Facebook Ireland

History

2020: Closing of all companies because of charges of non-payment of taxes for $9 billion

At the end of December, 2020 Facebook closed all the Irish holding companies which used for storage of intellectual property to avoid payment of taxes in the USA, Great Britain and hundreds of other countries. Several months earlier American tax accused Facebook of what the company thanks to Ireland underpaid taxes on $9 billion, and now Facebook returns this money home.

The companies entering into Facebook paid for use of intellectual property to Irish structure worldwide. It allowed Facebook to transfer a considerable share of the global income out of borders of the USA. Ireland is as a rule considered one of the best countries for creation of the holding company because of its flexible policy for tax benefits. So, the main Irish subsidiary company of Facebook company paid $101 million in a type of tax, at the same time having locked in profits in the amount of more than $15 billion.

Facebook closed all companies in Ireland because of charges of non-payment of taxes for $9 billion

The solution of the company to close the Irish divisions and to return the intellectual property to the USA was accepted shortly after the tax administration of the USA (IRS) filed a lawsuit against Facebook, having said that she owed more than $9 billion taxes since with 2010 transferred intellectual property to Ireland.

It is said in the statement of Facebook that the Irish holding company "was liquidated as a result of changes which best of all correspond to our operational structure. Within preparation for final closing of the company assets of Facebook Ireland Holdings were transferred its parent company in the USA. The licenses for intellectual property connected with our international transactions were repatriated back in the USA. We consider that it will be approved with recent and forthcoming changes in the tax law which politicians support worldwide".^[1]

2019: Europe thought up as it will force to pay taxes in the place of income generation

On October 15, 2019 it became known that large multinational companies, such as Google, Apple, Facebook and Amazon, can soon begin to pay taxes in those countries where they really gain income, but not in jurisdictions convenient to them. To it they will be obliged by the rules developed by the Organization for Economic Cooperation and Development (OECD). The relevant proposal is already published by the secretariat of the organization.

The OECD notes that the existing rules for apportionment of taxes were accepted in the 1920th, and do not consider feature of the progressing globalization and digitalization of economy. For October, 2019 the large companies, first of all technology corporations and digital services, can gain income in those countries where they have no divisions — and it and occurs, especially in developing countries.

As the companies have an opportunity to freely move income worldwide, they register office in jurisdiction with low taxation and pay taxes there as it does Apple which European office is in Ireland.

With respect thereto the OECD suggests to introduce two rules. First, it is necessary to deprive of the company of an opportunity "throw" profit from the country to the country that will force them to pay taxes in the place of receiving this profit provided that the company in this country has a significant business. Secondly, it is necessary to enter the fixed profit margin from local activity in those countries where the companies have offices.

Will benefit from these rules first of all the large countries, including the USA, China, Great Britain, Germany, France and Italy and also the developing economies. In territories of these countries technology giants perform large sales, and taxes on these sales will depart to the countries. "Tax havens" and the countries with low taxation, like Ireland will suffer generally.

OECD made necessary observations during the summer, and now believes that its offer will be supported by the leading global economies. The organization intends to discuss regulations at the level of "Group of Twenty" already by the end of January, 2020. The OECD hopes that such system will save the countries from need to take the tax measures against technology giants at the level of national legislations as France and Great Britain as it only increases strength in trade relations try to make it. In particular, these regulations will allow France to receive sales taxes of advertizing of Google to the French advertisers^[2].

"Double Irish" scheme of optimization of taxation (Double Irish)

Decades the American IT giant preferred to use in Europe one of versions "Double Irish" schemes (Double Irish — similar to the name of the Irish cocktail). Simply it looks as follows. Americans establish in any offshore and directly in Ireland couple of legal persons, and then connect offshore to the next national representative office of transnational giant. The local office on fabulous quotations "licenses" "intellectual property" at the, in fact, parent offshore company. And then pays according to the license agreement.

As a result multi-billion national revenue is spent for "runtime royalty fees" to parent offshore which it regularly lists to head "mother" in Ireland. In continental Europe according to accounting documents there is no profit left and Americans practically do not pay the local taxes on profit. It irritates France long ago.

It is curious that thanks to offshore "laying" and features of the legislation of Ireland, even in the last country where head offices of Americans on the continent are opened, taxes are paid uskolzayushche low, their business is done by "offshore"^[3].

You See Also

• 244-FZ "Tax on Google"

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