Is there logic behind France’s rumored €1 Billion Google Tax?

http://www.rudebaguette.com/2014/02/05/logic-behind-frances-rumored-e1-billion-tax-google/

by liam_boogar • 12 years ago

23 53 12 years ago

Doublon• 12 years ago

The answer is "no". Disclaimer: I'm French.

louhike• 12 years ago

The fact that you are french does not make your opinion meaningfull without any explanation on why you disagree with this tax. Please, explain us why or do not leave this kind of comments.

vvvVVVvvv• 12 years ago

Another French there, but with hopefully more insight on the why.

If France alone stands up for this one, it's meaningless because they'll find a loop (or carry on with the Double Irish and Dutch sandwich) and we'll just look like communist heaven (hyperbole) while not reaping anything.

We need to do it at the EU level, with a law which overrules local business taxations settings if the company is owned by a non EU entity.

Of course, the only way to push for it is to have champion country doing the dirty work, so I guess we're stuck with that.

mercurial2• 12 years ago

The article is not replete on details on how this supposed tax would work. Personally, I'm in favour of taxing Internet companies, but I believe tackling such a complex issue affecting many countries on a national level is a mistake.

Disclaimer: I'm French too.

sillysaurus2• 12 years ago

Personally, I'm in favour of taxing Internet companies

Why?

EDIT: I was just curious to hear more.

liam_boogar3• 12 years ago

Why you saying Why should Internet companies be taxed? Or Why should taxes exist at all?

mercurial2• 12 years ago

Why shouldn't they pay their fair share? Normal companies who make profits get taxed. Giant companies funnel their profits through Holland and Ireland, and pay a paltry amount.

Back in the days, the nobility had also exempted itself from taxes. I see no reason for this state of affairs to continue.

charlysisto• 12 years ago

It's not about internet companies, it's about a set of multinational companies (amazon, starbuck, McDonald & many others including non-US) using a set of legal fiscal tricks to pay a ridicule amount of taxes compared to the national based ones & individuals. It's hurting competition and feeding the increasingly wide gap between wages & company income.

DanBC• 12 years ago

Google does a lot of business in the UK. I can buy, with real English money products from Google employees in an Enish Google office. For them to include a token step at the end of that process (invisible to the user) of having a Google employee in the Irish Google office just so they can avoid paying the English corporation tax is shady.

Google quasi-legally avoids a huge amount of tax. Everyone accepts that reducing your tax burden is legitimate, but there comes a point when it is taking the piss.

Paying tax is part of being a member of society. People and corporations not wanting to pay any tax should not be able to claim the benefits tha result from that tax burden. Google benefits from UK education. Google should fucking pay for it.

The scary thing is that Google isn't that bad compared to other companies. The scale is huge but the techniques are run of the mill. See some of the water companies who have baffling corporate structures and who use international intra-business loans in order to avoid corporation tax, all while paying massive bonuses to staff, increasing costs to consumers, under funding maintainance, etc. it's infuriating.

doe88• 12 years ago

Because if you make some business in one country it's fair to proportionally contribute to that country. And hiding behind schemes in order to minimize it should be prohibited.

seszett4• 12 years ago

I believe tackling such a complex issue affecting many countries on a national level is a mistake.

This sounds like the main problem here, to me:

EU law makes it easy for a company to do business anywhere in EU and only pay taxes in its headquarters, on the assumption that it doesn't matter a lot where the company pays its taxes as long as it's inside the EU. But at the same time, EU law doesn't regulate corporate tax, so some countries can easily take advantage of that by lowering them (or completely removing them) so companies will be attracted there.

They are basically living as parasites to the other countries, and the only solution to that seems to be harmonizing taxes accross the EU.

Edit: could you explain the downvote a bit? I'm curious to hear what you don't like in what I said.

davidw7• 12 years ago

so some countries can easily take advantage of that by lowering them (or completely removing them) so companies will be attracted there.

God forbid anyone try and make a country a good place to do business.

I'm for closing the various loopholes, because big companies should have to pay the same taxes that smaller companies do. But I am also very much in favor or countries trying to compete and improve in order to attract business.

Edit: could you explain the downvote a bit? I'm curious to hear what you don't like in what I said.

You call other countries who don't want to import the crappy, unfriendly business climate of countries like France or Italy (where I live) "parasites".

WildUtah• 12 years ago

"EU law makes it easy for a company to do business anywhere in EU and only pay taxes in its headquarters, on the assumption that it doesn't matter a lot where the company pays its taxes as long as it's inside the EU."

US states have a set of policies and compacts so that corporations doing business in multiple states pay taxes to each state divided according to a formula.

The corporation attributes income to each state in proportion to a weighted average of its sales in the state, its total employee compensation in the state, and its business capital and equipment present in the state. Then each state sets its tax rate and takes that fraction of the income attributed to the state. Over time, the states have created counting rules to prevent cheating the system.

Europe may need to organize such a system if the other nations are really tired of being scooped by ie. There's still the classic scheme of putting intellectual property in a tax haven and paying franchise fees to a foreign subsidiary there to avoid having profits. They may want to try closing that loophole, too.

liam_boogar3• 12 years ago

The rumor is not replete with how the proposed tax would work either; however, previous indications of similarly proposed taxes would suggest a tiered tax level based on different types of User data (more sensitive vs less sensitive) are stored in different tiers (France/National, Europe/Federal, and outside of Europe), with wavering amounts of taxes on a, I imagine, per user level.

touristtam• 12 years ago

We (European) need to have a unified taxation system for this kind of business. Nationalizing a tax on internet companies sounds like a lots of headache trying to figure out who own what to whom. Either this or a tax on internet (financial) transaction; something like 1-1,5% of the amount transferred.

Shivetya• 12 years ago

I had to kind of laugh at the seeming distress expressed in the article the Google merely passed on the taxes to the consumer, as in who do politicians and journalist think pay all taxes? Business taxes are merely an indirect means of taxation on the populace, it is done to fool the general population into believing someone else carries the load.

adaml_6232• 12 years ago

Yes and no. The services that Google provides are already priced at the supply/demand meeting point. Tax is merely reducing profits that are already made.

Google is not going to insist on making X% net profit and will not put up it's rates just because a tax rate changes.

You can't pretend that Google dropped their rates in the UK by a few percent when the corporate tax rates dropped last year?

waps• 12 years ago

You neglect that a new supply-demand equilibrium will form, and since taxes effectively reduce supply, it will form at a higher price, with less demand.

End result : less sales, customers paying more, and Google earning less.

I do think you should consider that this will only raise prices for advertisers in France though. So it will be even easier for out-of-country advertisers to undercut France's local suppliers.

The problem is that most citizens don't realize just how big the state's take on a normal wage is. You believe it's ~55% of your income. Well, no.

In France, a business has to pay taxes to pay you, then you pay taxes on what you get (to make matters more complicated, these taxes are collected by your employer). In reality your bruto pay is about 130% of what you get quoted (just due to taxes). Out of that 45% remains (taxed at 55%). Then you have local taxes, since you have to live somewhere, these are at least 2% of income. And you add VAT 20% on most things you actually buy. This ignores various other things, like the fact that keeping track of all this requires people, and obviously the state doesn't pay for those, so they yet again increase costs for businesses.

But let's calculate. Out of what your employer pays you in France, you get to spend ... 100% * (100/130) * 45% * 80% = 27,6%. So the tax rate in France is 72.4%, for a person having a decent job in IT. We're not talking bank director here. And of course the French state is raising these levels. Also these are MINIMUM levels (for a decent wage), it's assuming you aren't investing in stock, assuming you don't own a house (or God forbid - more than one house), you don't own a car, ... If any of those are not true, you'll be paying even more.

I think it's beyond obvious that this tax level, even if it weren't going up, is not sustainable.

yodsanklai• 12 years ago

Can you elaborate? how google being taxed has an impact on my own income?

csomar• 12 years ago

it has impact on your disposable income if you are buying Google services.

colechristensen• 12 years ago

It's a bit of a stretch but it has some truth...

On one extreme, Google keeps it's prices static and it's customers don't change their buy resulting in the tax coming only out of Google's profit.

On the other extreme, Google raises it's prices exactly proportional to the tax, it's customers buy the same amount of ads and raise their prices exactly proportional to the increase and you pay them for service or good $x. Your income stays the same but it buys less because everything is more expensive.

The real result is in the middle, google eats some of the loss from tax, raises it's prices and customers somewhat lower their ad spend and somewhat raise their own prices eating some of the loss from tax. Which extreme any individual believes is more accurate has more to do with political bias than truth.

tbarbugli• 12 years ago

yeah, its all connected man, cant you see it?

JumpCrisscross• 12 years ago

Yes, taxes on businesses are a proxy for taxes on individuals. But business tax does not necessarily pass along to the consumer - that only happens for businesses with pricing power, i.e. with leverage. For companies with less pricing power, e.g. a small commodity processor, a business tax will more likely pass along to owners via a hit on margins.

pms• 12 years ago

Maybe this kind of taxation could be a way of coping with NSA surveillance of European citizens? (That's just a provocative sentence, so please keep on reading.) Currently, Europe is at data disadvantage comparing with USA, and this disadvantage is used by USA not only for security reasons, but also to protect interests of USA. (That's what Snowden claims himself.) In such case, shouldn't Europe also protect its interests? I think the only two ways out are:

1. Imposing taxation on foreign Internet giants in Europe. Needless to say, that would lead to divisions of the Internet, which we all want to avoid.

2. There should be an international act signed between Europe and USA providing Internet companies certain degree of independence from national-level surveillance, which would protect privacy of citizens of each country involved in the act to the same extent.

lispm• 12 years ago

Most of these US companies are huge tax avoiders. They use very trick to avoid paying ANY taxes. For some reasons these companies have tricked the countries to be able to. About time they get taxed at all.

lepouet2• 12 years ago

The problem for Google which might cost them 1 Billion is that they say that all sales to french customers are done in Ireland but in the same time Google has 100+ employees in france whith title like "sales manager" who talks about theirs "clients" in internal emails.

liam_boogar3• 12 years ago

I don't think that is true.

lepouet2• 12 years ago

This is what this article http://www.bfmtv.com/economie/enquete-google-france-sorganis... ( in french ) explain.

Realising this was a mistake everything was renamed in 2011, apparently.

atmosx• 12 years ago

The article is kinda poor, but the subject is interesting. Once again technology is way ahead of the justice estates all over the world (for good or bad).

Google and Apple (among others) are renown in Europe for paying virtually no taxation[1]. And while once upon a time no one really cared, now it's hard to swallow for voters being crashed by the financial crisis, so either this will change or some political figures might lose additional points in the next elections.

I'm not angry with Google. I'm angry with our corrupted politicians who've done nothing to fix this, all over Europe, not just in France and not just for Google.

Since we have the technology to tackle the issue at hand, everything else sound like an excuse.

[1] http://www.dailymail.co.uk/news/article-2549379/Fresh-questi...

digitalengineer3• 12 years ago

"For now, the tax is just a rumor, A rumor that is a symptom of a very real problem. And that problem is Taxation on Internet Companies. Expect this problem to be solved in the next 10 years."

A very real problem indeed. But it's not a Google problem. It's a France/Hollande problem. France is in recession (agian or still).

French private sector contracts as Germany’s grows Business activity in the eurozone’s two largest economies is diverging sharply, with France’s private sector contracting after two months of growth while in Germany it accelerated to a 10-month high, according to a survey. http://www.ft.com/cms/s/0/87e4a572-5285-11e3-8586-00144feabd...

French officials warn of social tinderbox as economy contracts again The latest data show a continued erosion of France’s industrial base and export share. It risks shattering the credibility of President François Hollande, who has been talking up recovery for months. http://www.telegraph.co.uk/finance/financialcrisis/10450889/...

tgautier3• 12 years ago

Find another article to comment on with your fucking french bashing.

This article is about International Companies avoiding taxation in Europe, which is, believe it or not, a real problem in terms of finance and ethics.

They make money out of EU citizens and get out of it with 0% taxes when EU business have to pay between 15% and 35% of their benefits in tax.

digitalengineer3• 12 years ago

Thank you for your kind words. Were you a waiter from Paris by any change? I read the article is about France’s rumored €1 Billion Google Tax. Not a European Tax...

free652• 12 years ago

Ad hominem in the first sentence and by a french person. So according to your logic american gift shops should pay tax to France also? Since they are making money from french citizens?

Is there logic behind France’s rumored €1 Billion Google Tax?

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