5 ms·

It's more difficult to determine where the value in software is being created. Still, big tech has a lot of R&D offices in Ireland.

hinkley 2y ago
That is definitely a difficult paper trail. If you make valves in Ireland they at least have to be shipped. Code just moves on the network. As do commands. But wouldn’t Ireland see their taxes as “working” if Irish coders are being hired to do the work?
- yunohn 2y ago
  There’s absolutely no employment requirement outside of any PR deals that IE may impose on Apple to satisfy their citizens. The tax evasion scheme they used does not necessitate any real humans in any jurisdictions - it’s almost literally just documentation.
  - musiciangames 2y ago
    I’m not sure that’s the case. I worked for Irish subsidiary of a financial software company. Management openly said the main reason we were there was for the tax benefit. We cut standard code for the product, then once a year had to fill out a form describing the ‘R&D’ component of what we had done. As I understood it, that was required for the tax treatment we received.
    - yunohn 2y ago
      AFAIU it’s a soft requirement so that IE can claim that losing taxes is offset by employing (a few) people. The actual tax structuring discussed in this case and similar for other FAANG, is all about where the company is registered vs making revenue vs paying taxes, and how none of it is intuitively what you’d expect.
    - piltdownman 2y ago
      You get a 33% tax rebate via a research credit. You probably filled out a form for PWC to attest to that. There's 10s of 1000s of Engineers directly employed in R&D in Ireland, spanning automotive, telecoms, fintech, SaaS etc.. with a large number of companies receiving the credit. We have a HUGE network effect now via the Silicon Docks and the other tech hubs around Ireland - Cork, Galway and Dublin are absolute inundated with groups of companies in certain industries. Seven of the ten of the world's top pharmaceutical companies including Janssen, AbbVie, Eli Lilly, Pfizer, Merck/MSD, Novartis, and Thermo Fisher Scientific are based within 50km of each other in Cork.
epolanski 2y ago
That's not what really Apple did in Europe to pay little taxes. The scheme was essentially like this: - Apple Ireland bought iphones for 200$ or so (talking about pre X numbers, now they're likely slightly higher) - Apple Ireland sold iPhones to Apple Italy for 599€s - Apple Italy sold iPhones for 599€s + vat (thus avoiding to pay any corporate taxes in Italy while making billions) - Apple Ireland had a special agreement with Irish tax so they paid like sub 1% corporate taxes on the 400€s of profit This way not only Apple wasn't paying any tax in the countries they were doing business with, but also paying extremely low taxes in Ireland. On top of that, which isn't illegal per se, it happened allegedly on top of preferential treatments (but I'm not much informed on the details here).
- hinkley 2y ago
  That sounds like something Hollywood does when they want to cut out profit sharing with the cast. One of their affiliate companies makes an absolute killing on services rendered and the studio itself takes a bath on the movie.
- GeekyBear 2y ago
  > avoiding to pay any corporate taxes in Italy This us a fairly common strategy not limited to tech. For instance, Starbucks in the UK: > Starbucks Coffee Company (UK) made a £149m “gross profit” in the year to October 2023, up from £129m the year before. But after “administrative expenses” of £127m, its pre-tax profits were reduced to £16.9m, on which it paid £7.2m tax... In 2012, it was revealed that Starbucks had paid just £8.6m in taxes on £3bn in UK sales since 1998, https://www.theguardian.com/business/2024/apr/05/starbucks-paid-7-point-2m-in-uk-corporation-tax-despite-gross-profit-of-149m https://www.theguardian.com/business/2024/apr/05/starbucks-p...
  - jrnx 2y ago
    you're ignoring the 20% VAT on those 3bn sales, which provided 600m tax revenue. Why is it so important that they paid 7m in corporate tax instead of any other amount? Their business apparently has high cost of sales (like stores, personnel etc.), where by the way also taxes occur, e.g. for wages... So I suggest to think twice if you want to paint the picture that Starbucks does not contribute it's fair share to taxes in the UK.

hinkley 2y ago

That is definitely a difficult paper trail. If you make valves in Ireland they at least have to be shipped. Code just moves on the network. As do commands. But wouldn’t Ireland see their taxes as “working” if Irish coders are being hired to do the work?

yunohn 2y ago
There’s absolutely no employment requirement outside of any PR deals that IE may impose on Apple to satisfy their citizens. The tax evasion scheme they used does not necessitate any real humans in any jurisdictions - it’s almost literally just documentation.
- musiciangames 2y ago
  I’m not sure that’s the case. I worked for Irish subsidiary of a financial software company. Management openly said the main reason we were there was for the tax benefit. We cut standard code for the product, then once a year had to fill out a form describing the ‘R&D’ component of what we had done. As I understood it, that was required for the tax treatment we received.
  - yunohn 2y ago
    AFAIU it’s a soft requirement so that IE can claim that losing taxes is offset by employing (a few) people. The actual tax structuring discussed in this case and similar for other FAANG, is all about where the company is registered vs making revenue vs paying taxes, and how none of it is intuitively what you’d expect.
  - piltdownman 2y ago
    You get a 33% tax rebate via a research credit. You probably filled out a form for PWC to attest to that. There's 10s of 1000s of Engineers directly employed in R&D in Ireland, spanning automotive, telecoms, fintech, SaaS etc.. with a large number of companies receiving the credit. We have a HUGE network effect now via the Silicon Docks and the other tech hubs around Ireland - Cork, Galway and Dublin are absolute inundated with groups of companies in certain industries. Seven of the ten of the world's top pharmaceutical companies including Janssen, AbbVie, Eli Lilly, Pfizer, Merck/MSD, Novartis, and Thermo Fisher Scientific are based within 50km of each other in Cork.

epolanski 2y ago

That's not what really Apple did in Europe to pay little taxes. The scheme was essentially like this: - Apple Ireland bought iphones for 200$ or so (talking about pre X numbers, now they're likely slightly higher) - Apple Ireland sold iPhones to Apple Italy for 599€s - Apple Italy sold iPhones for 599€s + vat (thus avoiding to pay any corporate taxes in Italy while making billions) - Apple Ireland had a special agreement with Irish tax so they paid like sub 1% corporate taxes on the 400€s of profit This way not only Apple wasn't paying any tax in the countries they were doing business with, but also paying extremely low taxes in Ireland. On top of that, which isn't illegal per se, it happened allegedly on top of preferential treatments (but I'm not much informed on the details here).

hinkley 2y ago
That sounds like something Hollywood does when they want to cut out profit sharing with the cast. One of their affiliate companies makes an absolute killing on services rendered and the studio itself takes a bath on the movie.
GeekyBear 2y ago
> avoiding to pay any corporate taxes in Italy This us a fairly common strategy not limited to tech. For instance, Starbucks in the UK: > Starbucks Coffee Company (UK) made a £149m “gross profit” in the year to October 2023, up from £129m the year before. But after “administrative expenses” of £127m, its pre-tax profits were reduced to £16.9m, on which it paid £7.2m tax... In 2012, it was revealed that Starbucks had paid just £8.6m in taxes on £3bn in UK sales since 1998, https://www.theguardian.com/business/2024/apr/05/starbucks-paid-7-point-2m-in-uk-corporation-tax-despite-gross-profit-of-149m https://www.theguardian.com/business/2024/apr/05/starbucks-p...
- jrnx 2y ago
  you're ignoring the 20% VAT on those 3bn sales, which provided 600m tax revenue. Why is it so important that they paid 7m in corporate tax instead of any other amount? Their business apparently has high cost of sales (like stores, personnel etc.), where by the way also taxes occur, e.g. for wages... So I suggest to think twice if you want to paint the picture that Starbucks does not contribute it's fair share to taxes in the UK.