6 ms·

Several EU countries (France and UK) have, IIRC, made very clear that fictive debt or fictive licensing fees are fraud an would be judged as such.

by Iv 5y ago

earnesti 5y ago
How can you say what is fictive and what not? Licensing fees and loans exist on market anyway.
- kemitche 5y ago
  The existence of valid licensing fees does not mean all licensing fees are valid. Surgeons are allowed to legally cut people, that doesn't mean we can't figure out when someone was illegally stabbed. Let's not give up without even trying.
- burnished 5y ago
  "oh no, our publicly very profitable company actually doesn't make any money because of all the.. license fees we pay, that we are clearly in a position to bargain for better, yet mysteriously do not! oh its such a coincidence that everyone in the C-Suite still makes money off the the shell company." You can obfuscate fraud. But don't try that post-modern horseshit "what is being, man" on us.
- nabla9 5y ago
  You figure out what the intent is. If the same owner is behind both, and there seems to be no other reason that avoiding taxes, guilty.
- travoc 5y ago
  Any time legislatures have a hard time defining the line between legal and illegal behavior, courts tend to take a “we’ll know it when we see it” approach. Justice might be served but rule of law is diminished.
  - kazen44 5y ago
    a major difference between continental law and common law is the intent of the law though. If the court can prove that they did not handle with the intent of the law, it can still be decided that this is fraud. In a common law system this is not possible.
    - bryanrasmussen 5y ago
      Common law is based on precedent and common sense application of the law, so it is generally common law systems which are described as being open to interpretation.
      - salawat 5y ago
        Common sense has nothing to do with common law after a couple generations morph any type of sense a law could have made into something nigh unrecognizable. Go digging through case law in different jurisdictions and marvel at the contradictory interpretations that arise. This is why strategic changes in jurisdiction are a valuable part of litigative strategy.
  - tshaddox 5y ago
    Not really. “Fictive” just means “not real,” and courts have processes for judging whether things are real or not. The fact that courts still have to judge the actual facts of the matter doesn’t mean the legislature isn’t doing its job or that rule of law is diminished. It’s no different than courts judging the truth value of claims in a murder case or a fraud case.
- Iv 5y ago
  If a profitable company is making a loan it does not need to a subsidiary it controls, that's a fictive loan used to disguise a transfer. When licensing costs are paid to a shell company with 3 employees in a country that is neither the place where the HQ are or where the company originates from, that's fictive.
deleted 5y ago
[deleted]
deelowe 5y ago
That’s the thing about laws. It’s up to the courts to decide.
sva_ 5y ago
Pretty sure Ikea does it this way, and numerous others for sure.
- oneplane 5y ago
  Once a company becomes big enough it turns into 'yet another big one' that inherits the branding and the original activities but simply starts doing whatever else is doing to min-max everything beyond human ethics. It's like having a very small company with only a few people. There won't be any HR because that kind of overhead isn't something you can afford or make use of. So you work 'for the boss' and if you need something your boss is also the person who makes the decisions. But when the company gets bigger, you now get HR between you and the boss, and suddenly you are insulated. You work for the company, and are beholden to HR. Every step after that is just more insulation, more min-maxing and just making things worse for the sake of scale. Usually.
  - jacquesm 5y ago
    HR does not get between you and the boss, but middle-management (hence the name) does. HR gets between the company and you if there is a chance of you damaging the company, other than that it is mostly (regulatory) window dressing and to save some cost on recruiting and onboarding.
- laurent92 5y ago
  Movies too. The studio charges the movie, so the studio is positive while the movie is in debt. Actors get a lumpsum and a percentage on the movie benefits. In this case, it’s not shell companies, the studios actually have in-house expertise (=shooting most of the movie) while the movie mostly drives the scenario and the actors, so it’s harder to define what is illegal. McDonalds also has a franchise system, although it’s easier to control whether the pricing offered to the franchisees is constant or proportional to benefits.
rich_sasha 5y ago
The UK shouldn’t really raise its voice here, easily half the tax havens are UK dependencies: Cayman Isles, Virgin Isles, Jersey, Guernsey, Isle of Man, Gibraltar. It is inconceivable to me that the UK lacks influence to stem these activities, so the only conclusion is that it willingly accepts status quo.
- jacquesm 5y ago
  There is a reason that London was the financial headquarters of the EU while it lasted. They are going to try to do what they can to attract EU capital now that the last of these rules no longer apply to them, and will be the de-facto tax haven for the rest of the world except for the five-eyes.
  - rich_sasha 5y ago
    Well, the UK is well suited to finance in many ways, most of the legit. The way courts work for example. Maybe a bit like France and Italy have a natural talent for couture, say. But the shady stuff is sure there, and shady. UK high end property market seems to be a Monopoly-esque money laundering machine, with the extra inconvenience of having physical real estate attached to it. Maybe one good replacement market for NFTs.
    - nextaccountic 5y ago
      > The way courts work for example. What do you mean?
      - rich_sasha 5y ago
        IANAL but I understand UK courts have a reputation for being quick, pragmatic, fair and unbureaucratic. Finance often turns on 'legal innovation', or introducing entirely new financial constructs, and where on the Continent a more prescriptive legal system is in place, UK law is more interpretation-based. Possibly not a concern with many EU countries, but with some for sure: the legal system is also stable, doesn't change on the whims of the politicians, and appears to be genuinely un-politicised. Since Finance heavily relies on parties promising huge contingent payments to each other, having a trustworthy and reliable arbiter is key. If I enter into an agreement where I pay upfront, and I'm guaranteed insurance-type payments for 20 years into the future, the legal apparatus is the backstop to my claims.
moffkalast 5y ago
Ireland: chuckles "I'm in danger" This is literally their entire economy lmao.
- OliverM 5y ago
  It literally isn't.
  - moffkalast 5y ago
    > In 2016–17, foreign firms paid 80% of Irish corporate tax, employed 25% of the Irish labour force (paid 50% of Irish salary tax), and created 57% of Irish OECD non-farm value-add. As of 2017, 25 of the top 50 Irish firms were U.S.–controlled businesses, representing 70% of the revenue of the top 50 Irish firms. (Wikipedia) Are you sure about that? If the EU enforces what they preach and Ireland loses its tax haven state they could lose a huge chunk of their GDP.

Several EU countries (France and UK) have, IIRC, made very clear that fictive debt or fictive licensing fees are fraud an would be judged as such.

by Iv 5y ago

Several EU countries (France and UK) have, IIRC, made very clear that fictive debt or fictive licensing fees are fraud an would be judged as such.

earnesti 5y ago

How can you say what is fictive and what not? Licensing fees and loans exist on market anyway.

kemitche 5y ago
The existence of valid licensing fees does not mean all licensing fees are valid. Surgeons are allowed to legally cut people, that doesn't mean we can't figure out when someone was illegally stabbed. Let's not give up without even trying.
burnished 5y ago
"oh no, our publicly very profitable company actually doesn't make any money because of all the.. license fees we pay, that we are clearly in a position to bargain for better, yet mysteriously do not! oh its such a coincidence that everyone in the C-Suite still makes money off the the shell company." You can obfuscate fraud. But don't try that post-modern horseshit "what is being, man" on us.
nabla9 5y ago
You figure out what the intent is. If the same owner is behind both, and there seems to be no other reason that avoiding taxes, guilty.
travoc 5y ago
Any time legislatures have a hard time defining the line between legal and illegal behavior, courts tend to take a “we’ll know it when we see it” approach. Justice might be served but rule of law is diminished.
- kazen44 5y ago
  a major difference between continental law and common law is the intent of the law though. If the court can prove that they did not handle with the intent of the law, it can still be decided that this is fraud. In a common law system this is not possible.
  - bryanrasmussen 5y ago
    Common law is based on precedent and common sense application of the law, so it is generally common law systems which are described as being open to interpretation.
    - salawat 5y ago
      Common sense has nothing to do with common law after a couple generations morph any type of sense a law could have made into something nigh unrecognizable. Go digging through case law in different jurisdictions and marvel at the contradictory interpretations that arise. This is why strategic changes in jurisdiction are a valuable part of litigative strategy.
- tshaddox 5y ago
  Not really. “Fictive” just means “not real,” and courts have processes for judging whether things are real or not. The fact that courts still have to judge the actual facts of the matter doesn’t mean the legislature isn’t doing its job or that rule of law is diminished. It’s no different than courts judging the truth value of claims in a murder case or a fraud case.
Iv 5y ago
If a profitable company is making a loan it does not need to a subsidiary it controls, that's a fictive loan used to disguise a transfer. When licensing costs are paid to a shell company with 3 employees in a country that is neither the place where the HQ are or where the company originates from, that's fictive.

deleted 5y ago

[deleted]

deelowe 5y ago

That’s the thing about laws. It’s up to the courts to decide.

sva_ 5y ago

Pretty sure Ikea does it this way, and numerous others for sure.

oneplane 5y ago
Once a company becomes big enough it turns into 'yet another big one' that inherits the branding and the original activities but simply starts doing whatever else is doing to min-max everything beyond human ethics. It's like having a very small company with only a few people. There won't be any HR because that kind of overhead isn't something you can afford or make use of. So you work 'for the boss' and if you need something your boss is also the person who makes the decisions. But when the company gets bigger, you now get HR between you and the boss, and suddenly you are insulated. You work for the company, and are beholden to HR. Every step after that is just more insulation, more min-maxing and just making things worse for the sake of scale. Usually.
- jacquesm 5y ago
  HR does not get between you and the boss, but middle-management (hence the name) does. HR gets between the company and you if there is a chance of you damaging the company, other than that it is mostly (regulatory) window dressing and to save some cost on recruiting and onboarding.
laurent92 5y ago
Movies too. The studio charges the movie, so the studio is positive while the movie is in debt. Actors get a lumpsum and a percentage on the movie benefits. In this case, it’s not shell companies, the studios actually have in-house expertise (=shooting most of the movie) while the movie mostly drives the scenario and the actors, so it’s harder to define what is illegal. McDonalds also has a franchise system, although it’s easier to control whether the pricing offered to the franchisees is constant or proportional to benefits.

rich_sasha 5y ago

The UK shouldn’t really raise its voice here, easily half the tax havens are UK dependencies: Cayman Isles, Virgin Isles, Jersey, Guernsey, Isle of Man, Gibraltar. It is inconceivable to me that the UK lacks influence to stem these activities, so the only conclusion is that it willingly accepts status quo.

jacquesm 5y ago
There is a reason that London was the financial headquarters of the EU while it lasted. They are going to try to do what they can to attract EU capital now that the last of these rules no longer apply to them, and will be the de-facto tax haven for the rest of the world except for the five-eyes.
- rich_sasha 5y ago
  Well, the UK is well suited to finance in many ways, most of the legit. The way courts work for example. Maybe a bit like France and Italy have a natural talent for couture, say. But the shady stuff is sure there, and shady. UK high end property market seems to be a Monopoly-esque money laundering machine, with the extra inconvenience of having physical real estate attached to it. Maybe one good replacement market for NFTs.
  - nextaccountic 5y ago
    > The way courts work for example. What do you mean?
    - rich_sasha 5y ago
      IANAL but I understand UK courts have a reputation for being quick, pragmatic, fair and unbureaucratic. Finance often turns on 'legal innovation', or introducing entirely new financial constructs, and where on the Continent a more prescriptive legal system is in place, UK law is more interpretation-based. Possibly not a concern with many EU countries, but with some for sure: the legal system is also stable, doesn't change on the whims of the politicians, and appears to be genuinely un-politicised. Since Finance heavily relies on parties promising huge contingent payments to each other, having a trustworthy and reliable arbiter is key. If I enter into an agreement where I pay upfront, and I'm guaranteed insurance-type payments for 20 years into the future, the legal apparatus is the backstop to my claims.

moffkalast 5y ago

Ireland: chuckles "I'm in danger" This is literally their entire economy lmao.

OliverM 5y ago
It literally isn't.
- moffkalast 5y ago
  > In 2016–17, foreign firms paid 80% of Irish corporate tax, employed 25% of the Irish labour force (paid 50% of Irish salary tax), and created 57% of Irish OECD non-farm value-add. As of 2017, 25 of the top 50 Irish firms were U.S.–controlled businesses, representing 70% of the revenue of the top 50 Irish firms. (Wikipedia) Are you sure about that? If the EU enforces what they preach and Ireland loses its tax haven state they could lose a huge chunk of their GDP.