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Google Spared $1.3 Billion Tax Bill With Victory In French Court (bloomberg.com)
New submitter Zorro shares a report from Bloomberg: Google won its fight against a 1.12 billion-euro ($1.3 billion) French tax bill after a court rejected claims the search-engine giant abused loopholes to avoid paying its fair share. Google didn't illegally dodge French taxes by routing sales in the country out of Ireland, the Paris administrative court decided Wednesday. Judges ruled that Google's European headquarters in Ireland can't be taxed as if it also has a permanent base in France, as requested by the nation's administration. "Google Ireland isn't taxable in France over the period 2005-2010," the court said in a statement. Google said in a statement: "The French Administrative Court of Paris has confirmed Google abides by French tax law and international standards. We remain committed to France and the growth of its digital economy."
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premier post!
So like a business you can be multiple places at the same time? Also for personal income tax you pay taxes to the country you spent the majority of your time.
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Actually it is simpler than that....
A company exists to make money, period.
They want to maximize their profits, so, they work (and hire lawyers to guide them) to pay the absolute least amount of tax they have to within each country they do business in, within the confines of the laws of those nations.
It may be a fine line, but as long as it is within that line of lawful, then there is no problem.
If you dislike the amount of tax a company/person has to pay in a country, you change the laws....simple really.
Or...do you as an individual not take EVERY tax deduction and savings you legally can?
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
and now the courts let them further destroy us. They have made the world shit and all thinking people want to die since their kind now lets the Google corporation steal even more from the people. Google has more than they need, and they need to pay their fair share.
Some places, but not all places. It depends on the local laws. And that's really the point isn't it? Rule of law. Not "this is how it should work ideally". But "this is how the law, as written and applied, works".
I agree multi-nationals shouldn't have loopholes like the Dutch Sandwich. I also agree that since they are legal, the companies are doing nothing wrong.
Fix the laws.
Judges ruled that Google's European headquarters in Ireland can't be taxed as if it also has a permanent base in France, as requested by the nation's administration.
Why should any company doing business in the EU have to have multiple permanent base, unless the company itself thinks it's to their advantage? If the company actually wants it, that's one thing - but why does the French administration "request" that Google keep a base in France when they already have one in another EU member state?
#DeleteChrome
To me it's a matter of stability. This system is stable, so whatever. Yes, they abuse the loopholes; and it doesn't matter. We can design new tax strategies that don't address this behavior without opening up new loopholes, so our economic data about what's out there to tax is safe.
There's some logistics we can look at about this, too. They don't form a coherent argument; they're just worth a thought.
When we buy things from a seller in China, we don't tax that seller on profits. We might issue a tariff, but that's generally a bad idea; instead, we just tax the profits of the business selling the good domestically. That gets the good to the consumer at the lowest price.
Likewise, the business doing the selling has employees locally. It pays some of its revenue to those employees, who are taxable, and who spend money into the local economy. We also tax it on any of its profits.
If the business abroad takes a huge profit margin, it starts charging more than domestic manufacture. In such a case, trade makes no sense: we can make it cheaper ourselves, and so do so.
So what's with these tech businesses?
A tech business will supply a good or service to a country. In essence, it's selling to the country, but not necessarily in the country. Where the business is selling from is ... well, it's not clear. It's pretty much arbitrary.
A business like Google might or might not have a presence in a country, such as France. That is to say: Google might or might not have employees in France. If it has employees in France, then it's doing productive work in France; that productive work is part of France's GDP, because it's producing a product in France. Those employees's labor represents the actual production, although the business profits represent the expenditure for that productive output: the total contribution to GDP should be the entire revenue stream created by that particular productive unit.
Even that's fuzzy: Google in France is using Google in the U.S.. Face it: local Apple, local Google, local Microsoft, all are leveraging the products of business efforts of other parts of the business in other parts of the world. No, we can't accurately model this; we can, of course, say that an empty office in Ireland receiving all the taxable income is not providing productive output.
You also have secondary effects of presence. Google, Apple, or Microsoft might have a data center, an office building, something. If Google is hosting Google's French services in France, then Google is paying money to a French data center buying French power, French internet, and French office space. That's even more of the revenue stream of Google France going to France. If Google France's servers are colocated in Ireland and not France, well... that chunk of Google's revenue stream represents the GDP of Ireland; taxing it in France is a nifty legal trick, and dishonest.
So it's somewhat of a complex issue. It's also one that doesn't much matter, usually; and when it does, it's often a matter of perspective. Apple, for example, chews through $234Bn of revenue, keeps $53Bn of profits; Apple gets that revenue from sales all over the world of devices manufactured in China and services (iTunes) provided from wherever they locate their servers. Apple draws $2Bn of global revenue to Cupertino, paying the workers there, who spend into the local economy of Cupertino and the surrounding municipalities. Apple expends billions of dollars into the United States economy for products and services supplying its business activities.
That $53Bn seems like a lot to dodge if you're only diffusing $100Bn into the U.S. economy.
It is.
Apple's effective tax rate is 25.8% (the statutory rate is 35%). They paid $15.8 billion in U.S. taxes, after all the dodging they did.
On $53Bn, Apple would owe $18.55Bn. (Irrelevant factoid: under the Universal Social Security I designed, the the
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Other countries would have pushed/had the legal system in a way to get the billions...
Slashdot, fix the reply notifications... You won't get away with it...
U.S. citizens have to pay U.S. taxes no matter where they live. So if you work in France, but are a U.S. citizen, you have to pay taxes to both France and the U.S. You get credit for the taxes you paid in France, so you only pay the difference to the U.S.
Companies get tons of special treatment that individuals don't get. Companies can deduct ALL expenses. Individuals can only deduct "eligible" expenses like charity donations. Because companies can deduct ALL expenses, Google France can pay Google Ireland all of its EBITDA profits, then Google France deducts all that expense and posts $0 net profit. If you took all your net salary and spent it on your Cayman island stock portfolio, you wouldn't be able to report $0 income. You only get to deduct spending on 501(c)(3) entities. (Hint: if you start a charity in the Cayman island and give your net salary to your own charity, you were able to report $0 income .. and many wealthy individuals did!! .. but that loophole has been plugged now with AMT).
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some places, get this, make you pay a percentage based on the time you spent there. Interesting, as it's almost as if companies could do the same based on how much revenue they made in said country.
There's all sort of schemes that companies use to get around this, including the corporate creation of subsidiaries designed to incur only losses, and thus show a perpetual loss on their balance sheets. The profits are funneled to sister subsidiaries through the use of clever legal arrangements that often rely upon classifying one type of financial transaction (e.g. a sale) as instead a different type of financial transaction (e.g. loan with amortized commission.)
This is only a ruling from a court of first instance. Now this can go through the Cour administrative d'appel, the conseil d'état (equivalent to US supreme court for procedures against the state in France) , and then the EU justice court.
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Or...do you as an individual not take EVERY tax deduction and savings you legally can?
I agree with you that the answer is to change the law, but that is a bad question to be asking. Because I and many others probably don't. We take the ones that are most visible, then decide that our time is not worth it trying to hunt out those remaining few dollars that can be saved. And because we can say no to your question, that then invites people to say "oh but Google makes so much money that for them it is worth it to spend so much time digging for every deduction possible", sending us off on a tangent, to completely forget that the real issue, which is (like you already said) we need to change the fucking law.
Google: We are a progressive company
Curious Kid: What does that mean?
Google: We believe in social justice, taking care of the poor, equality, stuff like that?
Curious Kid: So, this means that you are very diverse, have about 50% girls, and pay all your taxes to fund all the social programs that you advocate for?
Google: Not in the slightest
Curious Kid: Oh, I get it, progressive means the life you think others should have, but not yourself.
Google: Pretty much
"Liberalism is a very noble idea, currently controlled by some very bad people. Be sure you do not get the two confused.
in whatever country's, or hell State's (I'm a Yank) got the lowest taxes. I could enjoy all the benefits of civilization without having to pay for them. And all those suckers who keep voting in chaps to get low taxes for themselves would foot the bill while sit pretty. Unfortunately I'm stuck in the same boat as the suckers (minus the voting for people with nonsensical promises).
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Google offered to not reveal said Judge's search history for the past 10-20 years....
Oh wait. French are fine with both GILF and teen porn, as well as unusual sexual situations are they not?
many countries actually don't work that way at all, the US for instance bases it on citizenship, other countries base it on residency or whether you have spent 3 or 6 months in the country. some have tax treaties between countries and others don't. Their is no specific way that income tax is treated by country though yes largest amount do seem to go by time spent in country.
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Don't fight for your country, if your country does not fight for you.
Said scheme is usually countered by the local IRS by stating that "companies of type X make profit percentage y% normally, so we will levy taxes as if you do that too, since you are obviously operating more than x months now, and not bankrupt". There's also a law over here that basically says that any construct of companies used solely to evade taxes can be declared null and void for the purpose of assessing taxes. I worked for a multinational once and the tax authorities just used both rules. Tax authorities aren't stupid. Usually they employ a lot of sharpwitted financial experts because they earn more than they cost.
Therefore, by the (faulty) logic you're using, you're just a cow with a keyboard - osu-neko (2604)
French Judges all retire at the same with with four million dollars in the bank each
If the law doesn't say anything about against it, how could it be illegal?
Is everything illegal by default?
I pronounce government largesse illegal!