Google to finish the double Irish Dutch sandwich

drunkmonkey

Alphabet (GOOGL.O), the parent company of Google, will no longer use the intellectual property licensing scheme commonly known as the “Double Irish, Dutch sandwich”, according to 2018 tax filings with the Irish and Dutch governments seen by Reuters.

In 2017, Google’s Dutch filings showed that it had moved $23 billion through a shell company to Bermuda, a strategy that allowed it to delay paying U.S. taxes. In the 2018 filings seen by Reuters on Tuesday for both Ireland and the Netherlands, the company said it would end the practice.

“A date of termination of the Company’s licencing activities has not yet been confirmed by senior leadership, however management expects that this termination will take place as of 31 December 2019 or during 2020,” the filing with the Dutch Chamber of Commerce said.

“Consequently, the Company’s turnover and associated expense base generated from licensing activities will discontinue as of this date.”

https://www.reuters.com/article/us-google-taxes-netherlands/google-to-end-double-irish-dutch-tax-scheme-filing-idUSKBN1YZ10Z


Will this have any effect on our Economy if other multinationals follow. Is there a danger they could pull out of Ireland?

Charles Babbage

All multinationals are doing this, since the "loophole" ends in 2020. Google are actually quite slow to act.
The US government acted to have a more rational taxation system, they should have been taxing most of this money all along.
This loophole was an embarrassment for Ireland and note that corporation tax receipts have actually gone up in recent years as companies elect to have at least part of the money passing through this mechanism taxed in Ireland.

Larbre34

It's still very beneficial for them to be here. And don't worry about Brexit, Britain can't afford to lower its general corporate taxation rates low enough to compete with us, it would hit the exchequer income from their extensive indigenous sectors too hard.

seamus

As said above, the tax bonusses of locating in Ireland were really just a cherry on top for these larger multinationals.

Some companies were here just for tax reasons - I worked for a company once that said it wouldn't be here if it weren't for the tax loopholes. It collapsed not long after.

But Google has over 7,000 people in Ireland, Apple 6,000, Amazon 3,500. Our tax rates in general are still a good draw, but our position as an English-speaking country in the EU is a massive one. And becomes more and more important as the UK moves to leave.

So they're not going anywhere for now. We need to sort out our property crisis though as a matter of urgency.

listermint

seamus wrote: »

As said above, the tax bonusses of locating in Ireland were really just a cherry on top for these larger multinationals.

Some companies were here just for tax reasons - I worked for a company once that said it wouldn't be here if it weren't for the tax loopholes. It collapsed not long after.

But Google has over 7,000 people in Ireland, Apple 6,000, Amazon 3,500. Our tax rates in general are still a good draw, but our position as an English-speaking country in the EU is a massive one. And becomes more and more important as the UK moves to leave.

So they're not going anywhere for now. We need to sort out our property crisis though as a matter of urgency.

Its near the top of the pile if not the top that would stumble and hamper our growth. Rents being too mad for companies to relocate here.

We have an odd predicament of having ample office space but no where to house employees

beggars_bush

listermint wrote: »

Its near the top of the pile if not the top that would stumble and hamper our growth. Rents being too mad for companies to relocate here.

We have an odd predicament of having ample office space but no where to house employees

Where is all this office space?

listermint

beggars_bush wrote: »

Where is all this office space?

Up and down the Quays, Across the city, West Dublin, South Dublin, Sandyford.

Office space a plenty.


Have you been around Dublin recently ? For Lease signs everywhere.

Kermit.de.frog

What's the vacancy rate for office space at the moment?

listermint

Kermit.de.frog wrote: »

What's the vacancy rate for office space at the moment?

No idea where would you get up to date figures that a real ?

You'd walk past a huge amount of post 2000 Stock of Office space completely vacant across the city. Alot of bigger players are in centralising and consolidation mode currently. building boutique solutions for their wide spread staff. This in itself is leaving large units vacant.

blanch152

listermint wrote: »

No idea where would you get up to date figures that a real ?

You'd walk past a huge amount of post 2000 Stock of Office space completely vacant across the city. Alot of bigger players are in centralising and consolidation mode currently. building boutique solutions for their wide spread staff. This in itself is leaving large units vacant.

https://www.rte.ie/news/business/2019/0822/1070266-commercial-vacancy-rate-up-marginally-in-q2/

Can't find anything since last August, this appears to be the most recent.

Kermit.de.frog

listermint wrote: »

No idea where would you get up to date figures that a real ?

You'd walk past a huge amount of post 2000 Stock of Office space completely vacant across the city. Alot of bigger players are in centralising and consolidation mode currently. building boutique solutions for their wide spread staff. This in itself is leaving large units vacant.

Empty office space may not be the right office space.

Different to saying there is over supply. There is under supply if existing stock is not even considered anymore because it's out dated.

What is being constructed and leased/bought is the right space for the market.

lastusername

Why don't the government try to buy up some of this empty office space and convert it into houses or apartments, provided the supporting infrastructure is there?

Out in Citywest for example, there is one gigantic building just sitting there empty for the past 3+ years. I'm sure it's not a runner in many or most cases but I wonder is it something they could explore.

riclad

tech companys need offices in the eu,
they have to comply with gdpr, we speak english.
With brexit happening it makes ireland even more attractive .
ireland has laws favorable to tech companys, its not just the low tax.s .
The irs american tax administration , is sueing facebook for billions saying they are avoiding paying tax by saying profits are made by facebook ireland.
Certain area,s are zoned for office,s or business , it might be difficult to take over an old office and zone it for residential to allow people
to live there .
Its going to be hard to attract new companys to dublin in the future since we are in a housing crisis ,rents are high, theres a shortage of high quality rental units .

greenfield21

riclad wrote: »

tech companys need offices in the eu,
they have to comply with gdpr, we speak english.
With brexit happening it makes ireland even more attractive .
ireland has laws favorable to tech companys, its not just the low tax.s .
The irs american tax administration , is sueing facebook for billions saying they are avoiding paying tax by saying profits are made by facebook ireland.
Certain area,s are zoned for office,s or business , it might be difficult to take over an old office and zone it for residential to allow people
to live there .
Its going to be hard to attract new companys to dublin in the future since we are in a housing crisis ,rents are high, theres a shortage of high quality rental units .

Facebook has saved billions in tax by locating to ireland. Anybody who think these tech and pharma companies are here for any reason other than tax are deluded. I'm not against it either.

fiveleavesleft

beggars_bush wrote: »

Where is all this office space?

Conor McCabe did a wee tour of them a few years ago. There are probably lots more now. Starts around 15 mins.

Peregrinus

lastusername wrote: »

Why don't the government try to buy up some of this empty office space and convert it into houses or apartments, provided the supporting infrastructure is there?

Out in Citywest for example, there is one gigantic building just sitting there empty for the past 3+ years. I'm sure it's not a runner in many or most cases but I wonder is it something they could explore.

1. Because the government has largely set its face against the direct construction/provision of housing by the state on any scale. That might change.

2. If it does change, it's very unlikely that buying up under-utilised office space and converting (or, more likely, demolishing and rebuilding) it is going to the most appropriate or effective way of using public funds to provide public housing.

v638sg7k1a92bx

Charles Babbage wrote: »

All multinationals are doing this, since the "loophole" ends in 2020. Google are actually quite slow to act.
The US government acted to have a more rational taxation system, they should have been taxing most of this money all along.
This loophole was an embarrassment for Ireland and note that corporation tax receipts have actually gone up in recent years as companies elect to have at least part of the money passing through this mechanism taxed in Ireland.

I wasn’t embarrassed

dubrov

greenfield21 wrote:

Facebook has saved billions in tax by locating to ireland. Anybody who think these tech and pharma companies are here for any reason other than tax are deluded. I'm not against it either.

Exactly. The workforce is completely mobile and they could move anywhere in Europe and pretty much the same people would work there.

A lot of the work Google do here is localisation and sales. The fact English is the main language here is irrelevant for these roles.

seamus

lastusername wrote: »

Why don't the government try to buy up some of this empty office space and convert it into houses or apartments, provided the supporting infrastructure is there?

The short answer is that offices and houses are built to different standards of safety, energy, noise insulation, height, etc.

In order to convert a standard office space to accommodation that complies with the planning regs, it would probably be cheaper as Peregrinus says, to knock and rebuild. Whatever about the little offices above a row of shops, a commercial office block doesn't lend itself well to permanent housing.

v638sg7k1a92bx

dubrov wrote: »

Exactly. The workforce is completely mobile and they could move anywhere in Europe and pretty much the same people would work there.

A lot of the work Google do here is localisation and sales. The fact English is the main language here is irrelevant for these roles.

So a race to the bottom on wages as opposed to tax? How is one more acceptable than the other?

Last Stop

seamus wrote: »

As said above, the tax bonusses of locating in Ireland were really just a cherry on top for these larger multinationals.

Some companies were here just for tax reasons - I worked for a company once that said it wouldn't be here if it weren't for the tax loopholes. It collapsed not long after.

But Google has over 7,000 people in Ireland, Apple 6,000, Amazon 3,500. Our tax rates in general are still a good draw, but our position as an English-speaking country in the EU is a massive one. And becomes more and more important as the UK moves to leave.

So they're not going anywhere for now. We need to sort out our property crisis though as a matter of urgency.

To be fair, part of the reason they have such high numbers of employees here is because of the Double Irish. The agreements with these companies includes that they show that a certain amount of work is being done in Ireland. Even with these high numbers of employees it’s still a massive saving overall.
When you consider that when they could right off 100% of intellectual property (now being reduced to 80%), even if each employee cost them €150k, Apple would only have to pay €900m on profits work multiples of that. This equates to a very small percentage in real terms so is definitely worth it

v638sg7k1a92bx

Last Stop wrote: »

To be fair, part of the reason they have such high numbers of employees here is because of the Double Irish. The agreements with these companies includes that they show that a certain amount of work is being done in Ireland. Even with these high numbers of employees it’s still a massive saving overall.
When you consider that when they could right off 100% of intellectual property (now being reduced to 80%), even if each employee cost them €150k, Apple would only have to pay €900m on profits work multiples of that. This equates to a very small percentage in real terms so is definitely worth it

Chicken or the egg, fish or the whale. What difference does it make?

listermint

greenfield21 wrote: »

Facebook has saved billions in tax by locating to ireland. Anybody who think these tech and pharma companies are here for any reason other than tax are deluded. I'm not against it either.

Anyone who thinks it's solely based on the tax system solely.

Is equally deluded and knows nothing of business or setting up in business friendly location's.

dubrov

listermint wrote: »

Anyone who thinks it's solely based on the tax system solely.

Is equally deluded and knows nothing of business or setting up in business friendly location's.

That's not really an argument.

Facebook/Google are highly profitable companies with relatively low labour costs.
It is hardly surprising they seek to minimise their tax base even at the cost of higher salaries

Last Stop

Angie Tall Back wrote: »

Chicken or the egg, fish or the whale. What difference does it make?

A huge difference when a slight change to tax laws could see tens of thousands of high paid jobs up sticks and move elsewhere.

v638sg7k1a92bx

Last Stop wrote: »

A huge difference when a slight change to tax laws could see tens of thousands of high paid jobs up sticks and move elsewhere.

Exactly, so what difference does it make. They’re here now they have invested significantly in this economy. Important thing is we stay competitive so they stay rather than people bitching about the CT base.
This beggar thy neighbour argument is such nonsense.

listermint

dubrov wrote: »

That's not really an argument.

Facebook/Google are highly profitable companies with relatively low labour costs.
It is hardly surprising they seek to minimise their tax base even at the cost of higher salaries

Where did I say they didn't ?

Or is that your argument putting words in my mouth

Peregrinus

The tax arrangements are good for attracting investment, but not so good for keeping it. Even apart from the possibility that, e.g., US tax laws might change so that the Irish tax arrangements cease to be effective to minimise US tax, there are other risks - the most obvious being competition from other countries that offer low tax rates/flexible tax arrangements. Internationally mobile companies are, well, internationally mobile, so if your strategy depends solely on something which is highly vulnerable to political developments in other countries that you cannot control, it's not a great strategy.

Which is why tax has always been part of a broader strategy for attracting and retaining inward investment. Other attractions that Ireland offerst that are not so vulnerable to political risks in other countries and which are not so easily replicated by other countries include being English-speaking, having EU membership, having a highly-educated workforce, having a highly productive workforce (these last two are linked, obviously).

greenfield21

Good article on it here what next though can't see why link is dead

https://twitter.com/Brad_Setser/status/1233039827735588864

greenfield21

Another good article from the currency on mnc's tax games.

https://www.thecurrency.news/articles/11281/e100-billion-and-counting-how-us-tax-reform-pushes-silicon-valley-to-move-more-ip-to-ireland

murphaph

dubrov wrote: »

Exactly. The workforce is completely mobile and they could move anywhere in Europe and pretty much the same people would work there.

A lot of the work Google do here is localisation and sales. The fact English is the main language here is irrelevant for these roles.

It's actually not totally irrelevant because those roles require multilingual talents, usually native speakers. So, if I want to concentrate my sales team, full of native speakers of foreign languages, I need to be able to attract them to my location. English is by far the most widely spoken second language. If I set up shop in a country where my staff cannot interact with the local bureaucracy, I may struggle to find people willing to work for me.

You can probably squeeze by in a limited subset of EU countries like the Netherlands but in France or Bulgaria or Greece I suspect you can forget about getting the local ISP to communicate with you in English! Even here in Germany they might find someone who will speak to you in English but nothing in writing. It will all be in German.

There are other countries in the EU with lower corporation taxes than us but they are not poaching jobs from us.

Similarly Ireland has a strong legal system, built on English common law. That is hugely attractive to US companies especially, where the same legal foundation exists (almost everywhere).

The tax situation helps but it isn't the only thing. We are physically closer to the US. I often wonder should we move time zone by 1 hour to give us an extra hour's overlap with the US and Canada. I suspect if there was no land border with the UK we would have already done that. Losing one hour overlap with the UK and EU should be worth it IMO.

Rosahane

murphaph wrote: »

It's actually not totally irrelevant because those roles require multilingual talents, usually native speakers. So, if I want to concentrate my sales team, full of native speakers of foreign languages, I need to be able to attract them to my location. English is by far the most widely spoken second language. If I set up shop in a country where my staff cannot interact with the local bureaucracy, I may struggle to find people willing to work for me.

You can probably squeeze by in a limited subset of EU countries like the Netherlands but in France or Bulgaria or Greece I suspect you can forget about getting the local ISP to communicate with you in English! Even here in Germany they might find someone who will speak to you in English but nothing in writing. It will all be in German.

There are other countries in the EU with lower corporation taxes than us but they are not poaching jobs from us.

Similarly Ireland has a strong legal system, built on English common law. That is hugely attractive to US companies especially, where the same legal foundation exists (almost everywhere).

The tax situation helps but it isn't the only thing. We are physically closer to the US. I often wonder should we move time zone by 1 hour to give us an extra hour's overlap with the US and Canada. I suspect if there was no land border with the UK we would have already done that. Losing one hour overlap with the UK and EU should be worth it IMO.

School costs, language and standards are also a big factor for US corporates that want to get their senior managers and engineers to relocate with their families.

dubrov

Rosahane wrote:

School costs, language and standards are also a big factor for US corporates that want to get their senior managers and engineers to relocate with their families.

You could argue all those things were present in the eighties.

For languages skills, it would be cheaper to setup Italian localisation and sales teams in Italy. They are only here as part of the whole corporation tax agreement with the Irish government.

Multinationals only moved here in a significant way once Ireland demonstrated a good track record of low effective corporation tax. Note, headline rate is irrelevant.

Even now, the multinationals that move here are all in low labour intensive and high profit industries