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Originally Posted by Hugh
You are under a misapprehension - the services Google sell in the UK are sold and supplied by staff (they currently employ 3,500 in London, going up to 7,000 by next year) at their huge offices in London, but they put the sales through their Dublin Office or Luxembourg Office (depending on what it is).
I know this because I worked with Google for 5 years as one of members of their Education CIO Group.
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The data comes from their Data centres, none of which are in the UK. The ads are "broadcast" from those data centres. Any sales staff are merely selling a service ultimately physically provided from OUTSIDE the UK.
If the data centre and the costs of building and running it occur OUTSIDE the UK, how would they be able to offset those costs against sales? The principle of Corporation Tax is that it's levelled against PROFITS, not sales.
The Ireland & Luxembourg separation will be that the service charge goes to Ireland, and the Intellectual Property part(ie for using the Google software systems) goes to Luxembourg. The income is then taxed by those countries. Once that money has been taxed it can be sent anywhere in the world, including tax havens.
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Under the new regime, eligible net income from qualifying IP assets benefits from an 80% exemption from income taxes. Consequently, a corporate taxpayer based in Luxembourg Ville with eligible net income will be taxed on such income at an overall (i.e. corporate income taxes plus municipal business tax) effective tax rate of 5.202% in the 2018 tax year. IP assets qualifying for the new regime also benefit from a full exemption from Luxembourg’s net wealth tax.
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Eg A common theme in the Music business is to have royalties sent to somewhere like Holland or Luxembourg with lower tax rates for IP. If they bring some of that already taxed money into the UK, it is taxed further to bring it into line as if it had been brought straight into the UK. If left in the Dutch/Luxembourg company, it can then be invested elsewhere from those companies. Profits from those investments will be taxed in Holland/Luxembourg. The total amount available to invest is more that if it had been brought straight into the UK and taxed fully.
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What two of the other members of the Rolling Stones, Mick Jagger and Charlie Watts, apparently learned was that Richards's near-death experience meant it was time to think about their heirs. For that, the aging rockers turned to a reclusive Dutch accountant, Johannes Favie, whose company, Promogroup, has helped them minimize their tax bills for more than 30 years.
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Other Dutch shelters that Promogroup has arranged for the three have already paid off handsomely: over the past 20 years, according to Dutch documents, the musicians have paid just $7.2 million in taxes on earnings of $450 million that they have channeled through Amsterdam — a tax rate of about 1.5 percent, compared with the British rate of 40 percent.
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