Der SPIEGEL rumbles the European corporate tax loopholes and the only thing disappearing into the Bermuda triangle these days is US corporate tax revenue

While Ireland’s narrative is of a low tax business model on which our export economy hinges SPIEGEL explains how multinational corporations enjoy loopholes galore in Europe. Germany’s starting to rumble on legal “options for fiscal optimization.” eg Apple paid $130 million on profits of $13Billion. That’s 1%. It goes on to state that image conscious corporations like Starbucks and Pepsi are anti social when it comes to sharing their profits with the people of their host countries through paying tax. Schauble is getting serious about closing down tax havens like Bermuda and legal tax avoidance measures.  ’1,000 US companies have moved substantial assets abroad valued at roughly $1.5 trillion, or one tenth of the country’s national debt’.

effort-to-close-multinationaltax-loopholes-gaining-steam

This is how the Google system works: All earnings achieved in Europe are posted to Google Ireland Ltd., headquartered in the Irish capital Dublin. German fiscal authorities have no access to these revenues and profits, because the company does not maintain any places of business in the classic sense in Germany.

Google Ireland reported revenues of €10.1 billion in 2010, but they were almost completely consumed by advertising expenses and personnel costs for the company’s 2,000 employees. The largest expense, about €7.2 billion, consisted of licensing fees that Google Ireland paid to another Google subsidiary in the Netherlands. In this manner, almost all of the income was sucked away from Dublin. The Irish state was left with only €16.8 million in revenues subject to corporate income tax, as well as the taxes on employee wages.

Google Netherlands Holdings B.V. in Amsterdam, which collected the licensing fees from Dublin, is a company without employees. It paid only €2.7 million in corporate income tax in the Netherlands. That’s because the Dutch company funneled the lion’s share of its revenues from Ireland back to the Emerald Isle, in the form of a licensing fee to Google Ireland Holdings.

The Bermuda Treasure Chest

Shuffling billions back and forth may seem absurd to the uninitiated, but it’s worthwhile. Google Ireland Holdings is in fact domiciled in two places. It was established under Irish law, but its administrative headquarters are in Bermuda. The benefit for Google is that there’s no corporate income tax in Bermuda.

The operation is complicated, but it’s extremely lucrative. It allows Google to move its earnings, which consist mainly of advertising revenues, out of Europe while paying almost no taxes there, depositing them in a tax haven to which the US Treasury has no access. The US authorities would be able to tax these earnings only if they were later distributed to the US parent company, but that seems unlikely at this point. Google has amassed some $24.8 billion in largely tax-free income in its Bermuda treasure chest……….

Belgium, for example, has one of the highest corporate income tax rates in the world: 33.99 percent. In practice, however, the debt-ridden country collects far less from companies, thanks to loopholes in its tax laws. The average tax burden of the 50 most ingenious companies, with total earnings of €27 billion in 2010, was a paltry 1.04 percent.

13 comments on “Der SPIEGEL rumbles the European corporate tax loopholes and the only thing disappearing into the Bermuda triangle these days is US corporate tax revenue
  1. Tom-Tom says:

    Aim your arrows at corporations. STOP aiming arrows at regulations, at welfare, at Obama, at any thing else. Keep your eyes on the true genocidal monster in this world. It’s the corporations, stupid.

  2. Rick Perry says:

    Texas Instruments to lay off 1,700 workers

    http://www.wfaa.com/news/business/ti-layoffs-179369841.html

  3. arclight2011 says:

    Congressman Ron Paul’s Farewell Speech to Congress
    http://www.youtube.com/watch?feature=player_embedded&v=q03cWio-zjk#!

    at about 39 minutes

    the internet is the new news media and should be kept free!!

    luv yer ron!!

    while im here

    ASEAN – deeply flawed Human Rights Declaration – Affects Japans Human rights petitions?

    Wilder Tayler, Secretary General of the International Commission of Jurists. “Balancing human rights with responsibilities turns on its head the entire raison d’être of human rights,”

    http://nuclear-news.net/2012/11/14/asean-deeply-flawed-human-rights-declaration-effects-japans-human-rights-petitions/
    see! rons right
    peace

  4. Banking Thiefs says:

    Tax needs to be paid in the country you do business, IT’S THAT SIMPLE. The politicians are to blame for allowing these loop holes. So next time they complain, tell ‘em, they made the laws!

  5. eileen dublin says:

    Agreed that it’s all about the corporations. Really i posted the article to show how little these corporations pay versus the ordnary Jane/Joe and how complicit governments are in allowing these loopholes. The counter argument in Ireland is if they dont have these low headline rates and loopholes they’ll go somewhere else eg as Del did and where 10,000 people lost their jobs. even presenting two sides of the argument here in this country is regarded as heretical. That bears some weight perhaps but there are many many tax loopholes even her that reduce that figure even lower.
    I guess i just got off the phone to my German and German based friends who are coming to stay with me and we are all for debate. What we all realise is that these bankers (commerz bank bailed out l, Deutche Bank teetering) are right gangsters trying to take over the whole world.

  6. Tom-Tom says:

    NYT’s headline: “Relentless Bidding, and Record Prices, for Contemporary Art at Christie’s Auction.”

    They’ve got SO MUCH MONEY (and so many houses and cars and private jets) that they are bidding up the price of art against each other. What to do with all that extra money!

  7. S Jordan says:

    It’s not cultural passivity which prevents the Irish from screaming bloody murder about the this, as Ive so often heard from non Irish media. The Irish have entered the financial casino relatively recently. They dont have the basic financial vocabulary to follow all of the cons perpetrated on them and the state-monitored media does not enlighten. Eg, the Irish govtment loves to juke its export stats by virtue of this corporate tax shell game. I’ve never read about this in the IT or the Indo.

    I am an American living in Ireland, formerly a Wall St lawyer. Financial illiteracy needs to be addressed everywhere but esp in Ireland where the taxpayers are being duped into serfdom. Perhaps, Eileen, together we could do something about it?

  8. Joe R says:

    Great post Eileen.

    You possibly spotted this too ( below ) on tax dealings by Google in Ireland and how France is looking for £1 billion back too. Here it is again. Quoted from the linked article from the Irish Times below;

    “Court documents seen by The Irish Times show that Google twice took legal action over raids on its premises on June 20th, 2011, arguing they were disproportionate and underhand, but these claims were rejected by the Paris court of appeals. The court found that “the notion of independence” suggested in a contract between Google Ireland Ltd and Google France Ltd “does not correspond with reality”.

    The investigative newspaper Le Canard Enchaîné reported last month that the tax authorities had made a €1 billion claim against Google, but the company denied this.”

    http://www.irishtimes.com/newspaper/world/2012/1113/1224326523743.html

  9. Joe R says:

    Eileen ,

    Max and Stacey went and hung out with a Google tax dealings denier called David McWilliams recently in Kilkenny. They should own up!

    McWilliams was the guest at the Google zeitgeist conference in Arizona with no other than Bono just a week prior to the economics festival in Kilkenny ( U2 pay tax in the Netherlands not Ireland BTW to save money ).

    I wonder who paid for the flights and accomodation? Google per chance?

    Just after he wrote an article in praise of it all, that is Google and the world of tomorrow which is being created by tech companies that pay as little tax as possible, In Britian Ireland and elsewhere.

    When comments questioning Googles ( and others) behaviour with regard to tax in the EU ( and mild non abusive ones ) were attempted to be uploaded in response to the article he shad them stopped them from going on the site. There was to be no questioning of his recent employers. No reason given for the denial. Would you do this?

    BTW I have proof of this. Email me if you want it.

    His pro google article is linked below -

    http://www.davidmcwilliams.ie/2012/10/22/moving-onwards-and-upwards

  10. eileen dublin says:

    h/t mr B for pointing me towards the piece.
    In fairness to Max and Stacy the piece i saw in Kilkenny when McW was declaring his besottedness with Clinton our financial war reporting friends here pointed up Clinton administration’s passing of Greenspan’s deregulation into law.. . and the mayhem it caused. McW didn’t like it but in fairness took it well when the audience slagged him. Another point that came up at that was about gaggging control on reporters/colmumnists. All except Max said they had no interference. Max said he had experienced it when he was doing pieces for BBC. What i could see was that the press here in Ireland are deeply embedded into a narrative that becomes IMO a type of group think so they self censor. Within that piece i saw Max kept bringing things back to the pertinent point ie the banksters are screwing, here’s how they are doing it, us lets do something about it. I will state for the record i myself have received NO censorship from either Max or Stacy as regards War reports i choose to post.

  11. eileen dublin says:

    Forgot to say Max has been censored by RTE or it not censored as close as makes little difference.

  12. Mary Genoud says:

    Regrettably it is difficult to imagine the US without Ron Paul.

  13. Joe R says:

    Great Eileen and thanks for the reply.

    I saw Max mention Pat Kenny threw him off or something. Max is far too clear for RTE.
    I was joking a bit when I asked them to own up.

    It has to great to be able to post as you do here – please enjoy and take advantage.

    For the record it wasn’t the SBP or the Indo that was censoring my post about Google – it was McWilliams’s own independent site.

    I attempted to make a simple comment there – fairly mild, certainly nothing insulting or defamatory with a few credible links and I was stopped, a number of times, from putting them on his site. I mean it was plain to see that they set up some kind of automated fliter specifically for Google + tax comments and quarantined any comments containing a mention of this. And they never moderate stuff normally. I was able to put up other comments easily and immediately, like here.

    McWilliams prides himself on a youthful semi-loose cannon image – he has a series of ‘punk economics’ youtube videos for gods sake – but I found that he can be bought.

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