
Google now pays more money in EU fines than it pays in taxes - chatmasta
https://www.computing.co.uk/ctg/news/3070492/google-now-pays-more-money-in-eu-fines-than-it-pays-in-taxes
======
snidane
It clearly shows how the tax system based on taking a cut from profits is
totally leaky and should be abandoned. It only results in endless cat and
mouse game of tax consultants (the big 4) finding loopholes in such tax
systems against governments trying to plug the holes, just with much smaller
budget and efficiency than the tax-evasion consulting armies.

There are other models of tax systems. Some are even not production and
consumption based (you want to maximize production and consumption for growth,
not stifle it with taxes). For example land taxation proposed by single-tax
movement or monopoly based taxation in general. Ie. for providing a company
the privilege to be a monopoly on a market, it needs to pay a fee to those
guaranteeing such privileges, which is the state.

For example big pharma lobbied for its monopoly and now it is super hard for
competitors to enter the market. Let these companies pay a monopoly tax for
such privileges.

Other example. Somebody appropriates for himself a valuable piece of land with
oil deposits. He prevents others from utilizing that land. Let him pay for
having that exclusive rights of use, since clearly the government is providing
private property related services (police, courts and army to guarantee his
property) for him that others (non-owners) are not getting.

~~~
abraae
You start out strongly, but then this:

> Somebody appropriates for himself a valuable piece of land with oil
> deposits. He prevents others from utilizing that land. Let him pay for
> having that exclusive rights of use, since clearly the government is
> providing private property related services (police, courts and army to
> guarantee his property) for him that others (non-owners) are not getting.

If by "appropriates for himself" you actually mean "buy", then your position
basically boils down to an "all property is theft" manifesto.

~~~
diffeomorphism
Note that when you "buy" land this is quite limited. For instance anything
that happens sufficiently below it (e.g. subway tunnels, mining) or above it
(airplanes), you have no say in it.

Similarly a state could say, you license (not buy) land for
construction/agriculture etc. use. This license does not include extracting
oil, which requires a separate license. The land remains property of the
state, but for specific uses (e.g. housing) you have a guarantee that you can
keep the license for 100 years and/or can renew it under similar conditions.
This is for example what China does:
[https://en.wikipedia.org/wiki/Chinese_property_law](https://en.wikipedia.org/wiki/Chinese_property_law)

~~~
tobylane
Is that reducing the personhood of companies? (I consider that a good goal.)
Saying that you must be a company to drill oil, and companies can only buy
leasehold, not freehold.

------
kodablah
At the end of the day, Google probably doesn't differentiate the two very much
as they're both costs of doing business. I would expect Google to work in its
interest to reduce these impositions (taxes, laws+fines, etc) where they can,
but we shouldn't pretend the punitive value of fines is more than a cost
calculation to them.

We also shouldn't pretend that the EU justification for fines is purely about
citizen protection, they see this as a "tax" as well (though that is of course
not their primary motivation). Otherwise, they would work harder on non-
punitive approaches towards combating the ills of Google and the like. One
would hope education and encouragement of alternatives and other positive-
leaning approaches might be prioritized over a gavel.

~~~
jplayer01
Works for me. If Google is happy to avoid taxes however they can, we should be
extracting as much out of them as we can in other ways, such as fines. Not
sure why we should be content with them not giving a shit about anything but
themselves. Companies like Google only act out of pure greed. They don't
respond to "positive reinforcement" and "education". They know perfectly well
how to pay more in taxes, it's the default - they go out of their way to avoid
it. They pay millions, tens of millions to lawyers to make sure they do
exploit whatever loopholes there are. They aren't passive, innocent actors
here.

~~~
arctux
No. Fines exist to dissuade illegal behavior. The loopholes that Google (and
Apple, and many other multinationals) should be abolished, and any tax evasion
should be prosecuted. Antitrust fines do not exist to punish tax avoidance.
They exist to penalize companies who use their size to prevent competition and
distort markets.

I have many issues with Google's business practices, but punishing them is not
worth throwing out the rule of law.

~~~
jplayer01
> Fines exist to dissuade illegal behavior

This is just your preferred interpretation. Fines also exist to reduce or
disincentivize unwanted behavior.

~~~
YayamiOmate
How is that different? The behaviour is made illegal, precisely because it's
unwanted... that's pretty much the definition. I don't think there is another
source of law in healthy cases/systems.

~~~
jplayer01
Not all unwanted behaviors are illegal. Some countries tax soda in order to
reduce soda consumption. A behavior is not unwanted iff it's illegal. A
behavior is illegal iff it's unwanted. It's not necessary for a behavior to be
illegal in order to be unwanted. Illegal behavior is just a subset of the
other.

But aside from that, and in this case, I feel the barriers to making it
illegal are far higher than fining companies in other ways.

------
sidibe
The EU allows a couple of its countries to act as tax havens. Ireland and the
Netherlands are probably pretty pleased that EU citizens seem to direct all
their outrage at the companies that do the obvious thing instead of at their
tax laws.

~~~
rb808
You should check out the tax havens in the US before complaining about EU.
Wyoming, Nevada etc [https://www.bloomberg.com/news/articles/2016-01-27/the-
world...](https://www.bloomberg.com/news/articles/2016-01-27/the-world-s-
favorite-new-tax-haven-is-the-united-states)

~~~
sidibe
I'm not complaining about the EU or comparing with US, I'm just pointing out
that if the rage many EU citizens feel about the taxes of large corporations
should be addressed by the EU somehow instead of hoping companies start paying
some moral amount of taxes.

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eberkund
They need to make these fines "per user". It shouldn't be the case that for a
company sufficiently large that a few billion in fines is simply another cost
of doing business.

~~~
pzone
I believe the number of users affected is one of the factors considered at the
time the fines are levied. The EU seems to be happy to substitute fines for
taxes, so companies treating them the same way isn't too surprising. Structure
your activities to avoid {fines, taxes} as much as possible, but at some level
they are unavoidable.

~~~
simion314
>The EU seems to be happy to substitute fines for taxes,

When I think at EU fines I think At MS, Intel and Google, in all this cases
this companies abused the markets. Can you provide a citation of a company
getting a big fine but that did everything legally?

------
ocdtrekkie
This is hardly surprising given Google's tendency to evade taxes and exploit
loopholes in taxation of international corporations.

~~~
hcnews
So if Google paid more taxes than necessary (legal loopholes), there would be
no fines (for bad privacy etc.)? That sounds wrong.

I don't support the legal tax loopholes but don't think there should be much
relation between legal taxes and fines for bad practices (unless ofcourse the
bad practice is illegal tax evasion).

~~~
ocdtrekkie
I was merely suggesting the "more fines than taxes" bar in this article was
artificially low because of their artificially low tax rate.

Note that I am fully in support of the EU's fines for both Google's antitrust
violations and their privacy abuses, and agree that they should have no
bearing on taxation.

~~~
hcnews
This version of statement I can agree with (since its just facts). The
original statement didn't read anything close to this imho :-)

------
qqn
"Create an account" wall to read more than the headline, nice. Shimmying
around this led me to
[https://www.reddit.com/r/technology/comments/ansfle/google_n...](https://www.reddit.com/r/technology/comments/ansfle/google_now_pays_more_money_in_eu_fines_than_it),
where the commenting just made my day:

\- "So I get what the EU is trying to do with these regulations, but this
basically just means Google is paying to break the law at this point."

\- "Any law punishable only by fine is legal for the rich."

\- "At least it can deduct the fines off its taxable income."

------
YetAnotherNick
I really wonder what will happen if Google/Facebook becomes unprofitable in EU
due to regulations? It's clear that these companies work on user data and will
not gain enough data/users/money if it is paid, specially social networking
sites. Will they block it like China for exactly the opposite reason?

~~~
greycol
The interesting part about this is both google and facebook rely on network
effects to ensure that they offer better services than competitors.

Even running at a loss may be worth them continuing to run in the EU to stop
the rise of competitors and to keep the better service that having more users
grants them.

------
ciupicri
> The owner of this website (www.computing.co.uk) has banned the country or
> region your IP address is in (RO) from accessing this website.

------
visarga
For a second I thought they revived "Google Now".

------
crushcrashcrush
This will continue until we fix taxes globally.

------
c8g
Another source of income :)

------
autokad
the EU uses fines as a way of levying tariffs without explicitly being called
out for it.

~~~
iagooar
The EU has some rules that companies need to follow, same as any other
democratic country does. Like it or not, EU regulation usually does a good job
at protecting consumers from untamed companies, as happens in other places.

------
writepub
Completely disingenuous representation. ALL of EU has Value Added Taxation,
that takes money from every transaction to/from corps. For instance, buying
ads on Google would automatically incur these taxes.

What EU really wants is double/triple taxation where:

1\. They tax your transactions as VAT

2\. Income post these taxes are counted as revenues, and costs (excluding VAT)
are deducted to calculate profits.

3\. Profits from #2 are further subject to corp. income taxes.

This article would be half genuine if they listed the VAT dollar amounts
Google has raised for the EU

~~~
shaki-dora
First of all, VAT is collected by the vendor. But the entity actually taxed is
the customer. That's why VAT is an explicit line item on any bill.

Second, almost all customers of Google Ads are businesses, with the resultant
right get refunds for any VAT paid.

Third, because of [second], most customers likely take a shortcut: if you add
your VAT registration number to your account, Google does not even charge VAT.

~~~
writepub
> First of all, VAT is collected by the vendor

VAT is collected by the government. Just because VAT appears as a line item on
a bill, doesn't mean the vendor gets to book that as revenues.

> Second, almost all customers of Google Ads are businesses, with the
> resultant right get refunds for any VAT paid.

You mean, the business itself might charge a VAT from it's customer, and
deduct the VAT it pays to vendors as "cost" during taxation. There are NO
REFUNDS of VAT from the government!!

> if you add your VAT registration number to your account, Google does not
> even charge VAT.

Doesn't mean the transaction has 0% VAT fee, the EU/government GETS it's VAT
on valid transactions, one way or another. If you somehow avoid VAT reaching
the government, you're violating the law! AND, Google is NOT the beneficiary
of VAT, regulation typically requires a seller to charge VAT and pass it on to
the government.

Let's talk VAT numbers the EU gets from Google (as both a seller, buyer), and
income taxes paid by GOOG employees before demonizing them

~~~
notahacker
VAT isn't refunded, but since Google's clients are typically directly
deducting the VAT paid from their corporation tax bill and not many people buy
ads for personal use, the _net_ benefit of VAT paid on Google Ads to
governments is pretty minimal.

The case for income taxes paid by Google employees is better, but then most of
them would also be paying high income tax if working for businesses that
didn't use elaborate schemes to repatriate their profits.

~~~
writepub
Unless actual numbers are cited, discounting government's VAT income from
Google's operations is not useful. We need a number to understand whether or
not Google's contribution to the coffers are actually lesser than the fines it
pays.

~~~
notahacker
Unless actual numbers are cited, it is not useful to credit Google with paying
taxes which (i) are actually paid by Google's customers if at all and (ii) are
generally directly deducted from those customers' own tax obligations and thus
generally net to zero.

~~~
writepub
What in my statement implies Google directly pays VAT taxes. I make it amply
clear that "discounting government's VAT income from Google's operations",
i.e. owing to the actual operations that result in transactions with Google,
under EU law, subject to EU VAT, regardless of who pays it!

On (ii), ANY and all costs incurred in operating a company, including paying
VAT, can be deducted from revenues while calculating profit. That in NO WAY
takes away from the actual VAT being paid to the government!!! HOW exactly
does that "generally net to zero."? It certainly reduces profits, but unlike
other "costs" that reduce profit calculation, VAT cannot be viewed as tax
avoidance, if anything, the resultant profits post VAT are still subject to
corp income tax, constituting double taxation. No CPA will advise a company to
pay more VAT as a tax avoidance strategy, so I'm still trying to understand
why booking VAT payments under "costs" net to 0, and for whom?

The entire premise of VAT is to guarantee a certain income for the government,
as a % on EVERY transaction that happens in the economy. Hence, the mere
existence and operations of Google in the EU resulting in transactions, is a
source of VAT income for the government. Google can always move ALL
incorporation out of the EU, and buyers can make "American" transactions to an
American company that completely circumvent EU VAT. By choosing to have an EU
entity subject to EU VAT, Google is contributing to EU coffers.

Unless there is an agenda to malign Google, ignoring government income from
Google's operations seem convenient, and click-bait-ey.

~~~
notahacker
Your claim that it is "completely disingenuous" and click-bait-ey to note
Google avoids so much corporation tax on its European operations it actually
pays more in fines rests on a completely disingenuous claim that VAT on
Adwords should be counted as "dollar amounts Google has raised for the EU",
despite them generally resulting in zero net change to company tax bills as
they're fully tax-deductible for VAT-registered businesses.

It's a bit rich to accuse others of having an agenda to malign an organization
when you started off with claims about what the EU wanted based entirely on
your own ignorance of how VAT on business expenses actually works. (It's
actually a rare example of a tax designed to avoid "double taxation")

~~~
writepub
Ah! If VAT is not a tax, and Google's operations inside the EU doesn't
contribute to EU coffers, you must be all for moving Google's EU subsidiaries
offshore, and saving whatever VAT Google's customers pay?

Google recorder $40B in EU revenues in 2017. About 20%, or $8B was the VAT
related revenues that EU received. Let's move all that away from the EU, since
it's all one big non-tax.

Also, let's abolish VAT, as my "ignorance of how VAT on business expenses
actually works" is being exploited by big-evil Google for tax avoidance.
Everyone knows that paying VAT is the #1 way to reduce tax liabilities,
translated, "let's all pay taxes on transactions, as a way to avoid taxes on
income! Hurrahs all around for the genius CPAs".

VAT is an evil tax on revenues (transactions), that sellers conveniently pass
on to the buyer. Whether you agree or not, every seller is also a buyer, and
VAT merely increases the cost of doing business, while also effectively acting
as a double-taxation ploy, as profits are subject to income taxes. Who ends up
footing the VAT bill is immaterial, as VAT goes under "costs" that were
previously $0, unless you're a company that buys nothing to sell something.
And whether it's booked as "costs" or not, it's a tax that the government
receives on transactions under it's jurisdiction. Buying ads from a US company
as a US transaction doesn't incur a VAT cost on an EU company, hence, Google's
EU presence is a net positive for EU coffers!

~~~
notahacker
I suspect that Google ceasing to do business in the EU would be considerably
more harmful to Google's revenues than to the EU (actually that whole argument
works better the other way round. If Google is truly struggling to make any
profit at all on all that investment they make in the UK, why don't they just
leave?)

Please do yourself a favour and educate yourself on what VAT _is_ before you
Dunning-Krugersplain what the EU wants from it, how much you think it is worth
to the economy and what you think an accountant would recommend a business
does (I can recommend a good search engine as a starting point!). The entire
point of VAT that it's a tax _on the consumer_ of the final product only, and
that businesses get to deduct all the VAT levied on intermediate goods they've
purchased to make and market the final product. That's literally the most
basic, definitional aspect of VAT that sets it apart from traditional sales
taxes. Since Google Ads are bought almost exclusively by businesses, EU member
states (the EU doesn't actually levy VAT itself) receive a net tax benefit
from VAT paid on Google Ads only on ads bought for personal enjoyment or by
VAT exempt organizations, which must be a tiny proportion of their sales. Now
there's an argument that Google's customers' customers would buy fewer taxed
goods and services if they didn't see the ads, but that's a very different
argument and certainly not something you could object to journalists not
counting as "government income from Google's operations"

