Tech firms face massive tax bill if Dutch vote to end loopholes

US corporations including Dell, Yahoo!, and Google could be facing an extra $90bn in taxes if the Dutch government presses ahead with plans to stop the country being used as a conduit for companies looking to avoid paying local revenue officials. "We should not be a tax haven," said Ed Groot, a parliament member from the …

[Richard Taylor 2]

You have to admire the cheek

I always thought that the drawback of these schemes for US companies was the requirement (at some stage) to repatriate funds to the home country - after all for the unsophisticated of us, the ability to spend where we live is kind of the point? But this tax holiday - golly, golly, golly. Hope Obama says Nyet.

[jonathanb]

Re: You have to admire the cheek

They lend it back to the home country, at usurious rates of interest, which means they get to spend the money, and reduce their US tax bill.

[Richard Taylor 2]

Re: You have to admire the cheek

But even then the profits need to be landed and taxed eventually? This was its all free. I suppose the question is whether Obama et al hang out for a long (possibly very long when you see how much profit companies like Apple have stashed abroad) term, or whether he takes the breadcrumbs now and hopes they might reinvest in the US?

[Shagbag]

same shit different day

If and when, the Dutch change the law, Starbucks et. al. will just restructure their affairs and use some other jurisdiction. There are a lot of very smart tax lawyers out there eager to sell their services to multinationals in the game of international taxation.

[Graham Marsden]

Re: same shit different day

@Shagbag "There are a lot of very rich tax lawyers out there"

Fixed it for you...

[Gary Bickford]

Re: You have to admire the cheek

I think that if the holiday is structured right, it could be great. For example, the money repatriated might be required to be invested over the next several years (i.e. not all at once) in new tech startups in the US, or in US venture funds. This could result in a burst of new technology reminiscent of the 1980s that came out of the R&D tax credit - a substantial part of the companies that grew out of the Internet (before the dotcoms), such as Sun, Oracle, and many others were in large part funded by investors taking advantage of that tax credit.

This time around the investments might be directed by the holiday rules into biotech, accessible computing, space development and maybe advanced transportation - maglev rail maybe?

This would require the politicians to actually use some sense in building such a tax holiday scheme, which is admittedly a low probability scenario.

[Snake Plissken]

Re: You have to admire the cheek

The money is there purely to avoid it being taxed at the proper rate. There was a "one-off" holiday in 2004, which meant billions flowed back without proper tax being paid on it.

Now they want another "one-off" holiday. And if they get it, I'm sure in five years time they will be asking for another "one-off".

[James Micallef]

Re: You have to admire the cheek

This 'tax-amnesty repatriation' is bollocks. It is ALWAYS presented as a one-off measure that will allow tax fiddlers (or outright cheats) to repatriate their funds with immediate benefits to teh country, combined with future astronomically high penalties for anyone caught with undeclared foreign assets at a later stage.

Funnily enough the tax-amnesty repatriation always crops up from time to time so there is only a carrot and never a stick. Also, the companies make a big spiel abot how it will help teh economy at large, but it won't. Big compaies are right now sitting, Smaug-like, on huge piles of cash which they refuse to spend on infrastructure investment, hiring / training workers or even paying some back to shareholders. If the get their mega-cash loads repatriated, who'se to say they won't just sit on it as well?

[teebie]

Re: You have to admire the cheek

upvote for the reference to Smaug capitalism

[Fatman]

Re: But this tax holiday - golly, golly, golly. Hope Obama says Nyet.

I seriously doubt that will happen!

The last time this subject came up. all kinds of promises were made, and never kept; so I have absolutely no reason to expect differently.

Big Biz will say whatever the pols want, and dangle all kinds of campaign cash in return for a "tax holiday" and promises of jobs and investments, etc, all of which will amount to just the same bullshit Big Biz has been spouting for the past 4 decades.

[Oninoshiko]

Alternate headline

Dutch thinks to much money comes into their country. Looks to get companies to move their PO Boxes.

[Anonymous Coward]

> "It's called capitalism. We are proudly capitalistic. I'm not confused about this," Schmidt said.

Thank f*ck for a breath of fresh honesty among the usual bull sh*t piped out by the other coporate drones.

> cash-strapped EU

WTF? I think this is a typo. The EU is a tax magnet. I know the UK puts enough wonga into it.

[Anonymous Coward]

The UK negotiated a discount when their economy was in shambles. Now that the EU helped them to recover, they're unwilling to give a fair share and menace to leave.

http://ec.europa.eu/budget/figures/2011/2011_en.cfm

Whatever "wonga" they put into it - the EU also has put a lot of "wonga" in the UK when they were begging for it, and is still giving them a lot.

It is sad that that those who were in need lose that memory and are not ready to show the same generosity they themselves were shown.

[I ain't Spartacus]

The UK negotiated a discount when their economy was in shambles. Now that the EU helped them to recover, they're unwilling to give a fair share and menace to leave.

What a load of old bollocks. Unless you mean something different - which you'd need to explain better than that link to general spending.

Britain has always been a net contributor to the EU/EC/EEC. Even back in the 1970s when people laughed at us, and called us 'the sick man of Europe'. That's back in the days when Britain was one of the poorest members (partly because the EEC was smaller, with richer countries in). The rebate was agreed with Thatcher after a lot of years of negotiation because British net EC contributions were about to go above West Germany's even though Germany was massively richer than Britain, and France were still a net recipient of EC spending. France were of course, also richer than us... The shock to the system for the poor French is that they're now the 3rd biggest net contributor, when they've been taking money out of the EU (even as one of it's richest members) up until the last decade. Aw poor Fwance...

Also, rather than the EU helping Britain, we actually agreed to reduce the rebate as otherwise, due to the odd way it's calculated, Poland would have ended up a net contributor to the EU budget, rather than receiving from it. This was done because it was fair, and also with the promise of unspecified reform of CAP in future. Of course that promise was broken by France and Germany. There are reasons that British voters and politicians are suspicious of dealing with the EU...

While we're not perfect, and we've never managed to quite 'fit in' due to having a weird political system, we've always paid our way and pulled our weight. Even if we've complained about it...

[John Lilburne]

Jail the bastards next time they get off a plane anywhere in the world. If they want to be in the cloud let the fuckers live there.

[SteveCarr]

We are not doing anything illegal or immoral

Yeah, right! Illegal, maybe not - the politicos aren't clever at writing legislation, and tax accountants are very good at working loopholes. But immoral? Certainly!

[Anonymous Coward]

Re: We are not doing anything illegal or immoral

Looks like tax accountants read The Reg too and you are right. It may not be illegal but it certainly is immoral.

[Anonymous Coward]

Re: We are not doing anything illegal or immoral

> ...but it certainly is immoral.

Where does it say in the bible/quo'ran etc that paying taxes is a moral duty?

I don't remember that at school.

Perhaps you went to a school in cloud cuckoo land or something...

There is no moral obligation to pay tax, any tax.

There is a legal duty because the law says so and that's it.

We theoretically pay tax because it contributes to the common good.

In practice, the vast majority of that money is frittered away on wastage, pointless beaurocracy wars in places we have no business being in and the EU (more pointless beaurocracy of course).

The government long ago lost any moral highground from which to preach to anyone aiming to reduce their tax bill as low as possible. In fact, I would suggest to you that it is our duty to cut the tax take to the bone in order to force the government to cut their spending as much as possible.

[Anonymous Coward]

Re: We are not doing anything illegal or immoral

You lost me with equating the bible (any "holy" book) with morally, but got me back with, "We theoretically pay tax because it contributes to the common good." and you're right about governments having long ago lost, or never had, any moral high ground.

We can't change the behaviour of government without trying and we certainly all know that we need to try.

[Johan Bastiaansen]

Re: We are not doing anything illegal or immoral

"Give to caesar what is caesar's"? Or did you skip that part when thumbing through your bible.

Your children go to a state funded school. You drive your car over a road that's build by state funds. Your house is kept safe by state funded police and fire brigades.

But you're right, in your case that just wastage and pointless. What do you see in the mirror when you brush your teeth in the morning? A non-tax paying rat!

[Demosthenese]

Re: We are not doing anything illegal or immoral

"Give to caesar what is caesar's"

Commonly misunderstood. The pharisees' question was designed to elicit a response that was either seditious or look bad to the jewish nationalist audience. The reply would be understood by the audience - Caesar should be given what is rightfully his - i.e. nothing, without actually saying anything that would land Jesus in hot water with the Roman authorities.

[Anonymous Coward]

Re: We are not doing anything illegal or immoral

Your children go to a state funded school. You drive your car over a road that's build by state funds. Your house is kept safe by state funded police and fire brigades.

What is is alluding to in a convoluted way is that in some nations the tax pressure on your average salary is somewhere between 40% to 60% and nothing works, whereas in other nations the overall burden is somewhere around 25%..30% and all works fine. This is the debate that repeatedly flares up between Germany and Switzerland, for instance.

I have seen what governments do with your tax, which is why I never ever want to deal with anyone in New Labour other than when percussive attitude correction becomes legal.

[Schultz]

Tax rate in Germany vs. Switzerland

"What is is alluding to in a convoluted way is that in some nations the tax pressure on your average salary is somewhere between 40% to 60% and nothing works, whereas in other nations the overall burden is somewhere around 25%..30% and all works fine. This is the debate that repeatedly flares up between Germany and Switzerland, for instance."

Of course the Swiss collect some 25% of Quellensteuer ('source tax' on income from invested capital) from all that foreign money sitting in their bank accounts. If you are a small country and generously administer lots of foreign money (Switzerland, Luxemburg, Bahamas, ...) this is an attractive option. If you actually have a real economy to worry about, then this trick is harder to pull off. It's only a free lunch if you took it from someone elses pocket.

[jonathanb]

Re: We are not doing anything illegal or immoral

I don't know about the koran, but the bible says it here:

http://www.biblegateway.com/passage/?search=Matthew%2022&version=KJV Matthew 22:21

17 Tell us therefore, What thinkest thou? Is it lawful to give tribute unto Caesar, or not?

18 But Jesus perceived their wickedness, and said, Why tempt ye me, ye hypocrites?

19 Shew me the tribute money. And they brought unto him a penny.

20 And he saith unto them, Whose is this image and superscription?

21 They say unto him, Caesar's. Then saith he unto them, Render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's.

22 When they had heard these words, they marvelled, and left him, and went their way.

[Anonymous Coward]

Re: We are not doing anything illegal or immoral

This whole Jesus/religious story you are preaching is fiction! Let’s stick to the facts and not waffle on about wastage or how tax is spent in ways you do not approve of.

Schmit and his kind need to be brought back to earth, because they are definitely not living on this planet.

Avoiding tax is no different than stealing from you. Tax pays for our public services. No tax, no public services.

I was raised believing that we must pay our own way. There is NO ONE out there with responsibility for your care. You work, you pay your tax, and you consume public services. Schmitz et all need to rethink their position and pay their fair share.

Morality isn't dictated by the bible (what a farfetched piece of literature that is), it is dictated to us by what we feel is right or wrong. No one would say that rape was a moral act. Tax avoidance is just as immoral. The majority of sane people believe that.

Trying to avoid your burden doesn't make you clever; it makes you anti-social and a SPONGE, a drain on society. These actions make you lower than a snakes cock.

[The Indomitable Gall]

@Obviously!

"This whole Jesus/religious story you are preaching is fiction! Let’s stick to the facts and not waffle on about wastage or how tax is spent in ways you do not approve of."

Go on then, prove it! The "render unto Caesar" stuff and the "turn the other cheek/go the extra mile" stuff are very likely the teachings of a genuine radical in Judea during the Roman occupation. It's all about passive resistance.

Now imagine two thousand years from now, the dominant religion is Gandhiism, which worships Mahatma, the son of Brahma, born of a virgin in India. Three world leaders came to pay tribute after his birth was foretold on Twitter, and they went to Queen Victoria to ask where the new King of the Indians was, which led her to massacre all the children in Amritsar.

Would that change the fact that the teachings of Mohandas K Gandhi were and are teachings of peace, of love, and of general moral good?

So why do you dismiss the good teachings of religion along with their bad parts? Throwing the bathwater out with the baby Jesus, so to speak....

[Tom 13]

Re: Tax pays for our public services.

The problem is that thugs like you have perverted the meaning of public services to the point that taxing is now stealing from working people. If taxes are truly allocated to public services instead of Marxist redistribution schemes, then yes we owe taxes. But the duty of charity is a personal one not a public one, and cannot be conducted by governments which are at best inherently amoral, and all too frequently provably immoral.

[Irony Deficient]

ideology

skelband, paying the zakāt tax is one of the Five Pillars of Islam, a moral duty for any observant Muslim who can afford to pay it. (It is primarily for the benefit of the poor, so it is sometimes translated into English as “alms”.)

If it be the duty of people to “cut the tax take to the bone”, the result of a population taking that duty seriously would be not that their government would be forced to cut its spending (unless their nation no longer retained monetary sovereignty), but that that same government would increase its borrowing to pay the bills — and be assured that the local financial sector would be grateful for further opportunities to service the country.

[DF118]

Re: We are not doing anything illegal or immoral

@skelband: and where it's it written that the bible/ Koran are the only sources of moral authority? Why even bring them into it? I'm not religious, so does that mean I have no morals? As far as I'm concerned, a thing can be safely considered to be "morally wrong" if a majority of society believes it so. Certainly I'd use that measure long before I resorted to a fairy tale.

[Anonymous Coward]

Re: We are not doing anything illegal or immoral

> where it's it written that the bible/ Koran are the only sources of moral authority?

Materialist/humanist ideology suggests that evolution favours species (though a single datapoint is a dubious basis) with morality in their DNA (a totally unproven idea) because it helps preserve the species. However, it offers no good reason for a given individual to obey the rules other than the risk of being caught and punished.

From a humanist view, morality is genetically programmed irrationality. If morality is determined by the majority view, there is nothing intrinsically wrong, which is pretty much the opposite of the definition of morality. If there is no morality, you can't really be moral, unless you think by following the majority, you are being "moral".

[DF118]

@AC 24-Jan 10:29 Re: We are not doing anything illegal or immoral

Oh great, just what we need, a semantic discussion about morality. You're being the slow-witted grandparent who, when faced with a flippant/sarcastic remark, takes it straight and proceeds to explain in excruciating detail why the remark was factually incorrect. Don't be that person.

[Potemkine]

Re: We are not doing anything illegal or immoral

Actually, being rich by itself is immoral, and the Gospels are clear on that:

Matthew 19:24: "Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God."

Mark 10:25: "It is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God."

[P. Lee]

Re: We are not doing anything illegal or immoral

> Actually, being rich by itself is immoral, and the Gospels are clear on that:

No, its a warning about the tendency of those with money to trust in their wealth rather than God.

[dkjd]

Re: We are not doing anything illegal or immoral

skelband:

Mark 12:17 And Jesus answering said unto them, Render to Caesar the things that are Caesar's, and to God the things that are God's. And they marvelled at him.

"And they marvelled at him" I guess accountancy has not changed much in the last 2000 years

[James Micallef]

Re: We are not doing anything illegal or immoral

@skelband "Where does it say in the bible/quo'ran etc that paying taxes is a moral duty?"

It might shock you to know that the Bible / Quran / other holy texts are not authorities on the subject of morals.

[helicoil]

Re: We are not doing anything illegal or immoral

Exactly, It is our "moral" duty to pay as little tax as possible because government (UK) is highly proficient at wasting the money collected.

There is only one thing you can rely on the (UK) government to do and that is piss tax payers money against the wall -and feel good about it while they're at it. A little less money available on the country's debit card might force them to re-evaluate their priorities and start spend our money more wisely -If that ever happened though, I think I would probably be constantly expecting to wake up in the shower at any moment ;-)

[Robert E A Harvey]

Re: We are not doing anything illegal or immoral

>Where does it say in the bible/quo'ran etc that paying taxes is a moral duty?

"Render unto Ceaser that which is Ceaser's"

[Tom 13]

Re: Where does it say in the bible

I believe the relevant quote would be when Jesus was asked what is effectively the same question:

"Render unto Caesar the things which are Caesar's, and unto God the things that are God's" (Ἀπόδοτε οὖν τὰ Καίσαρος Καίσαρι καὶ τὰ τοῦ Θεοῦ τῷ Θεῷ Matthew 22:21).

The problem of course is that Ceasar is nothing more than a thug posing as a moral man while usurping that which is God's.

[John 62]

Re: Where does it say in the bible

Paul's letter to the Romans (Romans 13) and Jeremiah's letter to the Jewish exiles in Babylon (Jeremiah 29) are both relevant.

Paul knew very well how thuggish the authorities could be (as detailed in Luke's account of the Acts of the Apostles), but he still recognised the need for a civil society to have well-paid administrators.

Anyway, back to today. 1) the EU tax laws are meant to be so that one country can't tax companies punitively, just for being located in another EU jurisdiction. 2) I'm actually glad to see a Labour politician acting on principle, accepting a little less tax money for the perceived greater good of governments elsewhere, though of course the economy of the Netherlands is big enough (unlike Ireland's) to not be too disadvantaged by having a little less money due to accounting tricks.

[jbuk1]

Re: We are not doing anything illegal or immoral

What does religion have to do with morality?

[Tom 35]

politicos aren't clever at writing legislation

You think the loopholes are just bad law writing?

I'm sure a lot of thought went into making sure they only work for the big corps that paid for them. Can't have any normal people using a loophole!

[Anonymous Coward]

Re: politicos aren't clever at writing legislation

> You think the loopholes are just bad law writing?

Ahem: http://www.thedailymash.co.uk/news/business/tax-negotiable-2012120351605

[Paul Webb]

Re: politicos aren't clever at writing legislation

And here's the tax guide they use:

http://www.nicecupofteaandasitdown.com/book/

[Anonymous Coward]

an easy fix to this situation

The easy fix to that is to have taxes paid on the earning of all money earned by every company in the place that money was earned. Any company not wanting to pay said tax will have it's assets in that country seized and not be allowed to do business in that country.

I don't think it would take too many asset seizures to bring the business community around.

[Fred Flintstone]

Re: an easy fix to this situation

The problem is that that is like the drugs legislation they use in the Netherlands; it only works if everyone does the same. You can see that now: companies simply shop for the most beneficial jurisdiction and don't have a problem with moving if changing conditions make moving cheaper than the tax difference..

[Velv]

Re: an easy fix to this situation

Which is exactly what happens at present.

Profits are taxed, however if the business in a country doesn't make any profits then it won't pay any tax. Costs of sales is the problem. For example, Dell may sell a laptop in the UK for £400, but it might need to buy the laptop from Ireland for £399.99 (a grossly inflated price, but that's what it charges internally), so in the UK it only makes 1p profit.

So really there is no easy fix - multinationals will always need to sell things internally and there is nothing anyone can do to change that. (not saying its fair, just pointing out the facts)

[Anonymous Coward]

Re: an easy fix to this situation

I agree with you, but the issue comes back to accounting practices that are questionable at best and in a realistic world just plain immoral and should be illegal. An international company selling itself it's own equipment at inflated prices to avoid paying taxes only seems like a good idea to those who don't care about the impact that has on society. It's an accounting trick.

[Anonymous Coward]

Re: an easy fix to this situation

"So really there is no easy fix - multinationals will always need to sell things internally and there is nothing anyone can do to change that. (not saying its fair, just pointing out the facts)"

Yes there is an easy fix for transfer pricing. It is already the case that unfair transfer pricing is illegal in the UK(and most other jurisdictions). And under OECD guidelines HMRC can already recalculate companies profits where they believe that transfer pricing abuse has occurred. BUT THEY CAN'T BE BOTHERED.

They'd much rather hassle you and me to submit our poxy self assessment returns, even when we pay under PAYE, and then they'll hound the laggards with oppressive fines that no private company would be allowed to exact for late documentation.

So in the example you give, if HMRC would do the job they are paid for, Dell would get a bill based on the profits to be made buying at the the going rate for commodity laptops, and that would mean that they potentially pay tax twice, here in the UK, and in the Netherlands.

So the simple solution is to get HMRC's top management in to a room, tell them their employment will be terminated if in twelve months they haven't made serious inroads to the abuse of transfer pricing. Maybe the tax dodgers will try and find new loopholes, but HMRC should make it clear to business that they are in the long game for whack a mole, and threaten retrospective tax rules if business play silly beggars. In the meanwhile, dramatically simplify the UK tax code, to eliminate loopholes.

None of that is beyond the wit of man, but it may be beyond the wit of politicians.

[DragonLord]

Re: an easy fix to this situation

However it's not the commodity products that reduce the tax bill, it's always intangibles (such as permission to use a trademark) that "costs" the multinationals their profit.

[Tom 13]

@Velv: an easy fix to this situation

Actually, there is an easy fix, but most governments are unwilling to adopt it because it puts them on a rather short leash: All tax revenues should be derived from the taxes on the sales of goods within that country. Problem is, that naturally limits governments to tax rates of at most 12% of GDP, and they are unwilling to live within those bounds.

[G R Goslin]

Who pays the tax?

Think on this. Companies do not pay tax. The Company is a device for producing a profit, which is what is left after the costs have been taken away from the income. Tax is a cost, and as such is passed on the the buyer of the Company's product. If the buyer is another Company, then the cost is passed on to that Company's customers. Eventually you get down to the final customer, who does not have anyone to pass it down to, and they pay ALL the tax. So if a Company is avoiding tax, it has fewer costs to pass down to it's customers, and the customer benefits. If you think that the Government uses the taxes it gathers to benefit the population, then they should never have let you out of the nursery.

[Anonymous Coward]

Re: Who pays the tax?

You are correct, theoretically. Companies will charge what the market will bare for a service or product. So, are you saying that companies are not charging us as much as they can for those services and products right now?

[Cpt Blue Bear]

Re: Who pays the tax?

This is cant.

By that logic companies don't pay wages or rent either - their customers pay those too. Thus we'll all benefit if those are avoided to. It can be applied equally to individuals - I work around three months of the year to pay my taxes.

[fero]

Re: Who pays the tax?

The real problem is that these tax loopholes give international corporations an advantage over local companies who have to play by the local tax rules. Saving 20% or more is a massive competitive advantage and it's no surprise that the big players have in industry after industry closed down the small businesses.

[Anonymous Coward]

Re: Who pays the tax?

Continuing the big vs small - most of the innovation happens in small companies. So the current regime automatically puts any innovative small company at a distinct disadvantage the moment it becomes profitable. So this does not just kill the butcher down the road. It also kills the high tech companies which could potentially provide the average el-reg reader's daily bread (at least in the EU).

[Johan Bastiaansen]

Re: Who pays the tax?

Ok, where did you study economy? In kindergarten?

Less tax means more profit. This profit is not passed to the customer, this is passed to the stockholders. Usually these are very wealthy people who stockpile the money in Swiss bank accounts. And a very small amount goes to the average Joe who has a few stocks. And gets raped every 10 years while the major stockholders escape the bloodbath.

[Arild11]

Re: Who pays the tax?

Companies try to maximize profit, so they charge what the market will pay. When you say that a company which avoids tax has fewer costs to pass down to its customers, you make it sound as if that company is likely to cut prices to limit profits if their tax rate drops. Companies grab all the profits they can, of course, and nothing is wrong with that, but if a company makes €3 billion in profits and pays €1 billion if it in taxes, I don't think there is much wrong with that either. They're not likely to close up shop because €2 billion isn't as much as €3 billion, are they? I pay income tax, VAT and property tax, but it doesn't stop me from working, buying things and living in a house.

And I don't know what government you live under, but I would say my government has done more for me than any tax-haven based multinational conglomerate. All told.

[Tom 13]

@Arild the economic illiterate: Re: Who pays the tax?

A company that has a reduced tax bill has a choice. They can pass along the savings to preserve market share or they can temporarily increase profits to shareholders. If they temporarily increase profits to shareholders, other companies will see and seize the opportunity to provide the same service at a lower cost, which either forces the first company to lower prices to match them, or to go out of business (particularly if customers perceive they were being gouged and will therefore no longer do business with them).

[The Indomitable Gall]

Re: Who pays the tax?

Uh-huh.

Now, if Starbucks isn't paying tax, and Mrs Robinson's Tea Shoppe next door is (because it's UK based), is that in the public's interest? And is the lower cost at Starbucks passed on to the customer...?

[Anonymous Coward]

All about the money...

"Last month, the European Commission, the European Union’s executive body, declared a war on tax avoidance and evasion, which it said costs the EU 1 trillion euros a year."

How on earth could it cost the EU money when a US firm decides to move their HQ to the Netherlands (or put differently: within the EU)? The way I see it the Netherlands (and as such the EU) only gain extra income; if the company wouldn't be there then several people wouldn't be employed there either. And that's not mentioning local taxes, which maybe lower than in the US but such firms are still required to pay taxes nonetheless.

Another aspect could be if a company from EU country 'A' decides to move their HQ to EU country 'N' (..etherlands?) so that they don't need to pay as much taxes. While the company pays less they're still generating (tax) revenue of which a large chunk is most likely to end up with the EU as well.

The EU can whine all they want but I think the bottom line of that story is that they're simply jealous and would much rather see the money which these companies manage to save to end up in their own pockets.

Quite frankly I think they should be careful there. Because if they make it less appealing for those companies to have their "virtual HQ" residing in the EU you can bet that they'll also be as quickly gone as they came. And some (tax) income is always better than no (tax) income at all.

Or as we Dutch use to say: "Wie het onderste uit de kan wil, krijgt het deksel op zijn neus.".

[pepper]

Re: All about the money...

About your saying, I think it's more apt to apply it to the companies, if you would be looking at their behaviour.

Oh well, its not as if we had any plans with that billion anyway.

[Johan Bastiaansen]

Re: All about the money...

Perhaps you missed the part where Google didn't employ a single person in the Netherlands.

That is zero, nought, null, not a single one. Can you grasp that?

As you say in Dutch "die bedrijven willen voor geen dubbeltje op de eerste rij zitten".

[Tom 13]

Re: Google didn't employ a single person in the Netherlands.

At a minimum they employed a lawyer to write their incorporation papers, paid the legal fees for the same, and paid some sort of taxes for monies passing through the country. That tax money employed government employees. If Google move their shell company, that work will disappear.

[James 100]

0.1% still beats 0.0%!

So, right now the Dutch government is getting about 0.1% tax on the money flowing through. Not a huge wedge, but for just acting as a passive conduit, not a bad deal either. Ban this arrangement, they will get 0.0% instead: a net loss.

From a business point of view, they have a bunch of customers, paying them a little bit of money, so they make a little profit on the deal they wouldn't otherwise. Get greedy and try to charge 20%, they'll just lose the "sale" and get 0 instead - but tighten things a bit, they might get 1% or 2%, so everyone would be fairly happy: 1% of those trillions would make a heck of a big difference to the government's coffers, but losing the 0.1% wouldn't benefit either party.

[Johan Bastiaansen]

Re: 0.1% still beats 0.0%!

James, you look like a smart man. So why aren't you?

The idea is that we have countries undercutting each other in giving tax brakes to big multinationals. It they stop doing this, every country would have a larger income from taxes.

Do you think it is fair for a multinational to pay 0.1% on taxes and for a local company to pay 20%?

And if you say it's not about fairness, that's ok to.

How's your health James? Good, that's good, you need your health.

And your legs? And your kneecaps? A man needs kneecaps James!

Now who's complaining about "not fair"?

[Cynical Observer]

Re: 0.1% still beats 0.0%!

The idea is that we have countries undercutting each other in giving tax brakes breaks to big multinationals. It they stop doing this, every country would have a larger income from taxes.

If only it were that simple. On a level tax playing field, companies will increasingly be driven by cost of labour - it's still one of the largest expenses that any enterprise must bear. When the EU went through the expansions of 2004 and 2007, the multinationals didn't relocate to eastern Europe out of a sense of altruism. Skilled and cheap labour is a compelling motivator.

A lesser corporate tax rate acts as a counter balance and for the likes of Ireland, it's probably the most important factor in ensuring inward investment.

[Tom 13]

Re: And your kneecaps?

At last the inner thug is revealed! All set to break James's kneecaps and none to subtle about it either.

[G R Goslin]

Re Capt Blue Bear

Quite so. The customer does pay for the wages and rent. As I said the Company is simply a device for making profits, nothing more, nothing less. Which is probably why I, as someone who has always worked for Companies, who strive to keep costs (wages) down, has finished up as poor as a church mouse, whilst my brother, who effectively worked for the Government, has pots of money, since when they need money, they simply demand it.

[Johan Bastiaansen]

Re: Re Capt Blue Bear

Ok, now that you have established that your little theory on economics doesn't work, you want to change reality?

[Tom 13]

Re: your little theory on economics doesn't work

It's not his economic theory that doesn't work, it's your government thuggery which is keeping him down. Down with Government Thuggery! The time for Revolution has Come!

[Arild11]

Re: Re Capt Blue Bear

So you have worked for companies, which you feel impoverish their employees, and your brother has worked for the government, which treats its employees generously, and you still want companies to be rewarded with more money and government to get less?

Why?

[Anonymous Coward]

Re: Re Capt Blue Bear

"whilst my brother, who effectively worked for the Government, has pots of money"

AH! I see! That's where the truth lies.

Your greed.

[Anonymous Coward]

""We've always been clear that Dell has a responsibility to pay its fair share of taxes," said Jess Blackburn, a Dell spokesman. "We operate according to all applicable laws and regulations and in accordance with the letter and spirit of those laws.""

They are operating according to all applicable laws and regulations and in accordance with the letter of those laws, but not in the spirit of those laws.

[Chris Beach]

No such thing as the spirit of the law, it never has and never will stand up in any court as a defence or prosecution argument.

So the Dutch are doing the right thing (well according to the media, and maybe, just maybe their citizens), by changing the actual legal wording of the laws to prevent the practise from happening.

Ireland could do the same, cept they're in a slightly better position as the companies using the tax loopholes do tend to employee in Ireland, and Ireland desperately needs a job market (other than building lots of empty properties...)

[Anonymous Coward]

it never has and never will stand up in any court as a defence or prosecution argument.

If the law says you're not to bludgeon someone to death with an iron bar, you'll walk out a free man if you use copper one - yes, that's the US approach to law. But that's not true for everywhere in the world. If you try to pull that in a Swiss court, for instance, you're history. There are a number of countries which work on the "intent of the law" principle. It makes for easier laws because they don't have to close every loophole.

It doesn't make a difference in lawyering - it just changes the nature of the arguments used.

[Anonymous Coward]

There is no reason...

...to allow these companies to escape paying their fair share of taxes. I think Mickey Dull will still be able to buy a box of Krispy Kreme donuts everyday for lunch.

[Anonymous Coward]

"We are not doing anything illegal or immoral."

I'll bet the Taliban use this line of reasoning when they subjugate women, kill non believers and destroy property. By their own rules, they are right. By general consensus, not so much.

It's akin to the Nuremberg Defence

[Ole Juul]

Please help

I live in Canada and the Canadian government insists that I pay taxes here. I've told them repeatedly that I would rather pay taxes somewhere else instead, but they won't listen. What should I tell them to make them understand my situation?

[Irony Deficient]

OK, why not?

Ole, if you’re a Canadian citizen, tell them that you’ve been inspired by the example of Gérard Depardieu, and so you’ll be emigrating to another large northern country — one with a 13% flat tax on personal income. Don’t forget this step, to show them that you mean business:

http://www.cic.gc.ca/english/information/applications/renounce.asp

Competition in the market for citizenship of large northern countries — it’s the most effective way to make them understand your situation.

[JaitcH]

The only good thing from the Netherland/Holland is ...

André (Léon Marie Nicolas) Rieu and his great orchestra!

If you ever visit Maastricht, watch out for Manoe Konings - she makes Maastricht unsafe by racing around on her motorcycle.

[TeeCee]

Re: The only good thing from the Netherland/Holland is ...

If you ever visit Maastricht, watch out for Manoe Konings - she makes Maastricht unsafe by racing around on her motorcycle.

Can't say I've ever had a problem with motorcyclists. Scooter riders who think they're fucking immortal, that road priorites are for other people, who only have one speed, flat out and reckon that using the brakes is an admission of defeat are the real danger.

[Anonymous Coward]

Re: The only good thing from the Netherland/Holland is ...

André Rieu???

As they say in Dutch: Gatver..

And as long as Manoe avoids the Vrijthof in Mesjtreech I don't mind - the place is saturated with cameras so it won't take long :).

But I digress..

[Anonymous Coward]

Time to close all of the tax loopholes

It's outrageous in this day and age to allow corporate entities to escape paying taxes on all profits like citizens do. The nonsense that they aren't doing anything illegal is just foolishness. They know it's wrong and they know that it should be illegal so now is the time to make the change and end the misuse.

[Alan Firminger]

Of course, what is the point of tax if it is not collected fairly

Facts :

1 most tax havens are under British Jurisdiction, and

2 the State of Delaware is an outrageous tax haven within the USA, Barclays Bank is headquartered there.

[wowfood]

If this happens

and they do start plugging the loopholes they'd damn well better slower the actual tax rate. And I say this for good reason.

Right now the only reason my job, many jobs, exist in the UK is because the EU make it so easy to dodge taxes, we have a corperate tax rate of what? 20%+?

And it's taken them this many years to realize how screwed we are. So suppose we fix these tax holes, and these companies paying 0.1% suddenly start payijng the 20% they actually owe. Yeah during the first few months we'll get a load of money back into the country, but how long until these companies go "This is too expensive" and shift their business elsewhere?

I'm all for taxing these people don't get me wrong, but if we do we need to lower the tax rate. Not just to keep the big companies here, but to keep the smaller comapanies who have been paying their taxes competative. IF these loopholes are fixed, they could probably half the tax rate, and they'd still be making double the money they were before.

[wowfood]

Re: If this happens

And this theory is based just on local companies. My town had a fairly low... business tax? I don't know what they set individually per counsel. All I know is that the town next to us lowered theres by about 4% at the same time as we raised outs. Suddenly loads of businesses went under, and loads more moved to the town one over. What are they doing to rectify this?

They're talking about raising whatever it was they raised further to make up for the lost income... morons.

[Anonymous Coward]

Re: If this happens

"how long until these companies go "This is too expensive" and shift their business elsewhere?"

You make £1M and pay 20% tax.

You decide "this is too expensive" and move your operation. Lost jobs, lost revenue. Yeah?

.

.

.

.

.

.

.

.

.

.

.

.

Lost customers, the market in which you earned £1M is no longer open to you.

So your decision to move your operation elsewhere cost you 100% and not 20%.

Simple.

[wowfood]

Re: If this happens

actually most of the manufacturing side of my job is in china, and they've tried to shift the software portion to india once or twice (and failed due to terrible quality code)

The only reason they're in the UK still is because this is one of the places in the EU where they can manufacture and ship goods elsewhere, and the company originated in the UK. If the tax rate shot up then they would most likely shift the company offshore to portugal where manufacturing costs and base taxes are cheaper, and funny enough where a fair few of our eu based customers reside.

[James Micallef]

Re: If this happens

"how long until these companies go "This is too expensive" and shift their business elsewhere?"

All it takes is for countries to band together and stop taking a beggar-thy-neighbour approach. Countries should still be able to have flexible rates to account for their own situation, but if all countries had min 15% rate and no transfer loopholes, companies would domicile based on other factors such as availablity of skilled labour etc.

For companies such as Starbucks which need a physical presence in their country of operations, set a limit on the allowed transfer pricing eg if coffee, as a commodity, is selling for £X/kg, allow them to buy it for up to £1.2X/kg (or some other factor ) without triggering any tax. Otherwise if they wish to pay £3X/kg for cofee to their Swiss parent company they are free to do so but only £1.2X/kg is allowed to be accounted as cost, the rest is considered a transfer-priced profit and taxed as part of their profit.

For companies transferring money for 'intellectual property', make sure the money is following the brains. eg if Google has 70% of it's engineering staff salary based in US, then 70% of it's IP profits must go to the US. If they want to send 100% of their IP profits to Bermuda, their Bermuda subsidiary must buy the IP from Google US, and Google US is taxed on profit on that transaction.

Of course teh details will be more complex than that, but in substance all it takes is for countries to show some balls and stand united

[Tank boy]

Curious...

I can't wait until the Dutch Army comes to try to collect those taxes.

[bitmap animal]

Once again Turnover != Profit

Companies are taxed on their PROFIT and not their TURNOVER making statements such as "Dell's Dutch subsidiary Dell Global BV paid 0.1 per cent tax on over $2bn in revenues in 2011" and "pays tax rates of around 1.35 per cent on overseas revenues" meaningless soundbites.

Our company turns over about £5M, last year we paid around 1% of that in Corporation Tax. We also paid about £400k in VAT, £150k in Business Rates, £120k in National Insurance contributions plus all the personal tax of the employees and owners but this is not categorised as company tax. We paid 1% Corporation Tax not because we have an aggressive tax strategy but because as a company we are taxed on PROFIT. I don't understand why this kind of mis-informaiton is repeated so often by what one should expect to be intelligent people other than to whip up a frenzy with the readers.

That said, I do not think it's fair that larger companies with the facilities to create these tax efficient structures can compete head to head with companies burdened with higher local taxes. We need to fight to keep the money in our country circulating on our economy.

[JaitcH]

Low tech too: How the Vatican built a secret property empire using Mussolini's millions

Papacy used offshore tax havens to create £500m international portfolio, featuring real estate in UK, France and Switzerland.

< http://www.guardian.co.uk/world/2013/jan/21/vatican-secret-property-empire-mussolini >

I think they are all at it!

[Anonymous Coward]

Don't be evil

http://investor.google.com/corporate/code-of-conduct.html

https://www.google.co.uk/search?q=define%3A+evil&oq=define%3A+evil&aqs=chrome.0.57j58j62.3561&sourceid=chrome&ie=UTF-8

e·vil

/ˈēvəl/

Adjective

Profoundly immoral and malevolent.

Noun

Profound immorality, wickedness, and depravity, esp. when regarded as a supernatural force.

Synonyms

adjective. wicked - bad - ill - vicious - malign - sinister

noun. harm - ill - mischief - wrong - disaster - wickedness

https://www.google.co.uk/search?q=define%3A+evil&oq=define%3A+evil&aqs=chrome.0.57j58j62.3561&sourceid=chrome&ie=UTF-8#hl=en&tbo=d&sclient=psy-ab&q=define:+immoral&oq=define:+immoral&gs_l=serp.3..0j0i10l2j0l2j0i10j0j0i10l3.56201.58689.1.59500.6.6.0.0.0.0.167.901.0j6.6.0.les%3B..0.0...1c.1.XqEBiK_1KdU&psj=1&bav=on.2,or.r_gc.r_pw.r_cp.r_qf.&bvm=bv.41248874,d.dmQ&fp=4588547da649677a&biw=1223&bih=985

im·mor·al

/iˈmôrəl/

Adjective

Not conforming to accepted standards of morality.

Synonyms

dissolute - vicious - amoral

[Kubla Cant]

Rules, morals and taxes

Four tax regimes:

1. A scarey bloke comes round to your house and helps himself to anything he likes the look of. The main problem with this fiscal regime is that it destroys the economy (e.g. Zimbabwe).

2. Everyone is told that they have a moral obligation to pay taxes. The difficulty here is that my moral code and yours probably won't generate equivalent tax revenues. People will object to paying taxes that fund things they disapprove of. But the main problem is likely to be that many people who accept a moral obligation to pay tax will probably assess their obligation at rather less than the government needs.

3. The government creates a set of rules and formulae. People immediately start to game the rules to reduce the tax they pay, whereupon the government modifies the rules to reduce the amount of gaming. It's an imperfect system but it results in more tax take and fewer disputes than the other two. In theory everybody knows where they stand and can plan their lives accordingly.

4. Where we seem to be heading at the moment, namely a hybrid of 2 and 3. The rules are explicit, but it's immoral to exploit them to your advantage. This immediately sinks into the quicksand that made 2 unworkable. The only consensus about the moral course of action is that it would be highly moral, if a bit stupid, to interpret the rules to maximize the tax you pay. Even this leads to uncertainty: A is better at maths than B, so he manages to find a corner case that increases the tax he pays by 10% - is A more moral than B?

Number 3 may not be perfect, but it's clearly better than the others.

[James Micallef]

Re: Rules, morals and taxes

@Kubla Cant - you are right that your option 3 is the one to use: "The government creates a set of rules and formulae"

The only problem with it is that special interests, loopholes, one-off incentives etc build up to form a spaghetti junction of rules, and new rules add to old ones with a smorgasbord of addenda and exceptions, without clearing up the old ones. Also, countries make rules while looking at their own needs, not at teh big picture. Multinational companies play divide and conquer, pitting countries against one another and taking advantage of the chaos.

What is needed is extreme simplification of the rules and cutting down on loopholes and exemptions. If losing an exception wrangled to favour your particular line of business makes you uncompetitive, you're in the wrong country / business anyway, tough shit.

[teebie]

Re: Rules, morals and taxes

You could try 3, but without setting up the rules to be deliberately gameable.

[Bronek Kozicki]

Re: Rules, morals and taxes

... and that actually makes it 5. set the rules so dead simple that there is no flexibility in the system, everyone knows what they owe and tax avoidance gets replaced by tax evasion. In order to limit the tax evasion the rates must be low, and that goes counter to what most governments feel like. Sadly.

[teebie]

"it is easier for a camel" I thought that was an anti-smoking parable?

[Anonymous Coward]

NOT anti-smoking, PRO smoking

we appear to be going down the road of religious intolerance as you are clearly WRONG

[teebie]

Re: NOT anti-smoking, PRO smoking

I don't understand the objection, and so I apologise

[Anonymous Coward]

The Dutch?

"There are two kinds of people I can't stand in this world. People who are intolerant of other people's cultures, and the Dutch."