[diggan]

The meat:

> Last year, French media outlet La Lettre reported that until 2021, Netflix in France minimised its tax payments by declaring its turnover generated in France to the Netherlands.

> investigators are trying to determine whether Netflix continued to attempt to minimise its profits after 2021.

Wasn't Uber or some other US company found doing something similar? First they were found to be in violation of some law/dodging taxes, said they'd fix it and later found to not have done anything about it? Is that behavior perhaps more accepted in the US than Europe?

[lm28469]

> Wasn't Uber or some other US company found doing something similar?

Airbnb, they had to pay like 70k of tax a few years ago. There are employees who pay as much tax as single filers lol

They paid 18% less tax in 2016 than in 2013 while the number of flats available on the site went from 30k to 300k

https://www.lesechos.fr/2016/08/airbnb-na-paye-que-69168-eur...

[thrw42A8N]

> They paid 18% less tax in 2016 than in 2013 while the number of flats available on the site went from 30k to 300k

Completely meaningless without also saying what their costs and investments were.

[lm28469]

Well no that's not really what happens, what happens is that legally the french entity is just a service provider for the irish HQ. They pretend it's a simple marketing agency and that the real value is provided by the irish entity

[thrw42A8N]

Doesn't matter - you can't make any judgement without knowing these numbers. They may have actually paid a higher tax rate than previously - we don't know.

[lm28469]

Funny how it works, they lose money everywhere but one of the smallest country they operate in banks 50% of their worldwide revenues, it probably is just a coincidence that this is a tax heaven... we just don't know I guess

The French branch made 160k of profit while the Irish branch made more than all the other EU countries combined

FYI: france is the second market for airbnb after the US... do you really think they would even bother if they did make 160k there when they make 300m+ per year globally ? Do you really think their second market nets them < 0.1% of their total net income ? Do you really think the most touristic country in the world in absolute numbers brings 160k euros per year to airbnb ?

I dont't know much but I'm not a fool

https://en.wikipedia.org/wiki/World_Tourism_rankings

https://www.searchlogistics.com/learn/statistics/airbnb-stat...

https://www.rte.ie/news/business/2023/1127/1418779-revenues-...

https://www.breakingnews.ie/business/airbnb-ireland-records-...

[thrw42A8N]

I don't know why you're telling me this, I know it - and it's not relevant at all without knowing the numbers.

[Muromec]

At some point governments will catch up and start taxing based on percentage of global revenue or even turnover.

[betaby]

I hope so. And that's not only USA-copanies phenomenon. I worked for a french company in Montreal which payed close to zero tax amount even though they are doing more than OK financially world-wide, including Canada.

[scotty79]

All spending should be taxed instead of income. Income is too easy to move and hide. Spending tax could be unified framework encompassing all financial activity. If you purchase anything, labor, imports, energy, stock, politicians, you should be taxed.

Spending is the moment when the money shows its ugly head and does harm.

[vlovich123]

Isn’t that a hugely regressive tax?

[scotty79]

I don't think so. Rich people buy vastly more. Not just food, shelter and entertainment but also real estate, entire companies and financial instruments. They'd end up paying vastly more tax.

[betaby]

> Rich people buy vastly more

Not enough, especially since everything is business expense for them.

[scotty79]

That's the point. With purchase tax business expenses would be taxed similarly to private expenses. At least in the same framework.

[marcosdumay]

If you add financial instruments into the tax (what is a tax on investing, not spending), it will become proportional. What is still not very good.

This blind kind of tax also has horrible impact on the production of goods with high added value.

[scotty79]

> what is a tax on investing, not spending

Money changes hands so it's taxed with a purchase tax as a general rule.

> it will become proportional. What is still not very good.

Progressive tax currently is just a theory. Rich actually pay regressive tax. I'd take proprtional tax over ostensibly progressive tax but in reality regressive tax any day.

[lotsofpulp]

Correct, and it could be implemented as a power law formula that makes it impossible for the super rich to avoid tax (since they are the only ones that can spend a lot). It also aligns incentives with environmentalism and reducing waste and consumption. And poorer people are automatically exempted from tax since the power law formula parameters be set to slowly ramp up.

This is also easily accomplished now that almost all payments are happening digitally, assigned to a taxpayer ID#. We can easily replace a W-2 or 1099 with total spending instead of taxing working.

Of course, this should also be paired with similarly designed land value and estate taxes to disincentivize hoarding.

[shermantanktop]

So my effective tax rate on consumption is indexed on my ability to hide my assets?

Maybe my household LLC should buy all my groceries while I work for the LLC which employs me as the sole contractor and live in the house that I rent from the LLC which I am the sole owner of. For major purchases, I can hire a low-income person to do the purchase and then sell the item to me, or maybe they lease it to me.

I'm not a tax lawyer but it's pretty easy to see the many loopholes in alternative tax proposals.

[lotsofpulp]

>So my effective tax rate on consumption is indexed on my ability to hide my assets?

Where are you getting this from? Sales tax has nothing to do with one's assets. Also, land value taxes make hiding assets moot, since all real assets have to be stored on land. Of course, copyright protections would need to be reformed to be for far shorter durations of time.

>Maybe my household LLC should buy all my groceries while I work for the LLC which employs me as the sole contractor and live in the house that I rent from the LLC which I am the sole owner of.

Why should LLC's be exempt from the tax?

>For major purchases, I can hire a low-income person to do the purchase and then sell the item to me,

How does this help? You are still purchasing the item. If you are referring to purchasing it with cash and committing tax evasion, the same is possible with income tax today.

>or maybe they lease it to me.

Renting something is still considered a sale. You get charged sales tax at hotels. Renting apartments is not usually subject to sales tax, but that is a policy choice.

[vlovich123]

> Where are you getting this from? Sales tax has nothing to do with one's assets

Earlier you said

> And poorer people are automatically exempted from tax since the power law formula parameters be set to slowly ramp up

I too am very confused on how you envision this sales tax working where it's variable in some way that poor people don't get the tax but rich people do so I understand why OP is asking about asset tracking. If you're talking about it as a tax that increases the more you spend you've still got problems of hiding how much I'm spending through various legal entities. It also has a macro economic problem, at least how the consumer economy is structured, that could slow down the gears of business until society realigns (if it does) because people will be incentivized to consume less. You've got alternative models where you go after specific products and tax more for conspicuous consumption like yachts but that feels like it has all the inefficiencies of central planning a market.

[scotty79]

Ownership can be tracked. You're tax rate can be proportional to all of your assets along the ownership tree (tax already paid by the branches on what they own can be deducted).

You can of course "own" things informally but then you don't get any support from courts when the paper owner decides you really own nothing.

[scotty79]

Do you have any keywords for me that I could read up on?

I came up with the idea of puchase tax and progressive real estate tax myself, but I'm sure other people had same ideas before me.

[thrw42A8N]

Revenue tax? We had that before the fall of the wall - not again please. The VAT system works well and should be used more.

[scotty79]

Purchase tax would work like reverse VAT. Companies could be awarded tax credits for their sales (not 100% though) and pay tax on their purchases. This would be harder to evade and additionally incentivise companies to do more with less which might be good for environmental transition.

[thrw42A8N]

Why not 100%? How is that even supposed to work in low-margin markets like construction, where the profit is 100x less than the costs, so even 1% tax would erase it? But any markets really, this makes innovation and business so risky that I'd probably close down my IT company too.

[scotty79]

The strength of markets is that they adjust to environment. Taxation is a part of the environment. Taxation would be just priced in.

Why would it be risky to pay some percentage more on what you spend but not pay income tax at all?

[immibis]

... prices would increase to cover the tax?

[Aunche]

...or you can just use a VAT, which are also paid at purchase. Tech companies have high margins and low expenses, so if the point is to tax tech companies, taxing purchases and giving a credit to sales is literally the exact opposite of what you want to do.

[scotty79]

VAT with 100% deduction places entire tax burden on the end consumer. Income tax aims to extract additional tax from entities that extract money from consumers for investors.

VAT could do a lot of the same things that I'm proposing (if the deductions weren't 100%) but is limited in scope. And because of that it has a lot of interfaces to other domains like real estate, import, labor, financial intruments. Interfaces that can be exploited to avoid paying taxes.

General purchase tax could replace all taxes and fees transfered from the markets to governments (and effectively goverment managed buckets like social security or public healthcare).

Taxes have this strong moral objection that they are punishment for creating value. Purchase tax could help with that by ostensibly being punishment for using up value not for creating value. It might also compose well with transition to stable state economy that will have to replace old economy based on unbounded growth.

[yunohn]

Literally every single company that can afford to setup things like tax transfer schemes, are actively evading taxes.

It’s mind boggling how widespread it is, how accepted (legal) it is, and how it will seemingly never be fixed.

https://www.somo.nl/the-netherlands-still-a-tax-haven/

[diggan]

> Literally every single company that can afford to setup these tax transfer schemes, are actively evading taxes.

Yeah, but I think that's different than what happened in this case with Netflix. Declaring earnings from one country in another country is not just "tax optimizations" but straight up illegal. It's not using/abusing legal loopholes like most larger companies do, but going against the law.

[yunohn]

Honestly, I’m not sure. I find the premise of such tax laws to be illogical at a basic level. There are apparently always multiple ways to create legal loopholes.

If we consider the Irish sandwich mechanism that was recently “stopped”, somehow that hasn’t materially affected any of the innumerable companies that were using it. As we saw in the Apple vs EU case, most practices might’ve never been actually legal either.

So my personal opinion is that (almost) all tax “optimization” is at the minimum immoral, but most likely illegal too.

Edit: This reminds me of the idea of temporarily embarrassed millionaires. Your personal optimization is not what I’m talking about - corporations have legal teams the size of SMBs lobbying/creating/looking for secret loopholes, and people are talking about public self service methods.

[sokoloff]

I'm sorry for my immoral behavior of generally holding investments for more than a year, contributing to my 401(k) and HSA accounts, buying an EV, and installing energy efficiency upgrades in my house, all of which are driven by tax optimization (at least in part).

[marcinzm]

If a government says do X and I will cut your takes by Y then is doing X immoral?

[DrillShopper]

It depends on what X is.

If X is "install solar panels" or "provide affordable housing" or "reduce greenhouse gas emissions" then X is very likely moral.

If X is "lie to us about where your revenue came from" then X is very much immoral.

[przemub]

@bryanrasmussen I wouldn't put it past the Irish one!

[bryanrasmussen]

no government says "lie to us about where your revenue came from and we will cut your taxes"

[yunohn]

If a government “says”? These large companies actively campaign, draft, and lobby for the legal frameworks and loopholes that they exploit. The government and the companies are the same and are fighting for the same pot of tax money.

[scotty79]

That's rich coming from French. Long time ago France Telecom bought Polish top phone network. Immediately rebranded it to Orange (despite the fact that the company had one of the strongest brands on market where it operated).

Unsurprisingly the licensing fees for using Orange brand that the Polish company had to pay to France Telecom amounted to large percentage of taxable profits that the Polish company had. Overt theft from Polish company and Polish taxpayers.

[greyw]

Is that related to the privatization wave after 1989? If so, the culprit here is the corrupt political caste that sold companies below their true value for kickbacks. Corruption has been an endemic problem in the east.

[dr_kretyn]

It isn't. That happened some time around 2000. Unless your theory is that ~11 years isn't enough to change generations in which case there's more than that, right? Then give other examples.

[greyw]

Governments can block acquisitions and mergers for various reasons. Why this didnt happen in this case I dont know. Maybe they didnt understand the impact maybe regulators got paid off.

[lifestyleguru]

> Unless your theory is that ~11 years isn't enough to change generations in which case there's more than that

For the people holding power one decade is an eyeblink, the only generation change will be when they'll install their own children as a replacement.

> Maybe they didnt understand the impact maybe regulators got paid off.

They got paid off and by Western standards it was a bargain.

[lifestyleguru]

Ohhh the memory of their atrocious and extortive services still raises my adrenaline. The French bought the position of monopolist in the telecom market. That's (and similar privatization frauds) how the only true Russian-style oligarch in Poland was created - Jan Kulczyk. Thanks, French!

[mort96]

Nation state acts in its own interest, news at 11

No but seriously, this doesn't sound surprising? Why should France be against a French company buying up other companies and bringing revenue back to France

[scotty79]

Do you want euroscepticism? Because that's how you get euroscepticism.

[mort96]

I don't understand the problem honestly. I'd understand it if Poland stepped in and didn't let the company be bought out, but this just seems like bog standard normal globalized free market stuff? It would be extremely weird for France to step in and prevent a French company from buying a Polish company due to fears of stoking Euroscepticism among the polish population wouldn't it? And I don't even know what this has to do with the EU, companies have been buying up companies from other countries both in and out of the EU forever?

[scotty79]

I also don't expect nothing other from thief then continuing to steal.

I also expect thieves to be protective of their own assets.

I'm just saying they are still thieves and any outrage in their name is misplaced.

Screw the French when they are robbed for the benefit of other countries, because they steal from other countries using their public companies as well.

[mort96]

If you are criticising markets in general and capitalism's tendency of bigger companies buying up smaller companies then I understand and agree with you. If you are criticising France in particular then I don't understand what you think the problem is.

[kbolino]

It's hard to accurately measure secretive crimes like this, but the estimates seem to put corporate tax evasion by percentage of GDP at either similar levels between the EU and US or actually higher in the EU.

[kranke155]

The EU is just as corporatist as the US. The corporations just aren’t as big, but they control their local/national politics effectively.

[marcinzm]

Given Wirecard I wouldn’t assume the EU equally prosecutes or tracks crimes for EU and non-EU companies.

[DanielHB]

They obviously target the companies the highest revenues. Also you would be suprised. For example Klarna, a Swedish company, is often in trouble with the Swedish tax authorities.

A few years ago they had to pay huge amounts of money to the Swedish government because of some tax-dodging loophole was deemed illegal by court-order. So Klarna went into a desperate attempt to last-minute cut costs to not tank the stock value due to much lower expected returns that quarter.

It was kinda funny because the employees of Klarna are unionized they couldn't just fire anyone on short notice like that, but they did let go pretty much all consultants in one swoop. If this was the US the CEO would have just fired a bunch of people because the CFO f-ed up. For a few months there was a major glut of former-Klarna consultants around in Stockholm, two of them ended up at my company at the time.

I couldn't find details about this tax dodging online (it was around 5 years ago), but here is another article about Klarna being in trouble over GDPR violations:

https://www.reuters.com/technology/swedens-klarna-fined-7330...

[Hamuko]

Isn't the Wirecard case still pending with execs in jail waiting for trial?

[marcinzm]

Only after it all imploded did the government go after them.

Until that moment it did the exact opposite including opening criminal investigations into the journalists calling it a scam.

[lifestyleguru]

The protagonist was first the apple of Merkel's eye and then vanished in Russia.

[salawat]

It isn't really accepted anywhere, but there is a group of people who will make it their goal in life to get up to any shady practice to try to shortchange or dodge their local host polity to their ultimate advantage. The tax dodge, if you will, becomes something of a pass time and point of pride for them.

This becomes more difficult as more tax authorities better integrate with one another, which admittedly, is something many in in the U.S. fidget over, even if it is realized that the need for it is almost entirely a byproduct of these types of people's actions that necessitate that happening.

[seanhunter]

Yeah there's the so called "Dutch Sandwich"[1] which is a well-known tax "planning" methodology that corporates use with the so called "Double Irish" being another one. There's also a slightly less-well known one involving Mauritius and India. They're all ways of moving profits between companies in order to exploit tax treaties that countries put in place. In the case of the Dutch sandwich I think the Netherlands has a treaty with the Netherlands Antilles or something so people have a company in the Netherlands which then shifts things off-shore to the Antilles and avoids tax that way.

It's nonsense of course. Companies should (in my opinion) shoulder their fair share of tax because otherwise that burden falls disproportionately on individual income tax.

[1] https://en.wikipedia.org/wiki/Dutch_Sandwich

[s_dev]

Your information is outdated -- Double Irish is no longer applicable according to your own source since 2010.

[yunohn]

No, it’s much more complicated than that. If you scroll a bit further:

> After pressure from the EU,[22] the Double Irish BEPS tool was closed to new users in 2015,[citation needed] however, new Irish BEPS tools were created to replace it:[23][24]

Not only do the original evaders get to continue doing it, they’ve also found new loopholes already.

[seanhunter]

Right. Also I wasn't trying (nor am I equipped) to give some kind of current guide to tax dodging. I was explaining the basic sort of thing people do. The specifics change all the time because there is a sort of whack-a-mole that tax authorities try to play to get people to pay and people pay ever more and more inflated fees to various accountants and tax "planning" experts for ever more byzantine and artificial schemes of one kind or another.

My own experience with tax experts has left me pretty jaded about tax advice. It seems to me that often these companies have maybe 1 dude who actually understands tax and an army of people with powerpoint going out selling the "solution". I had a complex tax situation when setting up a business in the UK and US and got tax advice from one of the big four firms not to dodge tax but to make sure I understood the US system correctly and was paying everything I should. I paid so much tax that I got investigated in both the UK and US because they thought there must be some sort of fiddle because I seemed to be paying way more than I sholud be (this was what I told the accountants). I ended up getting rebates from the IRS and from the UK HMRC after the investigations but it took a couple of years to get it all sorted out.

[Muromec]

It's like eruv. The loophole was planted there for us mortals to find and use it

[gamblor956]

None of these tax "planning" schemes are available anymore.

Moreover, tax authorities have increasingly taken the position that the use of these planning methods constitutes tax evasion. The Dutch Sandwich and Double Irish were grandfathered in (meaning, not treated as criminal tax evasion) but a company utilizing similar schemes today would ultimately result in one or more of their executives spending time in jail.

Critically, most of tax law is actually regulation that implements statutes. Tax planning schemes that satisfy the technical letter of regulations but which violate the plain intent of the written statute can, and have, been deemed illegal years or even decades later (see, for example, the Bermudan tax loss harvesting scheme), and this has repeatedly passed constitutional muster.

[tiahura]

What’s the rationale for double taxing corporate profits vs other types?

[seanhunter]

No rationale for that, but likewise no rational reason that corporates sholud be able to use multinational structures to completely avoid tax, which is what these planning structures are all about. Typically there are inter-company transfer pricing arrangements that mean that the companies in the taxed jurisdictions pay fees to each other so their profits are minimised and as much profit as possible is expatriated to low- or no-tax jurisdictions.

[_ink_]

Is it illegal, tho?