. There are lots of internet-only companies for which the government did absolutely nothing.
- LightG 5y agoOnly if you think one-dimensionally. Consider the ultimate cause and effects and you'll get closer the truth.
- patrec 5y agoYou mean all those companies that grew and educated their employees in test tubes on Mars from whence they telecommute using their own inter-planetary network infrastructure?
- snakeboy 5y agoHow about providing infrastructure, a stable economy, peaceful society, etc. ?
- burntoutfire 5y agoLol. The government provides stable society which allows for any company to function. Without government, Musks and Jobs of the world wouldn't even get to their first million, as they'd just be robbed and killed on their way there.
- madsbuch 5y agoMy six years of dept free, tuition free education in computer science earning me a M.Sc. with government student housing subsidies and monthly pay is "the government doing absolutely nothing"? And it is morally warranted that I do what I can to avoid paying taxes when I employ online?
- Vadoff 5y agoThis isn't fraud, murder, or rape though - it's optimizing tax expenditure to the legal limit, which the government was fine with. If you want people to pay more taxes, increase the legal amount that they need to pay. This may mean closing loopholes or raising the rate. That's it. Expecting a company to willingly pay more taxes than they have to, especially when surrounded by a field of competitors who don't, is foolish.
- capableweb 5y agoOr, we can enforce the spirit of the law (companies with equal profit pays equal amount of tax or similar) rather than enforcing the letter of the law. You know, how we deal with lawbreakers otherwise. It's exactly the reason we have space for interpretation in laws in the first place.
- nraynaud 5y agowell, the European rule is that the HQ of a company for tax purpose is where its orders are actually coming from. I don't have this vibe here.
- madsbuch 5y agoThe problem is that there is a risk/compliance trade-off. "The law" is not a compiler that compiles or not. Heck, companies can report whatever they want and get away with a certain chance. If you do the math it might even be probabilistically beneficial. But that does not make these actions social or socially beneficial or morally right.
- technicolorwhat 5y agoHow about both :)
- sumedh 5y ago> inferior lawmakers? Who elects them?
- vmception 5y agoAny details on why 50 instead of 1? Even if it was to segregate liability for individual pieces of IP, it still seems excessive Many jurisdictions offer a single entity with segregated limited liability. Specifically “Segregated Portfolio Companies” or Series LLCs offering the same concept in other jurisdictions. Would seem out of character for the Netherlands not to have this in their catalogue of entities, since they were the first to do the modern share company.
- sumedh 5y agoMaybe some companies are used just for one specific kind of transaction to take advantage of some loophole in the law.
- vmception 5y agoYeah I do that, I call them parallel tax regimes or elections Still other companies doing dutch sandwiches are reported as having one
- varispeed 5y agoSome tax havens banned IP holding companies. Why is this not written in international law and closed once and for all?
- jeltz 5y agoOr at least just eu regulations.
- foepys 5y agoBecause the vote needs to unanimous and some countries don't want to give up their revenue stream.
- varispeed 5y agoThe laws come from EC and they can keep pushing it until it passes as with many things. There must be a conflict of interest in the EC if they don't do it. Such changes should be a no brainer - the famous levelling of the playing field.
- dstick 5y agoI'm getting more and more frustrated by my own country's willingness to facilitate this. It just doesn't make any sense. From what I can tell it's all based on old-fashioned debunked economic theories in the same vain as "trickle-down-economy". There's a growing resistance to the Netherlands as a "Doorsluisland", and our current administration's political turmoil will hopefully provide the momentum for actual change - so hopefully things will change. Here's a nice (Dutch) article on it. The big take-away with other tax "havens" is that the money doesn't reside / stay in the Netherlands, it's just passed through it. Like Uber did. https://www.groene.nl/artikel/doorsluisland https://www.groene.nl/artikel/doorsluisland
- jdasdf 5y ago>From what I can tell it's all based on old-fashioned debunked economic theories in the same vain as "trickle-down-economy". Eliminating corporate tax is a fairly mainstream idea in economics, that is hamstrung by politics.
- sva_ 5y ago> It just doesn't make any sense. It makes a lot of sense considering the amounts of money that are flowing.
- dep_b 5y agoWhy doesn't it make a lot of sense? It requires for companies to have some representation here, probably the have a board of directors and a board of directors is where a retired politician usually goes to after their political career. You wouldn't want to scare the people away that will give you a really well paid job for hardly any work at all, would you? We're still looking at the same people forming a new government after 10 years so the majority of Dutch people must absolutely love their achievements like the worst housing crisis since the Second World War or capitalism-presented-as-religion shit like this.
- beckman466 5y ago> Why doesn't it make a lot of sense? It requires for companies to have some representation here, probably the have a board of directors and a board of directors is where a retired politician usually goes to after their political career. You wouldn't want to scare the people away that will give you a really well paid job for hardly any work at all, would you? For all the Dutchies here who want to learn exactly how this 'politician to corporate advisor pipeline' works, the VPRO docu 'Bankgeheimen van Joris Luyendijk' is great: https://www.vpro.nl/programmas/tegenlicht/kijk/afleveringen/2014-2015/bankgeheimen-joris-luyendijk.html https://www.vpro.nl/programmas/tegenlicht/kijk/afleveringen/...
- varispeed 5y agoWhy this isn't stamped out ruthlessly? Because of this we don't have good competition. How can you compete with a company that don't pay taxes? Unless you are backed by bottomless VC, you cannot. Maybe that's the thing - these big investors and big corporations have money to make sure politicians won't do anything about it.
- sva_ 5y agoYeah, same goes for retail. These practices have been bleeding out smaller businesses throughout the EU for far too long.
- rickette 5y agoPrevious discussion: https://news.ycombinator.com/item?id=27136002 https://news.ycombinator.com/item?id=27136002. This was on the frontpage of HN a couple of days ago.
- blue1 5y agoShell (the oil company) is actually named Royal Dutch Shell. For a moment I was confused by the title. According to wikipedia it is really named after sea shells.
- capableweb 5y agoOne would think that the logo of the company would be enough to make sure everyone knows where the name comes from :) At first I though it was kind of macabre, but then I got reminded that it's basically standard practice, exterminators frequently have bugs as their logo, bacon packages have happy pigs and so on.
- Dort 5y agoThe shell logo dates back to the 19th century, when Shell traded in decorative Japanese seashells. You can read more of the logo history at (Dutch) https://www.shell.nl/over-ons/netherlands/history.html https://www.shell.nl/over-ons/netherlands/history.html
- DoingIsLearning 5y agoIt's not just Shell, it's an honorary title for a lot of old 'notable' companies: https://en.wikipedia.org/wiki/Koninklijk https://en.wikipedia.org/wiki/Koninklijk
- Vinnl 5y agoI think they were referring to the fact that the title mentioned "Dutch shell", which is almost the complete name of Shell-the-company.
- simondotau 5y agoWeirdly, I read this whole thread and assumed people were referring to shell in the form of an empty sea shell, representing an analogy to remnants of a now-dead life form. Which is what crude oil pretty much is. I didn't even think "shell corporation" until I read your comment.
- throwaway210222 5y agoIn a world of low to zero interest rates and comparatively high tax rates, expect a lot more of this transfer-ownership-with-loan arbitrage.
- decrypt 5y agoPreviously discussed at https://news.ycombinator.com/item?id=27136002 https://news.ycombinator.com/item?id=27136002
- sschueller 5y agoI don't understand why the US just doesn't make these companies pay the tax instead of trying to get some global minimum tax agreement. If Uber wants to operate in the US. Force them to pay otherwise ban them from operating in the US. Done.
- Denvercoder9 5y agoThe question is how much tax they should pay. To be fair and avoid double taxation, you'd roughly want to tax revenue in the US minus costs made to create that revenue. That quickly devolves into an endless fight to define exactly what contributes to US revenue, and which costs are made to create the US revenue. It's easier to workaround that endless fight by ensuring that it doesn't matter where tax is paid.
- Acinyx 5y agoWhat exactly should they pay tax on? AFAIK, most countries like the US go for a tax on profits, but profits of a multinational country are extremely hard to "locate", as in: in which country was the profit made? Some obvious examples are IKEA stores licensing the rights to the IKEA brand from some company in the Netherlands, which means most stores in the US almost have no profits. Or starbucks USA buying extremely expensive (but high quality they say) beans from a company in Switserland... which is also part of the multi-national Starbucks holding. These are obvious examples, but it is almost inherently hard to define where profits are made for a multi-national company as they almost always have revenue streams going in many directions and who says which national company is really adding value while others are almost profitless? Otoh a revenue based system would also be rather hard to manage, especially if you want to prevent double taxation (both countries in the equation taxing the same revenue) as that almost requires profit based taxation again.
- sschueller 5y agoSome rate dependent number of customers and employees in the that country. Also assets held in that country and capital gains made in that country.
- zmix 5y agoBasing a business on the availability of roads and traffics regulation (lights, etc.), payed by the public and not paying money for it shows us lots of the psychology of the decision makers: "We are not the stupid, tax paying public, we are something better."
- rjmunro 5y agoAs soon as I read "In 2019, Uber claimed $4.5 billion in global operating losses ... in reality, it brought in $5.8 billion in operating revenue." I think either whoever wrote this has no idea what they are talking about, or they are trying to trick readers. "in reality" implies there is a contradiction or fraud, when it's totally possible to have $5.8 billion in operating revenue and still make a $4.5 loss. All this actually says is that Uber spent $10.3 billion in costs (or thereabouts, depending on how they account for other things). Don't get me wrong. Uber probably are doing something dodgy, with all these shell companies, but this opening remark just shouts "Don't trust this source - they don't know what they are talking about".
- bryanrasmussen 5y ago>Don't trust this source - they don't know what they are talking about". or at least, outrage of uninformed readers is potentially larger than outrage of the informed.
- thegeekbin 5y ago> Uber probably are doing something dodgy, with all these shell companies, but this opening remark just shouts "Don't trust this source - they don't know what they are talking about". Uber, like all massive companies, are always doing dodgy tax avoidance things. But, even if they're doing tax avoidance, it's still legal as long as it's not blatant fraud. Like all media companies, Business Insider has manipulated the content to cause outrage with their target markets for readers. Though, on the topic of wording data, it's always interesting to see how media organizations & companies as a whole swing things, for example: "Uber claimed $4.5 billion in global operating losses ... in reality, it brought in $5.8 billion in operating revenue" could've been written as: "Uber brought in $5.8 billion in operating revenue, however, declared a loss of $4.5 billion" or "In a 2019 filing, Uber declared a $4.5 billion loss, despite earning $5.8 billion in operating revenue."
- jokethrowaway 5y agoI earn 300k, pay the rent at 50k, then my right hand pays 450k to my left hand and I claim a 200k loss. Not that I disapprove of that, I just wish I could pull the same trick with HMRC - I'm just not rich enough or in friendly terms with governments overseas to do that. Is this equality?
- villgax 5y agoWhy can't just every company do this & make such hacks obsolete?
- sumedh 5y agoIts not a bug its a feature.
- throw_m239339 5y agoThe real issue right there. This set up is actually costly and is only beneficial above a certain revenue. If anybody could do that, then it wouldn't be a problem, the fact that it can only profit big companies and not the little guy is the very moral issue with that tax set up. They roughly spend a few millions to save a few hundred of millions in taxes.
- belatw 5y agoThe double-dutch isn’t cool. You know what’s cool? The 500,000-dutch with 50 layers of Irish and a few Caymens on top.
- thegeekbin 5y agoI mean, why not? What Uber and the other companies who are doing this is entirely legal -- but, probably pretty costly at 500k dutch.
- belatw 5y agoIf I were playing the game at that level, I’d do it too. The best I can do to evade my taxes is to get customers to pay me via cryptocurrency which I then sell to people locally in person in cash for a 10% discount.
- deleted 5y ago[deleted]
- emn13 5y agoIt's convenient to think this is some simple tax loophole that needs closing, but that's unlikely. Those 50 legal entities likely have no profit (on paper) due to fairly arbitrary pricing of intellectual property and the loans. It'd be interesting to see where the profit ends up disappearing into - if anywhere at all, because Uber isn't profitable IIRC, and it's profits that are taxed in major jurisdictions (IIRC, IANAL, I bet there are thousands of exceptions). The real problem here isn't the dutch sandwich, it's the very notion of taxing profits. We should not tax profits nor capital gains; we should tax revenue and ownership - those are much harder to game. After all, that's what we do with individuals too. Such taxes are, in principle, not new: VAT is such tax. When implemented properly, those taxes have the additional benefit that they encourage participation - after all, you get to deduct VAT already payed on your inputs when paying VAT on your outputs. This is a much more resilient model, and thus a better basis for for corporate taxation; and it's open to tweaks (e.g. discouraging hyper-complex legal structures by allowing less than 100% deduction for input VAT); it's potentially regressive, but if you acknowledge that, you can attempt to compensate for that by altering (or even dramatically reducing) income tax, and considering measures such as universal basic income, and choosing to have lower tax on human consumables (food) than on e.g. services (vacations or medical care). Fundamentally though, the real problem here is that profit is a mirage; it's much too easily distorted, especially with flexibly interpreted valuations of ever more intangible goods we have today. Transactions however, are at least a little harder to fake, so those should be where taxation takes place if possible. Another advantage of VAT is that it can be levied by a consuming country; the US could simply impose this, and mostly ignore whatever shenanigans in corporations try to pull in foreign jurisdictions. Which isn't to say VAT doesn't have it's issues (e.g. https://en.wikipedia.org/wiki/Missing_trader_fraud https://en.wikipedia.org/wiki/Missing_trader_fraud ) - but by and large those are much more easily dealt with, and easier to clearly label as fraud, not merely clever and antisocial but legal tax avoidance. And perhaps somebody can come up with something even better than VAT; but regardless - I'm pretty sure playing whack-a-mole with profit-shifting tax avoidance isn't going to lead anywhere very quickly.
- nomercy400 5y agoUber [...] to dodge taxes. The location or means are unrelated. Maybe you should fix your accounting laws, by making them more detailed/strict?
- dalbasal 5y agoUber might be very sophisticated in its tax avoidance, but it's probably not a good example for research... inasmuch as the research has a policy focus. Uber lose money. Corporate income tax is paid on profit. These article frustrate me: "In 2019, Uber claimed $4.5 billion in global operating losses (excluding the US and China) for tax purposes — in reality, it brought in $5.8 billion in operating revenue." Unless I'm missing something, these aren't contradictory. Uber really does lose money. That doesn't mean that there's nothing more to say, but it doesn't imply what the article article seems to think it does. A business publication should have basic accounting literacy. This feels like a collection of other people's tweets, with more information lost than added. I suspect the author has not even read his own sources, beyond headlines.
- JI00912 5y agoIf Uber lost 4.5 billion, that also means they spent at least that much money. That's a lot of people who were able to sell good and services. That's actually a good thing. And while spending this money, Uber provided a useful service. Besides the journalist apparently not understanding how taxation works, the phrasing is used to make the situation sound nefarious without providing any evidence. 50 shell companies? Ok...? What if it was 20, would that still be suspicious? Or just 1? How many are ok? What are they used for? No info at all. The entire 'article' is a bunch of random remarks with no context. This is not journalism. This unresearched text belongs far down in somewhere in a comment field.
- dalbasal 5y agoI don't think it's nefarious, more likely lazy. I suspect I spent more time reading it than the author did writing it.
- jk20 5y agoWage theft is a bigger problem than tax avoidance.