Europe fires warning shot against U.S. tech companies with new tax ruling
venturebeat.com
venturebeat.com
http://www.irishtimes.com/business/vestager-denies-delay-in-...
I have no sympathy for big multinationals which make a bucket load of money but still shopping around the world to get even less taxes.
It is really just a variation of big multinationals going to corrupt 3rd world countries and getting an unreasonable sweet deal from a dictator. When the dictator is thrown out and a democratic government gets in charge, the multinationals cry that their previous deal is renegaded.
The point is that any multinational has to take into consideration what it is reasonable to expect. If a deal is too sweet to be expected to last you don't get into it and start crying about it being revoked later.
What the fuck? Why doesn't Belgium pay for its violation itself? Why someone who was adhering to the law would need to pay because the law was found to be wrong?
I must have misunderstood this somehow, because this is just too idiotic otherwise.
You did misunderstood. Belgium incorrectly offered tax aid to companies and now it's required to rectify it, hence said companies must pay what is legally required.
OK, that's reasonable.
> hence said companies must pay what is legally required.
And here I get a huge WTF. If someone gave me money that he couldn't give me (for example, he stole it), I'm not required to give it back — he is.
Why isn't Belgium held responsible for it's actions?
What's happening here is that the person never had the legal right to give you that money. So you're in factual possession of money that you don't - can't - legally own.
This is not a fine, it is a tax correction. These happen all the time, especially with complex tax structures that multinational businesses use.
OK, this explanation finally makes sense to me. Thanks.
Actually, this is not how the world works. If you buy stolen goods, you're liable, and they can be taken away from you (in Italy, you can actually get fined for buying stolen goods!)
I think you can be fined for _knowingly_ buying stolen goods everywhere.
But what about stolen money? That could've gone away in series of thousands of transactions with thousands of counter-agents since it was stolen?
If someone gave me money that he couldn't give me (for example, he stole it), I'm not required to give it back — he is.
Another example is banks- sometimes it comes up that banks accidentally credit people's accounts with huge sums in error. This money does not belong to those people, and if they withdraw it, the banks can take legal action to get it back.
(it doesn't quite map across directly, because EU federalism is less central than US federalism; in particular the EU has no direct tax powers, and we haven't had the Federalism civil war yet)
It has to be like that or laundering stolen money/goods becomes trivially easy - just give it to a third party and later on they give it back to you or to an entity that would benefit you.
I think we must clarify things and what "it" is
(1) Giving tax break is what Belgium wanted to do. Belgium offered aid, companies took it.
(2) The fact that said tax breaks (or aid) were illegal is the violation of the law that someone is supposed to pay for.
Belgium paid for (1), of course, that was it's intention. But it does _not_ pay for (2): it actually gets it's money back because of (2), if I understand correctly. Or this money goes back directly to EU, this is not important; anyway, Belgium is not losing money because of (2), companies are.
So, companies are paying for performing action that was completely legal in the law of the country they were operating in. Companies are paying for Belgium lawmaker's mistake.
If a region (say a state or a county in a state or a town in a county in a state) helps a company out and that turns out to be wrong, passing legislation it wasn't allowed to, why would you expect the company to also get off the hook? That would seem to provide an even greater incentive to perform corruption because once it's done, as the company you're immune from the consequences.
Especially big multi-nationals with lots of lawyers who knew the possibility that this exact thing would happen. They went in to this deal knowing full well the EU might turn around and say the deal violated the company aid treaties.
Get of the hook — for what?
You automatically assume corruption, I can see why. But still, (1) getting tax breaks or government help and (2) using illegal methods to get said tax breaks and government help are two different things. If you want to punish someone for getting government help, then you're using correlation of 1 and 2, but correlation does not always imply causation. And more importantly, in case of law people generally try to determine that someone _certainly_ did something wrong instead of relying on the notion that he did it with high probability.
So, if you can prove that the company engineered it through illegal means — feel free to do that. But don't forget that there are quite a lot of completely legal and ethically clean methods in lobbying. Quite often, all that company has to do to influence policy is to meet with the official and present their reasonable point of view on the issue, without any gifts, bribes or campaign contributions.
Not even the law is above the law.
But the violation of international law was performed by Belgium, not the companies receiving aid. It was mistake by Belgium lawmakers. Why do companies have to pay for it?
My layman impression is that you have to pay damages of equal value.
> to restore fair competition, Belgium now has to recover the full unpaid tax from the at least 35 multinational companies that have benefitted
I fully agree that this should not happen. If you can't rely on the law of those nominally sovereign European countries to actually apply, that's very damaging indeed. Not being able to rely on the law as written is one marker of a failed state.
> Under such [four year, renewable] tax rulings, the actual recorded profit of a multinational is compared with the hypothetical average profit a stand-alone company in a comparable situation would have made. The alleged difference in profit is deemed to be "excess profit" by the Belgian tax authorities, and the multinational's tax base is reduced proportionately. This is based on a premise that multinational companies make "excess profit" as a result of being part of a multinational group, e.g. due to synergies, economies of scale, reputation, client and supplier networks, access to new markets. In practice, the actual recorded profit of companies concerned was usually reduced by more than 50% and in some cases up to 90%.
It is quite telling that the Belgian government in this case is actually going to appeal the Commission decision - although the Commission decision would lead to Belgium being granted 800 million Euros!
While I would deplore having to hand over more government money to these multinationals (especially since I am a small business owner in Belgium myself), I still believe that the rule of law is more important. These deals shouldn't have existed in the first place, but I think the erosion of trust if they are retracted without compensation is also a grave cost...
But it's just my estimation, I could easily be wrong though. And I'm happy with any outcome, because all lead to lots of billable hours :)
Vasque Country government aids were deemed ilegal and they didn't had to pay companies damages for the tax breaks
China has a policy of allowing external players into its playground only in partnership with a local company over which the government has absolute power and control. That is a bitter pill to swallow, but some choose to take it any way! China can arbitrarily change its rules (which are bad enough as they are) at any time (usually into something worse), I'll give you that. But it doesn't make it feel better with going through the current Belgian/EU debacle!
https://en.wikipedia.org/wiki/Jean-Claude_Juncker#Controvers...