×

Announcing: Slashdot Deals - Explore geek apps, games, gadgets and more. (what is this?)

Thank you!

We are sorry to see you leave - Beta is different and we value the time you took to try it out. Before you decide to go, please take a look at some value-adds for Beta and learn more about it. Thank you for reading Slashdot, and for making the site better!

Google May Be $1 Billion Behind In Tax Payments To France

Soulskill posted about 8 months ago | from the maybe-run-a-search-to-see-where-it-went dept.

Google 199

An anonymous reader writes "Ars Technica reports, 'Technology giant Google has been delinquent on its tax payments in France for the past few years, to the tune of more than $1 billion in missed payments, and it now may be hit with a sizable tax penalty by the French government.' Google asserts that it has operated within the law in France, but the French government has reason to believe that in order to avoid French taxes, Google has been passing off some of its business contracts as Irish rather than French."

Sorry! There are no comments related to the filter you selected.

You mean "Le Google" (0, Flamebait)

TrollstonButterbeans (2914995) | about 8 months ago | (#46850445)

FTFY

Re:You mean "Le Google" (-1)

Anonymous Coward | about 8 months ago | (#46850467)

Wouldn't "Le Goog" be more French then one of them ass fountains?

Re:You mean "Le Google" (-1)

Anonymous Coward | about 8 months ago | (#46850867)

so just like wesley snipes - they make a fuckton of money and still cant manage to pay there taxes

so just like wesley snipes - what a bunch of niggers!!

Obligatory (-1)

Anonymous Coward | about 8 months ago | (#46850915)

"Le Google." What do they call a Whopper?

I don't know. I didn't go in a Burger King.

Re:Obligatory (1)

gmhowell (26755) | about 8 months ago | (#46851551)

"Le Google." What do they call Bing?

I don't know. I didn't use Microsoft.

FTFY.

So few (-1, Troll)

manu0601 (2221348) | about 8 months ago | (#46850481)

After the french government committed to economic suicide with austerity policies (latest plan is to remove 50 billions euros from the economy), what is a little missing billion?

Re:So few (4, Insightful)

cheesybagel (670288) | about 8 months ago | (#46850493)

Google, Amazon, Apple escaping taxes and it starts to add up to real money.

Re:So few (0, Flamebait)

AlphaWolf_HK (692722) | about 8 months ago | (#46850653)

In some countries, maybe there's some blame to be had for escaping taxes...but France is a whole other argument. I mean shit, 75% tax on the wealthiest has resulted in a lot of them just flat out leaving that country. It got so bad that their dear leader is now lobbying against his own tax plan; the same plan that put it there to begin with.

Here's a good read on the subject:

http://www.forbes.com/sites/je... [forbes.com]

Re:So few (5, Insightful)

Anonymous Coward | about 8 months ago | (#46850735)

If they don't like the laws the company is free to not operate in the country. If they choose to operate there they must follow the law. I have no sympathy for them, they knew what the deal was when they stablished there.

Re:So few (4, Insightful)

Anonymous Brave Guy (457657) | about 8 months ago | (#46850759)

The problem is that they are following the laws in these countries. The governments have the legislative powers and have created tax systems that don't work under these conditions, but instead of fixing the problem, it's politically better PR to just blame the big organisations for having decent accountants.

In cases where that creates a hostile public feeling toward a company, that can be a surprisingly effective strategy -- certain businesses that operate in the UK have recently changed their accounting practices so they declare more taxable income in the UK -- but usually the amounts involved are relatively small, just enough to counter the bad press with a good soundbite about how many million they paid in tax last year -- and it doesn't really work on businesses that utterly dominate their industries and/or don't deal much with the average guy in the street anyway.

Sooner or later, these governments are going to have to get their act together and fix the broken system properly, but I suspect a lot of them are hoping the next election will come and go first so either they have some breathing room or it's someone else's problem.

Alternative Minimum Tax (1)

flyingfsck (986395) | about 8 months ago | (#46851071)

The USA also has something called Alternative Minimum Tax. That is a rule that gets invoked when it looks like someone is trying to game the system. Essentially, it gives the tax service the power to impose a tax. France is doing the same thing.

Re:Alternative Minimum Tax (1)

Anonymous Coward | about 8 months ago | (#46851219)

> That is a rule that gets invoked when it looks like someone is trying to game the system

It's a rule that gets invoked more each year due to inflation. I'll bet that the majority of senior IT workers are hit by AMT.

Re: Alternative Minimum Tax (-1)

Anonymous Coward | about 8 months ago | (#46851747)

You don't have any understanding of what is going on here shitbird. Read something before posting. Google is following the law - if France doesn't like it they can change their laws plain and simple. You can't set the speed limit then pull someone over for following it.

Re:So few (5, Informative)

davester666 (731373) | about 8 months ago | (#46851845)

Actually, it really appears that Google was blatantly NOT following the law.

Apple sells an iPhone and says X% of the value of it is for patents to be paid to an Irish company [or something like that], which is completely legal, even if it is also completely arbitrary [as Apple owns said patents] so they basically shift most profits out of the country. Everybody and their dog does this, Apple just headlines this because they are a relatively new company [vs say, petroleum companies] and they make highest amount of profit [or thereabouts] worldwide.

Google has a large office of employee's in France, that were involved with negotiating and signing advertising contracts with french companies, then claiming those contracts were actually signed IN IRELAND. This is the part that the tax collectors are taking issue with. To be legal and not have to pay taxes in France for those contracts, Google would basically have to close their french offices and get everyone to directly deal with their Irish division.

And I believe I saw a similar story about the UK also investigating Google doing this in the UK as well. And I'm sure all the other tax collection agencies in the EU have perked up their ears and started taking a look at this...

Re:So few (1, Informative)

IamTheRealMike (537420) | about 8 months ago | (#46851947)

Google has a large office of employee's in France, that were involved with negotiating and signing advertising contracts with french companies, then claiming those contracts were actually signed IN IRELAND. This is the part that the tax collectors are taking issue with.

There are so many problems with this, where to begin?

Firstly, this is not some spontaneous action by a bunch of bottom rung tax collectors. Politicians in France got elected by promising things the country could not afford and have been desperately searching for things they can tax to raise revenue, or at least be seen to be doing something. Hence 75% tax on the rich, and so on. Wealthy non-French tech companies are of course a juicy target so top politicians in France have been threatening Google with retroactive tax "re-evaluations" for some time. This is 100% a politically motivated action, what's more, it directly contradicts EU law which France signed up for. It's not at all clear that the EU courts would let such an action stand.

But secondly, and more problematically, you are trying to argue that a contract is not signed with the people it's signed with. There's a very simple way to find out who a contract was actually made with - look at who signed it. If these contracts were signed by an Irish company, they're with a company in Ireland and it doesn't matter what language they're written in (seriously, who comes up with this crap, does the French government expect to tax transactions in Canada now?).

Countries that have a beef with salespeople promoting products that are actually sold elsewhere, will either have to get real, or start cracking down on any kind of affiliate network or company that has a mobile salesforce at all. Attempting to redefine where revenue accrues according the job titles of people who worked on the sale is a losing proposition and can never work - either companies will rename the people who are doing the selling to avoid ad-hoc rules, or they'll just increase the independence of the subsidiaries so they qualify as independent affiliates etc, or if governments get really draconian they'll go to entirely online selling - not exactly a hard thing for a company like Google. There's no way to make this kind of thing stick, which is why EU law does not work that way.

To be legal and not have to pay taxes in France for those contracts, Google would basically have to close their french offices and get everyone to directly deal with their Irish division

No, what they're doing is entirely legal, though whether they choose to fight this in the courts is an open question. But does France really want Google to shut up shop and leave? The entire point of the EU that France is so enthusiastic about is the common single market, which means anyone in it can sell to anyone from anywhere inside it. If France starts trying to undermine that system they're signing up for a whole world of pain far beyond any tax they could gain from Google.

Re:So few (1)

AmiMoJo (196126) | about 8 months ago | (#46851911)

TFA says that the French government thinks they are not following the laws. It's a somewhat technical disagreement but as far as the French government is concerned the should have paid that money.

As it happens the EU is trying to sort this out. The proposal is for companies to pay corporation tax based on the percentage of business they do in each country. If 5% of Google's business is in France with French companies then they pay French corporation tax on 5% of their global profits. Doesn't matter where they try to hide them, the bill is the same.

Of course some countries, most notably the UK, are against this because they like being tax havens.

Re: So few (-1)

Anonymous Coward | about 8 months ago | (#46851053)

Fuck you

Re:So few (2)

skegg (666571) | about 8 months ago | (#46851365)

Very true.

France, join the club: Apple, Google facing tax crackdown [smh.com.au]

Re:So few (1)

dbIII (701233) | about 8 months ago | (#46851871)

The difference is that in Australia a gift of an expensive bottle of wine to the right person will make the tax problems go away.

Re:So few (5, Informative)

PopeRatzo (965947) | about 8 months ago | (#46850963)

In some countries, maybe there's some blame to be had for escaping taxes...but France is a whole other argument. I mean shit, 75% tax on the wealthiest has resulted in a lot of them just flat out leaving that country. It got so bad that their dear leader is now lobbying against his own tax plan; the same plan that put it there to begin with.

What do personal tax rates have to do with a corporation paying corporate taxes? There are no "75%" corporate taxes in France?

A corporation has a choice in whether or not to do business in a country. Google has no problem doing business in countries with regimes with a lot worse policies than a 75% top personal tax rate.

Re:So few (3, Informative)

flyingfsck (986395) | about 8 months ago | (#46851517)

Sure, but Google (and others) are obviously trying to pass off work done in France (or other EU countries) as work done in Ireland, while the Ireland office obviously has very few staff and cannot possibly do all the work they are purported to be doing. This is a very obvious tax fraud and it is quite amazing that these mega corps think that they will get away with it forever. They should get audited and double taxed. Simple as that.

Re:So few (-1)

Anonymous Coward | about 8 months ago | (#46851587)

How is it "obvious tax fraud"? Tax fraud is bad but if you are going to throw claims like that around, you need evidence.

Also it would probably help if you didnt talk about "where work is done" -- it makes it sound like you dont understand taxes.

Re:So few (2)

Vapula (14703) | about 8 months ago | (#46851621)

The problem is the Ireland tax loophole. It's abused by Google, Apple, Microsoft and many other.

Politician need to fix it... because the same happen in Belgium, Germany, ...

Re: So few (0)

Anonymous Coward | about 8 months ago | (#46851659)

When you are not paying taxes, it is an obvious tax fraud.

Full stop.

Re:So few (1)

AlphaWolf_HK (692722) | about 8 months ago | (#46851883)

What do personal tax rates have to do with a corporation paying corporate taxes? There are no "75%" corporate taxes in France?

Technically true, and my point wasn't to say that corporations pay a 75% tax, rather my aim was to point out the biggest absurdity in their tax system in order to emphasize how bad it is. It is quite so bad that in fact that they are reversing course, which again I wanted to emphasize. As far as the 75% tax itself...the 75% figure cannot be taxed to individuals directly; I don't know exactly why, but apparently it's against their higher laws (constitution? I honestly don't know enough about French law.) What I do know is that it comes in the form of a payroll tax. The original law was written so that it was a regular personal income tax, but it was shot down in their court system, so it had to be rewritten to its current form, and the tax is paid before they even receive the money, or something to that effect.

Re:So few (4, Insightful)

Carewolf (581105) | about 8 months ago | (#46851917)

The US had a top marginal tax of 90% during it richest times of the last century. Why does it bother you so?

Re:So few (4, Insightful)

Blaskowicz (634489) | about 8 months ago | (#46851049)

Dear leader? The French president is more like Ronald Reagan than Dear leader lately.
The 75% for income above one million euros (after deductions), was a symbolic measure as it concerns very few people and is still not applied. Just stuff waived around to get elected. Same president had pleaded to renogotiate the treaty on European Stability Mechanism, but didn't. Not a single point or comma was changed. Now this government will get us in the Great Transatlantic Market, or whatever it's called in which US corporations will dictate their laws to the countries and European Union, putting an end to national democracy.

Dear leader my ass! We're trapped, with a presidency and governnement that have "socialist" in name but are right-leaning collaborationists, more in the way of Tony Blair and Gehrard Schroeder.

Re:So few (3, Informative)

the grace of R'hllor (530051) | about 8 months ago | (#46851793)

For much of the 20th century, the United States has had >70% tax on the wealthiest as well, with at some point >90%. Apparently, that did not seems to hurt the US.

Not that various American ultra-rich folks are calling for higher taxes on the wealthy too. Instead, they get tax breaks.

A few rich people being a bit upset that their income from labor gets taxed heavily, which they don't feel because the vast bulk of their income comes from investment, won't hurt them. It's the desire to spend spend spend that really gets Hollande. Actual socialists do more harm than good.

Re:So few (0)

Anonymous Coward | about 8 months ago | (#46851885)

A) The "75%" is the highest bracket and don't even touch the wealthiest unless they are stupid.

B) The "75%" is not on corporation

C) If google had lied, they must pay and stop doing business in France if they don't want to pay the taxes.

Do no evil, my ass. Illegal tax evasion is evil.

Re:So few (4, Insightful)

Fuzzums (250400) | about 8 months ago | (#46851893)

"The government redrafted a proposed bill to levy a temporary 75% tax on earnings over 1 million Euros."
-- on earnings over 1 million Euros --

Personally I don't see the problem to contribute more to society if you earn that much money.

Re:So few (3, Insightful)

Tom (822) | about 8 months ago | (#46851955)

the wealthiest has resulted in a lot of them just flat out leaving that country.

Which is why tax laws need a lot more international corporations.

Right now, the rich and the mega-corporations are turning countries into enemies that fight each other over "competitive" tax rates, when they should be allies fighting the tax evaders with criminal prosecutions.

It's just another trick to make you and me pay indirect subsidies to the rich. Even if you're anti-government, you can't deny a simple truth: Every $ that some rich dude or corporations evades in tax payment has to be paid by the rest of us instead.

75% tax on rich does not exist (4, Insightful)

aepervius (535155) | about 8 months ago | (#46851979)

I have no idea where you are getting that idea. http://en.wikipedia.org/wiki/T... [wikipedia.org] there is a 60% tax on inheritance but only if you are a remote relative. There are high income tax on very high income (41% top), and there is a very low tax on wealth (around a 1% if you are millionaire , and atround 2% if youa re over 10* millionaire). As for the article it does not speak at all about a 75% tax. As for the article, it was really written by an american "France is famous for its generous social benefits, somewhat relaxed work ethic" there are country (like germany, Sweden) which have as generous and as relaxed "work ethic". In fact I suspect the usage of the word "ethic" here as being american prejudice only.

Re:So few (2)

Noah Haders (3621429) | about 8 months ago | (#46850727)

there's a difference between structuring your business to avoid taxes, and not paying taxes that you owe. Goog is the latter. but I feel bad beating up on them lately, especially after the moto thing and their last quarterly report. desktop revenue down 9% even though clicks are up 26%...

Re:So few (2)

Krishnoid (984597) | about 8 months ago | (#46851217)

Goog is the latter. but I feel bad beating up on them lately, especially after the moto thing and their last quarterly report. desktop revenue down 9% even though clicks are up 26%...

For Google's case in particular, I also have to look at the services they've provided:

  • High-quality email with the holy grail of spam filtering
  • Basic office software in a browser
  • A standards-compatible browser under constant development
  • A phone operating system
  • Mapping, search, and everything else

Since these are provided free to everybody, isn't this a tangible public service? Sure, Google's users are the product, but if one considers these as analogous to services provided under a government's mandate to use their taxes to provide for the general welfare, why shouldn't Google get a special tax break? It sure beats the return on the multiple $1E9's spent beating the crap out of some foreign country.

Already something to cover that (2)

dbIII (701233) | about 8 months ago | (#46851877)

Google can try to register as a charity like all the others providing services and see how far it gets.

Re:So few (3, Funny)

smitty_one_each (243267) | about 8 months ago | (#46850907)

Should Google just buy France?

Re:So few (2)

bloodhawk (813939) | about 8 months ago | (#46850553)

I would not be surprised if between most of the major corporations that they owe the French more than 50 billion. Hate to cheer for a tax office let alone a French one but what Google et al do tax wise is fucking appalling and needs to be cracked down on by EVERY government.

Re:So few (2)

manu0601 (2221348) | about 8 months ago | (#46850599)

We have a good figure to start with: the share of GDP that goes to capital or labor. It moved a lot from the later to the former. Should we go back to 1980 values in France, workers (who cannot escape taxes as megacorporations can) would globally get a 195 billion euros bonus each year.

I heard that before (0)

Anonymous Coward | about 8 months ago | (#46850719)

We have a good figure to start with: the share of GDP that goes to capital or labor. It moved a lot from the later to the former. Should we go back to 1980 values in France, workers (who cannot escape taxes as megacorporations can) would globally get a 195 billion euros bonus each year.

I am a Greek and this is the kind of rhetoric i continuously heard in the past from most of our dear leaders - and knowing that this is a rhetoric that our good French partners like to hear i wonder how the rest of the PortugalItalyGreeceSpain can use that France...
The "capital" usually -if not under threat- becomes "labor" (and vice versa) - and to "share" the GDP you need to have it first!

Re:So few (1)

Anonymous Coward | about 8 months ago | (#46850617)

You're making the classic Keynesian mistake that money in transit is money in the economy.

Re:So few (1)

ThatsMyNick (2004126) | about 8 months ago | (#46850631)

A billion here and a billion there, and it begans to add up pretty quickly.

Re:So few (1)

manu0601 (2221348) | about 8 months ago | (#46850685)

I wonder why I have been modded down troll and flamebait. Is there anyone here that still believe austerity can benefit a country?

Re:So few (4, Informative)

kesuki (321456) | about 8 months ago | (#46850771)

you didn't provide links verifying your points. without links it is too hard for the people who regularly get mod points to mod positive, because if you want a soap box on slashdot you should use their journal system. having read the definition of austerity measures it is clear that the usa is also using austerity measures... the world is a complex place, though.

"After the french government committed to economic suicide with austerity policies" http://en.wikipedia.org/wiki/Austerity [wikipedia.org] In economics, austerity describes policies used by governments to reduce budget deficits during adverse economic conditions. These policies may include spending cuts, tax increases, or a mixture of the two.[1][2][3] Austerity policies may be attempts to demonstrate governments' fiscal discipline to their creditors and credit rating agencies by bringing revenues closer to expenditures; they may also be politically or ideologically driven.

In macroeconomics, reducing government deficits generally increases unemployment in the short run.[4] This increases safety net spending and reduces tax revenues, partially offsetting the austerity measures. Government spending contributes to gross domestic product (GDP), so reducing spending may result in a higher debt-to-GDP ratio, a key measure of the debt burden carried by a country and its citizens. Higher short-term deficit spending (stimulus) contributes to GDP growth particularly when consumers and businesses are unwilling or unable to spend. This is because crowding out (i.e., rising interest rates as government bids against business for a finite amount of savings, slowing the economy) is less of a factor in a downturn, as there may be a surplus of savings.[5][6]

Re:So few (1)

manu0601 (2221348) | about 8 months ago | (#46851817)

Do we need references to claim that austerity never works? Do we have examples where it was a success?

My understanding of the phenomenon is that common people understand it as a wise measure they adopt when they have budget problems: less expenses, more income. But that thinking miss the point that a state is not an individual, and has several special capabilities which can help here: creating money, increasing income, and refusing to pay the debt without seeing its belongings seized.

But what about the politicians that enforce austerity and the media that support it? They are economically educated, they know what they are doing/supporting will only make their People poorer.

Since it's France we're talking about... (0)

Anonymous Coward | about 8 months ago | (#46850487)

...they should offer Google some cheese with the upcoming whine.

$1B? That's nothing! (5, Informative)

Anonymous Coward | about 8 months ago | (#46850489)

Ever heard of the Double Irish and a Dutch sandwich [wikipedia.org] ?
The City of London [wikipedia.org] has established [theguardian.com] a world-spanning network of tax heaven states, mostly consisting of former parts of the english empire. Big corporations use this system to not pay taxes, and the sums involved exceed 1$B by far.

Re:$1B? That's nothing! (0)

Anonymous Coward | about 8 months ago | (#46850899)

"Double Irish and a Dutch sandwich"

Errr goddamn my filthy mind, too much urban dictionary.

Re:$1B? That's nothing! (1)

Em Adespoton (792954) | about 8 months ago | (#46850977)

"Double Irish and a Dutch sandwich"

Errr goddamn my filthy mind, too much urban dictionary.

I thought we were talking about a coffee with a double shot of whiskey and a sandwich where I only had to pay for half....

Re:$1B? That's nothing! (1)

flyingfsck (986395) | about 8 months ago | (#46851521)

It will only take one EU country to bring that house of cards down. Three cheers to France for starting with it.

Re:$1B? That's nothing! (1)

AmiMoJo (196126) | about 8 months ago | (#46851887)

Damnit, now I'm hungry.

Re:$1B? That's nothing! (0)

Anonymous Coward | about 8 months ago | (#46851943)

Mmmmmm [nocookie.net] , sandwich !

we're more advanced than hymenless monkeys? (0)

Anonymous Coward | about 8 months ago | (#46850505)

despite they still do not shoot each other & they do still share their bananas... no more typos please the coin of the realm is kaput

Same as UK (1)

Alex Kasa (2867743) | about 8 months ago | (#46850513)

Google seems to be consistently dodging taxes. Shouldn't people go to jail for this?

Re:Same as UK (2, Insightful)

Anonymous Coward | about 8 months ago | (#46850543)

Nope. No one goes to jail when the pile of money on the table is this large.
You have to be pretty small-time to get prison unless you've stolen from our real rulers, i.e. Bernie Madoff's mistake.

Re:Same as UK (2)

rtb61 (674572) | about 8 months ago | (#46851029)

Keeping money is tax havens makes paying bribes in tax havens with secret bank accounts real easy. Politicians collect the bribes by going on luxury holidays and spending up big on 'souvenirs' which they bring back with them to pay for corrupt legislation, in corrupted democracies all over the globe. Many corrupted democracies conspire together to keep tax havens alive, rather than actually doing anything about it. The top dog in corruption is of course the US, which then uses it's economic and military power to push that high level corruption upon the bulk of the globe.

Re:Same as UK (1, Insightful)

arbiter1 (1204146) | about 8 months ago | (#46850563)

Apple does it to, but lately EU struggling so much lately they are going after anyone they can for money, few years ago it was Microsoft cause IE in windows, now its google.

Re:Same as UK (0)

Anonymous Coward | about 8 months ago | (#46850629)

Well the super rich didn't get rich by paying taxes.

Re:Same as UK (1, Informative)

Anonymous Coward | about 8 months ago | (#46850655)

There is nothing shady about the penalties dealt by the EU. The whole penalty process always has to follow established EU law, and thus it's the same for everyone.

If you want to look at some shady stuff, take a look at Indian officials slamming Western corporations with huge billion scale taxes retroactively.

Re:Same as UK (1)

amaurea (2900163) | about 8 months ago | (#46851771)

Commenting to undu mistaken moderation.

Re:Same as UK (-1)

Anonymous Coward | about 8 months ago | (#46850925)

Is that all you Fandroid faggots got? "The appllezz does it 2!!!!!!" (BTW: your grammar fucking sucks)
 
I thought you bitches claimed that Google was better than Apple. It seems like that's not the case any longer.

Re:Same as UK (1)

Anonymous Coward | about 8 months ago | (#46850569)

I agree. Politicians that made up these taxation laws should be going to jail for this. Furthermore, it is inexcusable that the status-quo remains.

Re:Same as UK (0)

Anonymous Coward | about 8 months ago | (#46850585)

"people" like you and me? For sure. But there's "people", then there's people. You know, real people with money, not some poor law-abiding schmuck with a job.

Re:Same as UK (0)

Anonymous Coward | about 8 months ago | (#46850587)

Shouldn't people go to jail for this?

The trick is to steal enough to buy the judge. $1 billion is more than enough. And never, ever, steal from someone with more money than you.

How they get away with it (for now) (5, Interesting)

Anonymous Brave Guy (457657) | about 8 months ago | (#46850739)

Giving the benefit of the doubt, and assuming this a genuine question and not a troll...

The problem is that it is surprisingly difficult to objectively distinguish between legitimate activities in an international business that operates in under multiple tax regimes and the activities which are "obviously" just tax avoidance.

It's hardly a secret that some businesses set up a legal entity that is little more than an administrative formality in a country with a very low corporation tax rate, and then their legal entities in other countries with higher corporation taxes pay some sort of fees/royalties to their low tax counterpart, thus shifting the tax burden and saving them money (as well as changing which country is the beneficiary of the corporation tax they do pay).

The trouble is that the same rules about international payments and taxes have to cover businesses that really do operate, for example, a crucial R&D lab in one country (perhaps with a good reason, such as having close ties to a good university nearby) but still sell the end product to customers internationally. More than that, you also have to allow for the fact that it might be two completely separate legal entities doing that, which may or may not be owned by some of the same interests. After all, if a business in one country spends a lot of time and money hiring smart people to design products, but then sells the IP rights to completely independent manufacturing businesses in other countries that make and sell the physical products, I don't think many people would argue that it's silly to have the money for the rights shifting across international borders back to the people who did the research, and for each individual company involved to pay the appropriate tax in their own country on the money they make in that country.

So where do you draw the line, and on what basis? After all, the businesses in question almost certainly do still pay substantial amounts of money to the countries where they really are selling things, such as sales, property and employment taxes. The "obvious" thing to do is to adjust the tax rates so corporation tax is universally low and more government revenue comes from these other forms of taxation that can't be so readily shifted, but that has a lot of knock-on effects for your entire national tax system, and it's also susceptible to various other kinds of manipulation unless there is a lot of international co-ordination to mitigate those dangers. And remember, the people who are making all this money typically have a lot more to spend on professional tax advice -- and get excellent returns on that investment -- than the governments in question have to spend on challenging them in extended tax-related lawsuits that will drag on for years at great cost to all concerned.

I think there is sufficient public opinion turning against the more egregious examples of corporate tax avoidance now that we really will see such international co-ordination starting to get results within the next few years. France is definitely not the only place concerned about this, at either government or guy-in-the-street level. But for now, the above is (a grossly simplified explanation of) how they get away with it, and why it's neither breaking any laws nor easy to make laws it would break without unintended and potentially very nasty side effects.

Re:How they get away with it (for now) (0)

Anonymous Coward | about 8 months ago | (#46851127)

Giving the benefit of the doubt, and assuming this a genuine question and not a troll...

The problem is that it is surprisingly difficult to objectively distinguish between legitimate activities in an international business that operates in under multiple tax regimes and the activities which are "obviously" just tax avoidance.

Really?? What is so hard? An American company setting up in Ireland/Singapore etc to sell goods to third country X. It isn't hard to distinguish at all, it is hard to make good laws that prevent it but it is god damn easy to identify companies intentionally abusing these havens. There are also a range of different laws/duties that countries could impose to prevent this or at least make it non cost effective for companies.

Re:How they get away with it (for now) (2)

IamTheRealMike (537420) | about 8 months ago | (#46851951)

Really?? What is so hard? An American company setting up in Ireland/Singapore etc to sell goods to third country X. It isn't hard to distinguish at all

What makes you think Google is an American company?

Yes, it was founded there. But more than half its employees and more than half its revenues are outside the USA. Looking purely at the numbers as they are today, Google is not an American company.

So what country does "own" Google then? Ireland? No. Most of Google's operations are not in Ireland. France? Certainly not.

Now we see the crux of the problem. Google is in fact a truly trans-national company. It is not obviously located in any one place. It has offices, employees and customers everywhere, and its products are all online where there are no borders.

How do you decide which countries get the biggest slice of the cake? There is no rational way to do it which is why people who design tax systems like the EU designed it to create a deliberate race to the bottom [theregister.co.uk] .

Re:How they get away with it (for now) (1)

ShakaUVM (157947) | about 8 months ago | (#46851421)

>why it's neither breaking any laws nor easy to make laws it would break without unintended and potentially very nasty side effects.

It's very easy to fix, actually. You just have to do away with the notion of taxing profits. There's still side effects, of course.

As Hollywood has taught us, there are a million and one ways to shift money around to avoid having profits, even when a reasonable individual would say a company is profitable.

So you just tax 10% of revenue, and call it a day.

The side effect is, of course, that companies that really are breaking even right now would go under (if they can't get a loan), and with our ludicrously high corporate tax rate it incentivizes corporations to spend money. It's like you get to buy everything at a 40% discount, after all.

But a revenue tax would stop all manners of shady profit shifting and hiding.

Re:How they get away with it (for now) (2)

WoOS (28173) | about 8 months ago | (#46851957)

But a revenue tax would stop all manners of shady profit shifting and hiding.

There is already a tax on revenue. It is called VAT [wikipedia.org] and has its own tax evasion problems.

Doing a revenue tax in any other way than as a value added tax will immediatly give you massive vertical integration in the industry as companies not producing their own intermediate goods indirectly have to pay "revenue" tax on them with no way of deducing it from their own revenue tax. Thus you end up with more "too big to fail" companies.

Re:Same as UK (2)

tlambert (566799) | about 8 months ago | (#46850815)

Google seems to be consistently dodging taxes. Shouldn't people go to jail for this?

If you set up rules by which something is legal, and someone jumps through the necessary hoops to follow those rules in order to pay the minimum possible taxes, the only thing you really have a right to complain about is the rules you've set up, not that people follow them in an optimal fashion.

France is (effectively) paying Google $266.5M to execute their contracts in Ireland rather than France, due to the 33.3% corporate tax in France, vs. the 12.5% corporate tax in Ireland.

If France wants to tariff EU transactions, they need to drop out of the EU; if they want the $162.5M from Google that's going to Ireland instead of France, then they need to drop their corporate tax rate by 20.8% to match Irelands ...or drop out of the EU.

If it weren't for the loading (multiple incorporations, intellectual property assets capable of being licensed for large feed, lawyer costs, professional board member costs in the NL, etc.), pretty much no one would actually do business in France directly, as a legal venue.

Re: Same as UK (0)

Anonymous Coward | about 8 months ago | (#46851937)

Blah blah blah blah. The problem is they aren't executing the contracts in Ireland but only *saying* that they were. Learn to read dumbass. Google was straight up lying which is definitely against their "Don't be evil." corporate policy.

Re:Same as UK (1)

sumdumass (711423) | about 8 months ago | (#46850859)

The problem of putting companies or people in jail is that often the tax dodging is more or less legal. Do you know what the real definition of a loop hole is, someone you didn't intend using a provision law in a way you didn't intend it to be used. But what you intended isn't the law so a lot if not all of the tax dodging is within the law- hence the problem with jailing someone.

Now sometimes you can get judges to read into something and cause the loophole to be closed by judicial decree (more or less), but that is often seen as an after the fact law and typically wouldn't be criminally prosecuted (no jail time)- even if back taxes and penalties could be taken.

They should get in touch with Ikea's lawyers (1)

Anonymous Coward | about 8 months ago | (#46850523)

You know, the guys that set up IKEA as a Dutch registered "charity" to funnel profits tax-free??

Look it up!

Same tricks played in UK (4, Informative)

whoever57 (658626) | about 8 months ago | (#46850725)

Google has played the same tricks in the UK. Google claims that the sales are made in Ireland, while employing many people in the UK whose job titles includes sales. I expect there are Google employees in France and UK (and most other European countries) who get sales commissions for sales "made" in the Ireland.

Re:Same tricks played in UK (-1)

clarkkent09 (1104833) | about 8 months ago | (#46850743)

Why shouldn't they use "tricks" to avoid evil behavior by various governments. Google owes France $1 billion!? Really? For what? For creating jobs in France and for benefiting French people through its free products for which the French government has not contributed 1 cent?

Re:Same tricks played in UK (4, Interesting)

mlts (1038732) | about 8 months ago | (#46850779)

In cases like this, I wonder about just moving to a VAT entirely and dispensing with income taxes.

In a perfect world where companies paid what they earned, an income tax would be better in theory, as consumption taxes tend to slow down purchasing and movement of money.

However, in the real world, we read all the time about the stashing of income. A VAT is better because it is a lot harder to get around (as of now... I'm sure there might be loopholes.)

tl;dr... Income can be hidden. Hiding that factory, Lear Jet, or Maybach, not so much.

Re:Same tricks played in UK (4, Insightful)

jemmyw (624065) | about 8 months ago | (#46851149)

The problem with sales tax (VAT) is that it taxes the poor more than the rich because the poor tend to spend a greater proportion of their income. It is also quite a burden to administer for companies and government. It is also an inefficient tax for states with welfare - government gives you money and then you give a large portion of it back again.

I don't have a solution though, even though it is something I think about often. But it seems to me that what we really need is for some way to experiment with widely different tax regimes. But what country is going to be willing to suffer negative consequences of doing so?

Re:Same tricks played in UK (-1, Troll)

KingOfBLASH (620432) | about 8 months ago | (#46851703)

Bollocks. VAT will hit rich harder than the poor. The benefit of a VAT tax is you tax consumption not income. So when a rich guy goes out and buys a 747 and outfits it as a super luxury "sky yacht" he's paying tax on it. Compare this to the current tax situation where a rich guy may not pay proportional taxes on his luxury good. (Buffett famously made the observation that he pays less tax on his luxury Malibu vacation home then most middle income people pay on their family homes)

Of course you don't want the poor, so you help them with the sales tax by making necessity items like milk and diapers tax free. You can additionally provide help like food stamps, or other subsidies. Or, another option is a "tiering" structure for the VAT. Buy a basic car like a 4 cylinder Honda? No tax. Buy a mid level car with a 6 cylinder engine, leather seats, and a sun roof? Tax. Buy a super luxury car like a ferrari? A lot of tax.

In that way you are capturing tax only on the wealthy (or people who are spending on "luxury").

Re:Same tricks played in UK (2, Insightful)

Anonymous Coward | about 8 months ago | (#46851589)

In cases like this, I wonder about just moving to a VAT entirely and dispensing with income taxes.

In a perfect world where companies paid what they earned, an income tax would be better in theory, as consumption taxes tend to slow down purchasing and movement of money.

However, in the real world, we read all the time about the stashing of income. A VAT is better because it is a lot harder to get around (as of now... I'm sure there might be loopholes.)

tl;dr... Income can be hidden. Hiding that factory, Lear Jet, or Maybach, not so much.

VAT, or sales taxes don't work on a level playing field. If you make a low wage the vast majority of your money is spent on housing, then on the repeat purchasesables. Food, household items like garbage bags, dishsoap, clothes, and possibly fuel.

Most of your spending is taxed, a decently high rate. When you make 10-15k a year 15 precent or so sales tax hurts. A lot.

On the other hand, if you make 10 or 20 times that much you don't spend 10 or 20 times as much on the same things. You'd spend a little more. Higher quality goods do cost more, but unless you are doing hilarious things with your wealth like buying solid gold Lambo's chances are you aren't spending anything close to a similar ratio. Even a good house (mansions are a whole nother thing) doesn't cost that much more than renting an apartment.

The richer you are the less a sales tax hurts, when that's the opposite of the way you want to distribute a tax burden.

The examples of factories, lear jets, that kind of thing. Rich people don't own their own toy's if they are smart. That Lear Jet? Its a Company Jet, which means it'd actually a tax deduction as a business expense. That's right the private jet let him pay less, not more taxes.

If we're going to get really sneaky, we can double down on Company's. Lets incorporate a Transportation Company that exists solely to own this Lear Jet, its only income is renting the Jet to our theoretical rich man. To offset this income it has the operating costs of the jet, gas, maintenance, fuel, the pilots salary and a lawayer/accountant to run the whole mess.

Except this Company doesn't own the jet either. Much like a bank loans you money so you can buy a house, a third company exists solely to loan the money to the second company to buy a jet with. And since we control both companies, we'll make some silly terms, like a 100 year repayment plan, with interest payments tailored to the setup so that the Transportation company will stay in the tax bracket we desire. In fact, lets make sure the Transportation company slowly loses money over time, so they qualify for all those tax incentives the government sets up to help small businesses, and since the transportation company doesn't own anything, if there is ever an accident or something there are no assets to sue for. All it owns is a big fat debt on the Jet which Company number three can repossess if necessary.

Now we put each of these companies in whatever country has the most favorable laws for each circumstance.

This is the problem with tax laws. Not that Google (or any, hell, lets be honest, EVERY, multi-national corporation) owes money, its that the tax laws are so messed up that the above scenario is possible, legal, and if I had to guess, probably simplistic.

I love beating on mega-corps as much as anybody, but I'd put money that Google has been following the letter of the law in France. They have teams of very highly paid lawyers to make sure of it after all. France is just pissed somebody figured out how to game their system.

Re:Same tricks played in UK (0)

Anonymous Coward | about 8 months ago | (#46851823)

VAT is payed by the consumer, ie. the base of the society pyramid. It would just make the rich people richer and the poor poorer. Stupid idea. Also an increase in VAT slows down economies by far, as the increase in good prices would just lead to slower consumption. Increasing VAT at the expense of income tax would not give lower income people more money to spend. The opposite. Really bad idea.

Re:Same tricks played in UK (0)

Anonymous Coward | about 8 months ago | (#46850781)

Google employees benefit from the roads, drinking water and municipal/government services that allowed them to set up shop in France as opposed to, say, the Antarctic. Go there if you think you need the freeeeeduuuumb.

"Move to Antarctica" (0)

tlambert (566799) | about 8 months ago | (#46851679)

Google employees benefit from the roads, drinking water and municipal/government services that allowed them to set up shop in France as opposed to, say, the Antarctic. Go there if you think you need the freeeeeduuuumb.

Actually, a lot of us would, only there are international agreements to prevent people colonizing there, and pretty much creating new nations anywhere. When it looks like it's about to happen somewhere, it gets stopped. E.g. the Minerva Reefs were underwater atolls that was landfilled by a libertarian group seeking to become a new nation state in 1972, at which point the U.S. Government paid Tonga to send the Tongan navy to go plant a Tongan flag on them. They were basically their own country for a grand total of 26 days. It was claimed on the basis of territorial fishing outside the internationally recognized 2 mile coastal limit. Right now they are completely unoccupied, but the Tongan Navy shows up any time someone tries to occupy the area (good enough to keep other people from living there, not good enough to live there themselves), as it did again in 1982. Ironically, Fiji, one of the countries that rubber-stamped the Tongan claim initially at the behest of the U.S. is now trying to dispute the territorial waters claims, since they now want fishing rights to the area as well.

As far as paying for things: the Google employees enjoying French services are socked with a 66% payroll tax (do you really think the employer pays this tax? This is income that you would get that the employer gives the government instead), and on the remaining 34% which is their take home pay, they pay up to a 45% personal income tax (the top rate is at 70,830 Euros, which is just under US$100,000, which is an easy amount to get as a Google employee after just a couple of years out of college, assuming you don't suck).

So they are getting about US$111,000 per Google employee ... and they want more.

Re:"Move to Antarctica" (0)

Anonymous Coward | about 8 months ago | (#46851929)

Which shows how much you know nothing about French taxes.
66% payroll tax is bullshit, although there is indeed quite a lot of "social contribution" on wages that would more likely amount to about 33% (we have actual social security here, it does not come for free). Then the 45% personal income tax rate (which is the highest tax bracket) would only apply to the part of your income that exceeds 150k€. The 70k€ bracket's rate is 41% and the brackets most people encounter are the lower ones which are 0%, 5.5%,14% and 30%.
You are taxed on income after deducing 10% of the actual figure as "job-related expenses" and further reducing it according to the number of children you've got to feed. And keep in mind that 70k€ is a very high salary in France, even for a Google employee. Top management sure earns more, but even a good engineer won't likely reach that level, ever. Mostly because of the social system enabled by the high "payroll tax", we don't need to save so much money in case we get sick or we want to send children to college...

Re:Same tricks played in UK (1)

Killall -9 Bash (622952) | about 8 months ago | (#46851247)

Why shouldn't they use "tricks" to avoid evil behavior by various governments. Google owes France $1 billion!? Really? For what? For creating jobs in France and for benefiting French people through its free products for which the French government has not contributed 1 cent?

You could make the same argument about any tax levied by any government anywhere.

Re:Same tricks played in UK (0)

Anonymous Coward | about 8 months ago | (#46851891)

Could?

Re:Same tricks played in UK (0)

Anonymous Coward | about 8 months ago | (#46851973)

Why shouldn't they use "tricks" to avoid evil behavior by various governments. Google owes France $1 billion!? Really? For what? For creating jobs in France and for benefiting French people through its free products for which the French government has not contributed 1 cent?

So why should any corporation pay taxes then? They create jobs after all and it's not like they benefit from any infrastructure in the country, such as police, firefighting, road networks... All paid for by the French government.

And free products? When did Google start to offer Google ads for free to French companies? That's their source of revenue. It's clear that you're obtuse but I can't imagine that you think Google magically gets revenue from Internet users that pay them nothing.

Hard to follow what going on (1)

tomhath (637240) | about 8 months ago | (#46850729)

According to the DGF investigation, the company only sends Google Ireland contracts, but they are written in French with French clauses, and therefore considered French contracts.

So why don't they write the contracts in English? They'd be easier to read that way.

Re:Hard to follow what going on (2)

RJFerret (1279530) | about 8 months ago | (#46850757)

According to the DGF investigation, the company only sends Google Ireland contracts, but they are written in French with French clauses, and therefore considered French contracts.

They should stop reading them via translate.google.com.

SWAT team google! (1)

erroneus (253617) | about 8 months ago | (#46850839)

That seems to be the response these days by governments trying to collect money.

Like they care (0)

Anonymous Coward | about 8 months ago | (#46850855)

What, is France gonna send in its army? LMFAO!

Re:Like they care (1)

Anonymous Coward | about 8 months ago | (#46850935)

What, is France gonna send in its army? LMFAO!

That joke is getting stale.

http://www.globalfirepower.com... [globalfirepower.com]

Re:Like they care (-1)

Anonymous Coward | about 8 months ago | (#46851233)

No it isn't. The joke of French being cowards will continue until they redeem themselves. No, bombing New Zealand and encouraging genocide of anglophones in Rwanada doesn't count.

France should liberate the French speakers trapped in Quebec under the oppression of the uncultured anglophones. Take over the province and then we can retire the French surrender jokes.

Re:Like they care (0)

Anonymous Coward | about 8 months ago | (#46851547)

No it isn't. The joke of French being cowards will continue until they redeem themselves. No, bombing New Zealand and encouraging genocide of anglophones in Rwanada doesn't count.

Americans are a bunch of redneck biblethumpers warmongering ignorants. While there is hope for the French to redeem themselves, there is no hope at all to have enlightened Americans.
And for the record, you shitty hillbillies would still be subjects of the crown had the French not helped you some 200 years ago go against the legitimate authority. But what can we expect from a country born out of terrorism ?

 

France should liberate the French speakers trapped in Quebec under the oppression of the uncultured anglophones. Take over the province and then we can retire the French surrender jokes.

French Canadians can liberate themselves, they don't need French help.

Nothing special here. (1)

Noishkel (3464121) | about 8 months ago | (#46850929)

I don't know why this is so surprising. If one place becomes too expensive to operate out of then a corporate will move to someplace that won't try to fleece if for every dime it can get. Or in this case use the law to keep from getting screwed by the frogs.

Re:Nothing special here. (1)

Rockoon (1252108) | about 8 months ago | (#46851123)

There is a large group of people here that think that its not just moral, but a complete obligation, for governments to maximize their revenue. These same people are of course against corporations doing that very same thing.

Logical fallacies all the way down the statist trail.

Re:Nothing special here. (1)

dbIII (701233) | about 8 months ago | (#46851915)

That's a very "special" excuse for why it's perfectly fine to avoid tax, not put money in the collection plate etc. That "large group of people" is not allowed to get in charge for very long by a wide variety of mechanisms in any state. The equivalent of the United Fruit Company calls in their friends as soon as such a situation is threatened.

If you legislate tax law (0, Troll)

fred911 (83970) | about 8 months ago | (#46850955)

And a company follows the letter of that law, and due to the
way the law was written, a company creates wealth for their shareholders against the INTENT of your law, they did not break the law! Write the law as you intent to enforce. Don't cry foul when you fail to write proper law, or fail to amend your law.

  And I'm sorry for this (not really).

  Fuck the French anyway..

Re:If you legislate tax law (0)

Anonymous Coward | about 8 months ago | (#46851403)

And the French say Fuck You, you're just stupid anyway :)

Re:If you legislate tax law (0)

Anonymous Coward | about 8 months ago | (#46851499)

The French are nearly bankrupt. Wonder why.

Cake (1)

Anonymous Coward | about 8 months ago | (#46851237)

Let them eat cake...

who cares? (-1, Troll)

samantha (68231) | about 8 months ago | (#46851675)

Screw the French and their stupid tax system. I would rather see the money use usefully by Google.

Load More Comments
Slashdot Login

Need an Account?

Forgot your password?