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Comment by Iv | Hacker News Reader

Several EU countries (France and UK) have, IIRC, made very clear that fictive debt or fictive licensing fees are fraud an would be judged as such.

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The UK shouldn’t really raise its voice here, easily half the tax havens are UK dependencies: Cayman Isles, Virgin Isles, Jersey, Guernsey, Isle of Man, Gibraltar. It is inconceivable to me that the UK lacks influence to stem these activities, so the only conclusion is that it willingly accepts status quo.

There is a reason that London was the financial headquarters of the EU while it lasted. They are going to try to do what they can to attract EU capital now that the last of these rules no longer apply to them, and will be the de-facto tax haven for the rest of the world except for the five-eyes.

Well, the UK is well suited to finance in many ways, most of the legit. The way courts work for example. Maybe a bit like France and Italy have a natural talent for couture, say.

But the shady stuff is sure there, and shady. UK high end property market seems to be a Monopoly-esque money laundering machine, with the extra inconvenience of having physical real estate attached to it.

Maybe one good replacement market for NFTs.

> The way courts work for example.

What do you mean?

IANAL but I understand UK courts have a reputation for being quick, pragmatic, fair and unbureaucratic. Finance often turns on 'legal innovation', or introducing entirely new financial constructs, and where on the Continent a more prescriptive legal system is in place, UK law is more interpretation-based.

Possibly not a concern with many EU countries, but with some for sure: the legal system is also stable, doesn't change on the whims of the politicians, and appears to be genuinely un-politicised.

Since Finance heavily relies on parties promising huge contingent payments to each other, having a trustworthy and reliable arbiter is key. If I enter into an agreement where I pay upfront, and I'm guaranteed insurance-type payments for 20 years into the future, the legal apparatus is the backstop to my claims.

The City of London itself is a tax haven.

[0] https://platform-production.s3.amazonaws.com/therules-134-Ci...

This is debatable... The City of London is not really a tax haven as it has the same tax rate as the rest of the UK.

As the document whispers, what the City of London is, is a massive financial hub, that accommodates the offices and sales arms of many tax planning companies which sell professional services in London that would design structures to tunnel profits to various Crown Dependencies.

But you would find such services in any supercity. London is simply sitting at the crossroads of multiple hubs so it facilitates a lot of what's despised — but in itself, there's no haven in town!

Ireland: chuckles "I'm in danger"

This is literally their entire economy lmao.

It literally isn't.

> In 2016–17, foreign firms paid 80% of Irish corporate tax, employed 25% of the Irish labour force (paid 50% of Irish salary tax), and created 57% of Irish OECD non-farm value-add. As of 2017, 25 of the top 50 Irish firms were U.S.–controlled businesses, representing 70% of the revenue of the top 50 Irish firms. (Wikipedia)

Are you sure about that?

If the EU enforces what they preach and Ireland loses its tax haven state they could lose a huge chunk of their GDP.

Pretty sure Ikea does it this way, and numerous others for sure.

Once a company becomes big enough it turns into 'yet another big one' that inherits the branding and the original activities but simply starts doing whatever else is doing to min-max everything beyond human ethics.

It's like having a very small company with only a few people. There won't be any HR because that kind of overhead isn't something you can afford or make use of. So you work 'for the boss' and if you need something your boss is also the person who makes the decisions. But when the company gets bigger, you now get HR between you and the boss, and suddenly you are insulated. You work for the company, and are beholden to HR. Every step after that is just more insulation, more min-maxing and just making things worse for the sake of scale. Usually.

HR does not get between you and the boss, but middle-management (hence the name) does. HR gets between the company and you if there is a chance of you damaging the company, other than that it is mostly (regulatory) window dressing and to save some cost on recruiting and onboarding.

Movies too. The studio charges the movie, so the studio is positive while the movie is in debt. Actors get a lumpsum and a percentage on the movie benefits.

In this case, it’s not shell companies, the studios actually have in-house expertise (=shooting most of the movie) while the movie mostly drives the scenario and the actors, so it’s harder to define what is illegal.

McDonalds also has a franchise system, although it’s easier to control whether the pricing offered to the franchisees is constant or proportional to benefits.

How can you say what is fictive and what not? Licensing fees and loans exist on market anyway.

The existence of valid licensing fees does not mean all licensing fees are valid. Surgeons are allowed to legally cut people, that doesn't mean we can't figure out when someone was illegally stabbed.

Let's not give up without even trying.

You figure out what the intent is.

If the same owner is behind both, and there seems to be no other reason that avoiding taxes, guilty.

Any time legislatures have a hard time defining the line between legal and illegal behavior, courts tend to take a “we’ll know it when we see it” approach. Justice might be served but rule of law is diminished.

a major difference between continental law and common law is the intent of the law though.

If the court can prove that they did not handle with the intent of the law, it can still be decided that this is fraud. In a common law system this is not possible.

Common law is based on precedent and common sense application of the law, so it is generally common law systems which are described as being open to interpretation.

Common sense has nothing to do with common law after a couple generations morph any type of sense a law could have made into something nigh unrecognizable. Go digging through case law in different jurisdictions and marvel at the contradictory interpretations that arise. This is why strategic changes in jurisdiction are a valuable part of litigative strategy.

Not really. “Fictive” just means “not real,” and courts have processes for judging whether things are real or not. The fact that courts still have to judge the actual facts of the matter doesn’t mean the legislature isn’t doing its job or that rule of law is diminished. It’s no different than courts judging the truth value of claims in a murder case or a fraud case.

"oh no, our publicly very profitable company actually doesn't make any money because of all the.. license fees we pay, that we are clearly in a position to bargain for better, yet mysteriously do not! oh its such a coincidence that everyone in the C-Suite still makes money off the the shell company."

You can obfuscate fraud. But don't try that post-modern horseshit "what is being, man" on us.

If a profitable company is making a loan it does not need to a subsidiary it controls, that's a fictive loan used to disguise a transfer.

When licensing costs are paid to a shell company with 3 employees in a country that is neither the place where the HQ are or where the company originates from, that's fictive.

That’s the thing about laws. It’s up to the courts to decide.

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