Quote:
Originally Posted by nomadking
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.
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.
Link |
My information comes from experience of working with Google, the HMRC Legislation, and discussions with my best friend, who is a Senior Tax Partner (with extensive experience in British and International Tax Law, over 30 years Tax Law experience) with one of the Big Four accountancy firms.
The service they sell is on your desktop, which is in the UK - the data servers aren't in Luxembourg, but holding companies are based there, which negates your assertions. They are based in a low-tax regime, which is why the law was changed - you may not like it, but that's what happened.