Beta
×

Welcome to the Slashdot Beta site -- learn more here. Use the link in the footer or click here to return to the Classic version of Slashdot.

Thank you!

Before you choose to head back to the Classic look of the site, we'd appreciate it if you share your thoughts on the Beta; your feedback is what drives our ongoing development.

Beta is different and we value you taking the time to try it out. Please take a look at the changes we've made in Beta and  learn more about it. Thanks for reading, and for making the site better!

Google Invests $1 Billion To Build New London HQ

timothy posted about 2 years ago | from the but-how-will-they-find-it? dept.

Businesses 132

redletterdave writes "Google just purchased a 2.4-acre plot in the King's Cross Central development in London, where the company plans to build a brand-new, 1 million square foot office. Google reportedly invested about £650 million ($1.04 billion) on the property, which, when finished, will be valued at more than £1 billion ($1.6 billion). While Google traditionally leases its overseas offices, the company's decision to buy rather than rent in this case was likely tax motivated, since Google can't repatriate its cash to the U.S. without paying a hefty tax."

Sorry! There are no comments related to the filter you selected.

My freelance gig in front of Windows 8 (-1, Offtopic)

Anonymous Coward | about 2 years ago | (#42632711)

Having used Windows 8 extensively over the past month, I can now say with confidence that not only is the new UI a disaster, but all the people who said that it's faster or technically superior to Windows 7 are dirty fat liars, too.

Re:My freelance gig in front of Windows 8 (-1, Flamebait)

Anonymous Coward | about 2 years ago | (#42632729)

It depends on your personal taste. Do you prefer to eat horse shit or cow shit? Windows users are shiteaters.

I'm a PC and parent is correct (-1)

Anonymous Coward | about 2 years ago | (#42632739)

It's true. The taste and smell is awful, but I can't stop eating the stuff. It's terrible.

A new way to add new building to your city? (-1)

Taco Cowboy (5327) | about 2 years ago | (#42632751)

By putting up a hefty tax on anyone trying to move money out of your country and you may end up getting new buildings.

Re:A new way to add new building to your city? (4, Informative)

Shimbo (100005) | about 2 years ago | (#42632763)

Except it's to avoid US tax they are doing this. Reuters article. [reuters.com]

Re:A new way to add new building to your city? (-1)

Anonymous Coward | about 2 years ago | (#42632853)

I'm waving my flaccid cock in front of your face. Do you see the truth? Do you see it?

My, my... your mouth is watering more than I'd expected it to!

Re:A new way to add new building to your city? (1)

IamTheRealMike (537420) | about 2 years ago | (#42633069)

Er, I don't think Google has said what the rationale is. For all you know it's the same as why most people choose to buy rather than rent - a plan to stick around for the long term and that way it's not "dead money".

Re:A new way to add new building to your city? (1)

Shimbo (100005) | about 2 years ago | (#42633165)

Well indeed there is more than one possible reason, although minimising tax liabilities will no doubt something Google takes into account. Hefty taxes on moving money around in one of the financial capitals of the world is a rather unlikely one.

Re:A new way to add new building to your city? (1)

sunking2 (521698) | about 2 years ago | (#42633811)

That's kind of misleading. The purchase vs rent decision itself doesn't help them skirt any tax laws. It's simply a way to spend the money before they send it back to be taxed. The fact that they are building rather than renting has no tax implications on its own. It's just that they are spending a boat load of money before bringing it back.

Re:A new way to add new building to your city? (1)

Impy the Impiuos Imp (442658) | about 2 years ago | (#42634037)

Wait, if a corporation brings millions or billions it earned outside the US, in some other country under some other laws, back into the US, most of which it invests,the government just seizes some?

Well, fuck us. We deserve to die.

Re:A new way to add new building to your city? (1)

daath93 (1356187) | about 2 years ago | (#42634663)

Repatriating money is specifically the act of investing the money inside America, moving it out of country to avoid tax, and then moving it back at a later time, thus REpatriating. Do you look anything up for yourself?

Re:A new way to add new building to your city? (0)

mumblestheclown (569987) | about 2 years ago | (#42633367)

why was my rational post which described the troubling effects of such protectionism on foreign direct investment deleted from slashdot?

Re:A new way to add new building to your city? (2)

Runaway1956 (1322357) | about 2 years ago | (#42633989)

I don't think slashdot deletes posts. I've had it happen a few times, that my posts don't show up. I've always blamed some other thing - my browser, or the internet, or something. Maybe the stars are just improperly aligned, I don't know. But I do know that a lot of worthless shit and shinola appear on slashdot, that would be deleted ANYWHERE ELSE. Slashdot just leaves it up there, to be viewed by people like myself, who don't mask any posts.

Check your settings, and if they are all correct, then blame gremlins. We're so busy concentrating on that stupid rover on Mars, that we didn't even notice when the Martians sent their own ship this way, in retaliation. Latest estimates are that the ship could have carried as many as 16 billion gremlins. Awesome, isn't it? Each person on the planet can have one or two personal gremlins of their own! I'm sure it won't work out that way, though. The 1% will probably take about 15.5 billion of them for their very own.

It sucks being part of the 99% . . .

Re:My freelance gig in front of Windows 8 (0, Offtopic)

Anonymous Coward | about 2 years ago | (#42633097)

bought a dell 8500 xps windows 8 home
dead on arrival due to bad drivers
replacement dell arrives
crashes upon installing office, unable to reboot
repeated changes to bios eventually allows reboot and reinstall windows
full windows update
crashes an hour later starting up firefox
dell sends recovery disk and indicates this is an epidemic for them right now
reinstall windows, all updates
crashes after office install
suggested reverting windows 7
dell says impossible because the windows 8 product key is hardwired on the motherboard
windows 8 product key is hardwired on the motherboard
windows 8 product key is hardwired on the motherboard
windows 8 product key is hardwired on the motherboard
windows 8 product key is hardwired on the motherboard
returned and full refund

meanwhile i have a dell 8500 xps running windows 7 bought last year, 0 issues, solid gaming machine, 3d studio max, udk, etc just needs a better video card in a few months, aero looks like milk and honey next to that metro ui windows 8 was stuck with.

my first windows was 3.11, moved along to win98, loved windows 2000, windows xp transition was fine except for weird network glitches, i struggled a little adapting windows vista when that happened, but mostly because of UAC and the windows explorer interface, it was just a bit of learning. I loved windows 7 the minute i first installed it, so much improvement in look and behavior, it gets a machine up on its feet immediately and looks great.

Windows 8, even when its working the way its supposed to work, is not what professionals want happening on their machine. A desktop version of this OS would be a good idea, desktop mode versus tablet mode. Professionals who have work to get done vs children who want to put paw prints all over their little flashy toys.

Re:My freelance gig in front of Windows 8 (1, Funny)

Runaway1956 (1322357) | about 2 years ago | (#42634025)

"my first windows was 3.11"

Geez, Louise, would you just get off the lawn? If you didn't diddle around with Windows 1 point anything, installed on an ancient DOS like 3.1, then you ain't done nothin'. (Oh yeah, Win1 would install onto any DOS - I had it on DRDOS and TRSDOS, both! None of that "Checking, checking, oops, we're not on MSDOS, crash and burn!"

Re:My freelance gig in front of Windows 8 (0)

AK Marc (707885) | about 2 years ago | (#42634751)

Nobody used Windows 1.0. I ran Windows 2.0 through 3.1 on an XT (yes, I've been pointed to sites indicating 3.1 wouldn't run on an XT with 1 MB RAM, but I don't let someone else's opinion change reality) Though 3.0 did better than 3.1. Xtree was better than Win1. Windows 1.0 wasn't new or novel, it was just another file manager, and not a good one. I've seen Win 1.0, but I never ran it.

Can someone explain how multinationals work? (4, Interesting)

metrix007 (200091) | about 2 years ago | (#42632723)

With companies like Google or Coke or Sony, is it one company....say Sony is a Japanese company, that incorporates businesses in many countries which are owned by the Japanese company, and just funnel the money back into the Japanese parent corp? What is to stop the independent company from doing its own thing or making different decisions?

Or in the case of Google, how do they have say over the UK iteration of the company? Are they all controlled by the same people? What are the relationships?

Re:Can someone explain how multinationals work? (0)

Anonymous Coward | about 2 years ago | (#42632733)

Could someone also explain it to our members of parliament so they can work out how to tax these bludgers properly?

Re:Can someone explain how multinationals work? (4, Funny)

hughbar (579555) | about 2 years ago | (#42632749)

Great word bludgers! I think you may have meant bu**ers and I agree. Apart from how to tax them, we need to have a debate about whether we want these currently untaxable, intrusive, search-solely-for-profit [rather than search-for-general-utility in the economic sense] eavesdroppers in the middle of Kings Cross. Personally I preferred it as a red-light area.

Re:Can someone explain how multinationals work? (5, Informative)

burisch_research (1095299) | about 2 years ago | (#42632951)

Bludger: Australian slang for someone who lives off government handouts, and who refuses to work.

Re:Can someone explain how multinationals work? (1)

Anonymous Coward | about 2 years ago | (#42633249)

Here in the U.S. we call them Gimmedats (the new nickname for Democrats).

Re:Can someone explain how multinationals work? (0)

Anonymous Coward | about 2 years ago | (#42633661)

No, that is a new species, called 'homo recipiens".

Re:Can someone explain how multinationals work? (1)

Anonymous Coward | about 2 years ago | (#42633687)

We used to call them "Wall Street Bankers", but then the Tea Party arose and convinced people (perhaps with the aid of a new source of funds) that WS wasn't the real problem.

Actually "Occupy WS" was the media creation ... (3, Informative)

drnb (2434720) | about 2 years ago | (#42634287)

We used to call them "Wall Street Bankers", but then the Tea Party arose and convinced people (perhaps with the aid of a new source of funds) that WS wasn't the real problem.

Actually the Tea Party's roots are in reigning in gov't spending. It was in fact an organic grass roots movement. They went after Bush and the Republican controlled Congress when they were spending like mad. However it eventually became co-opted to a degree by the Republican party.

It was Occupy Wall Street that was a creation:
"The Canadian anarchist group Adbusters initiated the protest with assistance from the Manhattan-based public relations firm Workhorse, who was well-known for its successful work on client brands including Mercedes and Saks Fifth Avenue."
http://en.wikipedia.org/wiki/Occupy_wall_street [wikipedia.org]
And like the Tea Party became co-opted to a degree, though by the Democratic party.

Re:Can someone explain how multinationals work? (0)

Anonymous Coward | about 2 years ago | (#42633043)

I think you may have meant bu**ers and I agree

Buffers?

Re:Can someone explain how multinationals work? (5, Informative)

RLU486983 (1792220) | about 2 years ago | (#42633283)

bu**ers = buggers

bugger (noun)
1. Informal. a fellow or lad (used affectionately or abusively): a cute little bugger.
2. Informal. any object or thing.
3. Often Vulgar. a sodomite.
4. Chiefly British Slang.
- a. a despicable or contemptible person, especially a man.
- b. an annoying or troublesome thing, situation, etc.

Re:Can someone explain how multinationals work? (0)

Anonymous Coward | about 2 years ago | (#42633395)

Thanks, one forgets [one does] that a few slashdot readers hail from the ex-colonies. George III was mistaken, it's gone really, really wrong and one wants it back.

Re:Can someone explain how multinationals work? (0)

Anonymous Coward | about 2 years ago | (#42633895)

eavesdroppers in the middle of Kings Cross. Personally I preferred it as a red-light area.

Google obviously found what it was looking for. Who knows what goes on at the basement levels of that building.

Re:Can someone explain how multinationals work? (1)

philipmather (864521) | about 2 years ago | (#42633909)

search-solely-for-profit [rather than search-for-general-utility in the economic sense] eavesdroppers in the middle of Kings Cross

As opposed to the tax spending eavesdroppers over in the middle of Vauxhall? ;^)

Re:Can someone explain how multinationals work? (1)

hughbar (579555) | about 2 years ago | (#42634655)

But the Vauxhall ones are mainly just drunken, incompetent, inoffensive ex-public [public = private and very expensive in UK!] school boys who leave their laptops in any convenient pub. Beside they are 'our' eavesdroppers, rather than the cousins. We should embrace them.

Re:Can someone explain how multinationals work? (4, Informative)

JaredOfEuropa (526365) | about 2 years ago | (#42632767)

You'd have to address this issue in the rest of Europe as well, at the very least. Companies are being taxed on profit so they do anything to reduct that profit. As far as I know, companies can freely funnel money around in Europe (same for goods, services and labor) so they incorporate in a tax haven and send all the money there, reducing their UK profit to zero. Getting it across the pond is a little harder, but there are ways like labeling funds as "management fees" or fees for using the parent companys patents.
Most of the talk I've heard about doing something about this centered on convincing tax havens to raise their taxes, but as long as there is one around, doing so is pointless. And as a country, there are advantages to being a tax haven.

As a freelancer, I incorporated a few years ago and was surprised at how easy it is to reduce ones profit on paper, even for a small 1 man firm. And it's easy to set up a company nowadays, a few phone calls and a signature is all it takes; I'm considering setting up a company on Cyprus and sending my revenues there to enjoy an even lower tax rate. One of our royals was discovered doing the same thing, and after some public outcry, Internal Revenue hastened to proclaim that the whole thing was fully legit. So I do not feel bad about dodging taxes, not with IR approval and a royal endorsement.

Re:Can someone explain how multinationals work? (4, Insightful)

iserlohn (49556) | about 2 years ago | (#42632837)

So what are the moral implication of funnelling money through a tax haven that has no real purpose other than to reduce tax load? It may be legal, but is it moral?

This is the reason that I have avoided doing the same. Obviously, if your main base of business is in your own country, the corporation tax should also go back to you country to fund public expenses in your country, as opposed to a country which has nothing to do you your business apart from having low tax rates.

There are some people that go even further than that. They roam around Europe with no fixed abode, claim non-domiciled status and can avoid the majority of dividend tax. There is more to being honest than staying within the boundaries of the law.

Re:Can someone explain how multinationals work? (1)

JaredOfEuropa (526365) | about 2 years ago | (#42632903)

Good point, and I have avoided doing this for the same reason.
But things are getting to a point where I am starting to have moral objections to the weight of the tax burden, the distribution of that weight, and the way the collected monies are being spent. I'm a liberal (in the European sense, slightly right of centre) and a believer in small government. If the rest of us opt for big government instead, I'd still be happy to pay my fair share, provided that government does what we have a right to expect of them, that is: to be frugal and conscientious when spending our tax euros. And I am seeing less and less of that.

Re:Can someone explain how multinationals work? (4, Interesting)

towermac (752159) | about 2 years ago | (#42633059)

Over here, I am called a conservative, but yes; we are classical liberals.

As your simpler, dumber brother on the other side of the pond; please allow me to condense your thought into a sound byte so we can understand it over here:

If a billion dollar building in downtown London is cheaper than the tax, then the tax is too high.

Re:Can someone explain how multinationals work? (2)

TheLink (130905) | about 2 years ago | (#42633339)

If you transfer 1 billion dollars to Google USA and Google USA spends that 1 billion dollars, does that 1 billion dollar show up as taxable profit? I should think there's a way of spending it so it doesn't become profit right?

And if it doesn't show up as taxable profit then it could mean that Google doesn't have anything in the USA that they want to spend 1 billion dollars on.

Also the billion dollar building might be worth more in the future than USD1 billion (inflation and all that).

Re:Can someone explain how multinationals work? (1)

alexander_686 (957440) | about 2 years ago | (#42634163)

First, you need to distinguish between transfers of cash (non-taxable), profits, and expenses (which, from an accounting standpoint, is not exactly the same things as spending money.)
The big issues is that the US uses a residential tax system (you pay American taxes no matter where you earned the profit) and Briton uses a territorial tax system (you pay taxes on the profits earned in Britton – which is basically how the entire world operates.).

Here is the formula:
1 – TA – TB + (TA*TB)
TA = America’s tax percentage
TB = Britton’s tax percentage

So, Google Britton earns 1 dollar of profits in Briton and pays taxes on those profits. Google Britton then pays a dividend ($1-TB) to Google Parent where is pay’s the USA Tax (-TA) but gets to claim a foreign tax deduction (+(TA*TB)).

The simple answer for US corps is not to pay the dividend to the parent company but keep it overseas.

Now, you are right – if Google USA had losses they could offset Google Britton’s – but they would need actually losses. Spending cash on stuff does not inherently generate losses. i.e. If I spend $1 (an asset) to buy a $1 asset (Gold, land, buildings, servers, R&D, a 747) no losses have occurred.

As to buying a building – I could buy a building or I could lease a building for 20 years with a right to buy at the end – economically they are basically the same. However, the tax treatment is very different. In the US (and I believe Britton) you get a tax benefit from leasing – which is what makes this deal so odd.

Re:Can someone explain how multinationals work? (1, Insightful)

LordLucless (582312) | about 2 years ago | (#42633063)

So what are the moral implication of funnelling money through a tax haven that has no real purpose other than to reduce tax load? It may be legal, but is it moral?

Um, none? Tax isn't a moral issue, it's a legal and economic one. It's like asking if there's a moral issue with not paying $110 against a $100 charge. The government calculates your tax bill. If you pay what it says you owe, you've discharged your obligation. If there are "loopholes" in the tax law, then the government has put them there, and presumably is ok with you using them.

There are some people that go even further than that. They roam around Europe with no fixed abode, claim non-domiciled status and can avoid the majority of dividend tax. There is more to being honest than staying within the boundaries of the law.

If they have no fixed address and keep moving around between countries, it's quite likely they're not receiving any benefits their taxes would ostensibly go to pay for.

Re:Can someone explain how multinationals work? (1)

plalonde2 (527372) | about 2 years ago | (#42633617)

There is *certainly* a moral component. The money taxed is earned in part with tax-payer provided assets: roads, security infrastructure, various regulatory frameworks, a court system, and so on. Being part of a functioning western society and partaking of its infrastructural advantages costs sometime - we call that "taxes". Debating the level of taxes vs the benefits is certainly acceptable, but claiming there's no moral dimension is wrong.

Re:Can someone explain how multinationals work? (1)

SomeKDEUser (1243392) | about 2 years ago | (#42633813)

No. As non-sociopathic humans, we tend to see things in moral terms. However, I do not wish for my government to think about tax in moral terms: I want them to think about taxes in terms of maximising the global welfare of the people they administer. Arguably, this is a moral objective, but it should be attempted through pure optimisation.

This means that if I get 1€ in taxes by taxing the beejeezus out of a company, and 1.1€ by taxing nominally much less, I should pick the second option, because although it will seem unfair, it is also more effective. And this is indeed what countries tend to do.

However, this causes a problem: some countries can specialise in doing that (offering low taxes) and because they are unbeatably better at it than anyone (the Cayman Islands is a tropical paradise with minuscule needs in terms of infrastructure and social spending, and no significant military -- no large country can beat them at low taxes without going insta-bankrupt) they get all the taxes and we all, collectively, have a problem.

A global treaty where no country is allowed to tax _less_ than, say 15% of its GDP and the money it gets beyond the 200% of its needs gets put into some international redistribution fund would do wonders. You could still have very low taxes country if you want to (because taxing 15% of GDP is mighty low), but no "paradise", because then there is a legitimate balance as a company between picking a country with excellent infrastructure and a country with low taxes.

Re:Can someone explain how multinationals work? (0)

Anonymous Coward | about 2 years ago | (#42633911)

No. As non-sociopathic humans, we tend to see things in moral terms. However, I do not wish for my government to think about tax in moral terms: I want them to think about taxes in terms of maximising the global welfare of the people they administer. Arguably, this is a moral objective, but it should be attempted through pure optimisation.

This means that if I get 1€ in taxes by taxing the beejeezus out of a company, and 1.1€ by taxing nominally much less, I should pick the second option, because although it will seem unfair, it is also more effective. And this is indeed what countries tend to do.

No, this is not what happens. The problem of differential taxation is a Prisoner's dilemma [wikipedia.org] problem. The countries with low tax rates (or the countries/states which provide "incentives" for companies to set up in their state/country) siphon off revenues from higher tax/low bribe countries. Eventually all countries lose because the high tax countries have to reduce taxes/increase incentives for big companies (and correspondingly move more of the tax burden to the middle class/poorer classes) to compete with these low tax countries.

In the end all countries lose big since to get any tax revenue from multi-national companies at all they have to setup tax rates for these companies at effective rates approaching zero.

Re:Can someone explain how multinationals work? (0)

Anonymous Coward | about 2 years ago | (#42634315)

Getting the quoting right this time:

No. As non-sociopathic humans, we tend to see things in moral terms. However, I do not wish for my government to think about tax in moral terms: I want them to think about taxes in terms of maximising the global welfare of the people they administer. Arguably, this is a moral objective, but it should be attempted through pure optimisation.

This means that if I get 1€ in taxes by taxing the beejeezus out of a company, and 1.1€ by taxing nominally much less, I should pick the second option, because although it will seem unfair, it is also more effective. And this is indeed what countries tend to do.

No, this is not what happens. The problem of differential taxation is a Prisoner's Dilemma" [wikipedia.org] problem. The countries with low tax rates (or the countries/states which provide "incentives" for companies to set up in their state/country) siphon off revenues from higher tax/low bribe countries. Eventually all countries lose because the high tax countries have to reduce taxes/increase incentives for big companies (and correspondingly move more of the tax burden to the middle class/poorer classes) to compete with these low tax countries.

In the end all countries lose big since to get any tax revenue from multi-national companies at all they have to setup tax rates for these companies at effective rates approaching zero.

Re:Can someone explain how multinationals work? (1)

AK Marc (707885) | about 2 years ago | (#42634815)

But who is the prisoner? You are claiming that if all the prisoners picked the same choice that it breaks the prisons, or something like that.

Re:Can someone explain how multinationals work? (1)

Fastolfe (1470) | about 2 years ago | (#42634505)

Tax systems operate with the expectation of rationality, not morality. If you believe our system of taxation is immoral, the solution is to change the tax system, not to call rational actors immoral and expect them to change their behavior.

Many of the things people are upset about aren't even immoral, from the perspective of the other country. Localities create tax incentives to cause companies to change their behavior. This could be to install solar panels, or to locate jobs in a community that's starving for them. When a business seeks a place to set up shop, it's looking at its operating expenses, including taxes. If a community needs jobs, and creates tax incentives to cause businesses to create them, and businesses react to that by moving there (at the expense of another community that would have gotten those jobs instead), is that immoral?

Let's say I have a company. We produce widgets in locality A, and earn $10M a year selling them. I need to build a new factory, and see that my operating costs in locality A will be $2M, but locality B is starving for factory jobs, and so they've agreed to give me tax incentives that, combined with the costs of managing a remote factory, cost-of-living differences, etc., means my costs will be $1M by putting this factory in locality B. The people of locality A are outraged, because they've been deprived of jobs, and label my actions "immoral". Would you agree?

Separately, I realize that my brand is a huge contributor to my company's success. If I tried to sell my widgets under a brand that no one has ever heard of, I'd only make $5M. So my brand is worth $5M/year to me. My tax liability in locality A for that $5M contribution to my earnings is high. I could move my brand to an IP division, and set up licensing so that the manufacturing side of my company licenses the brand for some significant fraction of $5M, and the IP division sees a large profit for the use of the IP. Since everyone lives in locality A, this doesn't actually change anything for tax purposes, but what if my IP division could operate much more cheaply somewhere else? It only has a few employees.

"But you'd be depriving A of tax revenues on that other $5M!" But the manufacturing side didn't produce a $10M product, they produced a $5M product. It was my IP that provided the other $5M. My employees don't use double the government services just because their product has a popular brand attached to it. Why is it immoral that I only realize profit in locality A that matches what was actually produced in locality A?

The tax system is designed with rational behavior in mind. If you don't like it, don't just cry and label all of these rational actors "immoral" in the expectation that they're going to change their behavior with your system of morals as their guide. Change the system so that it becomes rational for corporations to pay taxes in ways that match your moral system.

Re:Can someone explain how multinationals work? (1)

AK Marc (707885) | about 2 years ago | (#42634833)

Your comment would be correct if the "rational actors" didn't spend billions to change the system to an immoral one. The funny thing is that because everyone was subject to the same rules, they gained no competitive advantage in breaking the system as best they could.

Re:Can someone explain how multinationals work? (-1)

Anonymous Coward | about 2 years ago | (#42633407)

Tax avoidance is extremely moral. All taxation is theft by states against individuals to transfer their wealth to the poor and stupid.

Re:Can someone explain how multinationals work? (0)

Anonymous Coward | about 2 years ago | (#42634517)

I'll remember this when my company has automated all jobs everywhere and we've concentrated all of everyone's wealth in one place. Billions dying in the streets from starvation? That's OK, my automated street cleaning vehicles will deal with the mess. Or they would, if only the government could pay for it.

Re:Can someone explain how multinationals work? (0)

Anonymous Coward | about 2 years ago | (#42633923)

VAT is a major contributor to the tax revenues in EU, so the abuse of individual tax rate differences is no longer as significant issue on the whole society. On the other hand, the value added tax-paying customers might disagree about this level of significance eventually.

Re:Can someone explain how multinationals work? (1)

Impy the Impiuos Imp (442658) | about 2 years ago | (#42634129)

Legal != moral

Avoiding decisions by masses != immoral, though it may be illegal

Democracy is just an abstraction of might makes right. Insofar as it runs hog wild, where is any inherent morality at all?

Re:Can someone explain how multinationals work? (1)

tukang (1209392) | about 2 years ago | (#42634255)

Business is adversarial. If you do not take advantage of a tax haven or tax loophole while your competition does, you will fall behind your competition, whether it's because they can now offer their product at a lower price or invest more in r&d and your chances of going out of business will increase. Therefore, it is not immoral for businesses to take advantage of tax loopholes.

The problem is the loophole, not the businesses or people that are using them. The playing field needs to be level by law.

Re:Can someone explain how multinationals work? (1)

alexander_686 (957440) | about 2 years ago | (#42634277)

So what are the moral implication of funnelling money through a tax haven that has no real purpose other than to reduce tax load? It may be legal, but is it moral?

There are cases where it is moral.

The US is one of the few (and the only major one) that uses a residential system for taxes. Most other places use a territorial system. The different standards can be incompatible issues anytime there is a joint US / foreign operation. In theory taxes could be over 100% of profits. In practice this does not happen due to a host of tax treaties – but they cause their own headache.

Tax havens can be used to bypass this complexity and double (and triple) taxation. At the end of the day everybody pays’ their home tax rate – thus everybody contributes to society.

Re:Can someone explain how multinationals work? (0)

Anonymous Coward | about 2 years ago | (#42634679)

They are laundering their profits, the same way drugs dealers handle theirs. Profits generated in one place appear as an asset elsewhere courtesy of the money laundering banking system (HSBC for example).

Re:Can someone explain how multinationals work? (0)

Anonymous Coward | about 2 years ago | (#42634005)

Then the rest of us should implement you only get the functional level of soceity you pay for. You might find it hard to do business then.

Re:Can someone explain how multinationals work? (1)

Impy the Impiuos Imp (442658) | about 2 years ago | (#42634113)

Well, didn't the papers apply social invectives against the royal, trying to make him feel bad about not contributing to your common greatness-through-government, and thus so why would any right-thinking person want to avoid it?

God, I feel dirty even talking like that. I am shit-covered. Literally gais, I literally have pig feces smeared all over me. Help!

Re:Can someone explain how multinationals work? (3, Interesting)

91degrees (207121) | about 2 years ago | (#42632823)

I have the feeling that it's actually HMRC not enforcing the rules that actually exist, because they're letting the companies dictate what the interpretations are.

Re:Can someone explain how multinationals work? (5, Interesting)

queazocotal (915608) | about 2 years ago | (#42632907)

The unfortunate fact is that tax laws are fucking complex, and contain loopholes smart people can find and exploit.

If you are a large corporation, do you:
A) Pay a hundred million in tax.
B) Pay 20 million in legal research to find completely legal loopholes and ways to arrange your corporate structure so you can pay 10 million in tax.

There is then the wrinkle that to not do 'B' may be against your shareholders best interests.

Re:Can someone explain how multinationals work? (0)

Anonymous Coward | about 2 years ago | (#42633011)

There is then the wrinkle that to not do 'B' may be against your shareholders best interests.

I wouldn't really say there's much of a maybe about it... and as far as I know isn't it a legal requirement that you can't do anything against their best interests?

Re:Can someone explain how multinationals work? (4, Insightful)

dkf (304284) | about 2 years ago | (#42633141)

There is then the wrinkle that to not do 'B' may be against your shareholders best interests.

I wouldn't really say there's much of a maybe about it... and as far as I know isn't it a legal requirement that you can't do anything against their best interests?

But there's usually a way to spin virtually anything that management want to do as being in the shareholders' best interest. The issue is that shareholders have a very large range of interests, many of which will be directly divergent from one another, and there's a need to have many different strategies over many spans of time.

In practice, the fiduciary responsibility regulations only really have real bite in limited circumstances where the actions of management may verge on the fraudulent (e.g., selling substantial parts of the company for much less than their fair value to another company owned by the CEO; whether or not that's technically fraud, it's still seen as clearly wrong). Most of the time, so long as management are trying to do the best for the company as they see it, they're not on the hook for fiduciary responsibility violation.

If you want to identify real problems, point your finger at investment firms that just want a fast return on their money and care nothing for the success of the businesses that they invest in. All they do is try to force everyone else to act like as big a corporate psychopath as they are. (This is why businesses run by their founding entrepreneurs often do better: they don't just focus on boosting their share price or returning dividends over the next 3 months, but instead actually build the business.)

Re:Can someone explain how multinationals work? (4, Informative)

LordLucless (582312) | about 2 years ago | (#42633081)

The unfortunate fact is that tax laws are fucking complex, and contain loopholes smart people can find and exploit.

And why are there loopholes? Look into it, and you'll find that it's basically a massive patchwork of hacks to maintain favourable exemptions for certain industries that are politically important/give politicians a lot of money. The tax system could be massively simplified to eliminate those loopholes, but it's in nobody who counts' interest to do so - companies would pay more tax, politicians wouldn't be able to manipulate the system to scratch the back of companies' "lobbying" them, and individuals, well, since when have they counted anyway?

Re:Can someone explain how multinationals work? (1)

umghhh (965931) | about 2 years ago | (#42634599)

Tax laws are complex that is true. The society and its economy is complex too so some of this complexity gets into the tax code. The fact is however that majority of the tax laws across the world are too complex for their own good. If rules are complex then enforcing them is expensive i.e. the state gets less from each of CurrencyUnit they collect. Looking at this from historical perspective - you started with simple laws some time ago and in time they gathered fat of tax code that nobody can understand and changing one little thing may create unforeseen consequences.If the state is forced to created a new tax code (like for instance the Baltic states have been forced to after they suddenly sprang into existence) then you can chose simple model - say for instance it is 21% no exemptions, non-taxable income set to minimum social support level. It will grow over time but with rules like this you give companies and their owners more time to do the business that was spent on accounting tricks before. No loopholes, no waste so everybody is happy (well that is never true is it?).

I think tax code is just lesser problem. Western states were living over their means for last few decades now they need money to pay back the debt they got so tension in the society is increasing. Then there is globalization which allows capital to travel freely while other assets and labour cannot. This is bound to cause trouble at some point. It is a constant struggle. Financiers of the world (and some other people and big corporations too) tend to think that they can decouple themselves from reality of societies they live in. The day they really can will be interesting but we are not as far yet so we i.e. the rest of the society still have means to put pressure on them. Nothing unreasonable of course but just to make a proper proportion of the benefits and costs for everybody. You want to do business with us then you pay taxes here.

Re:Can someone explain how multinationals work? (2)

hcs_$reboot (1536101) | about 2 years ago | (#42632743)

Rules are country related, besides taxes, UK makes sense for the Google-in-Europe strategists: English speaking, 3 hours from Paris, and as they say We’re one of Google’s largest engineering operations in Europe. [google.com]

--
If you consider an idiot someone who ignores ACs for some reason, you're an idiot.

One trick is through sales (5, Insightful)

SmallFurryCreature (593017) | about 2 years ago | (#42632807)

Ireland and say Spain have radically different tax rates over profits over a sale. So... what can you do if you are devoid of all morals?

Say the product in Spain sells for 100 dollars but really costs 10 to produce in China. Then Ireland buys it from China for 10 and sells it to Spain for 99.99. The sale in Spain then to the consumer is for 100, giving the Spain division a 1 cent profit.

Of course, since you are making so little money in Spain, you do claim all the subsidies and tax breaks you can to support your struggling business.

The fact is that our society is run on the principle that everyone is nice, that everyone is going to try their best to live together and play well with each other. The order keepers can NEVER check everyone doesn't speed, doesn't run red lights, gives the right of way. AND we NEED that, just imagine HOW hard it would be to travel anywhere if you couldn't at least somewhat count of right of way, people stopping for signs and keeping a similar speed. Remember that those who hate the speed limit ONLY talk about the MAX speed limit, the speeders NEVER complain about SLOW vehicles being banned from certain roads. No speed limits means you can drive ANYTHING ANYWHERE.

It is the same with taxes, it would be un-workable to check everybody, so the system relies on most people paying their tax neatly.

Evil people/Republicans often claim the rich pay the majority of the tax burden... apart that from the fact it ain't as a big a burden if you are rich, that is only logical, those who have the majority of the money, pay the majority of the taxes. The hidden lie (you know it is a lie because a Republican said it) is that the rich SHOULD be paying FAR more. But countless loopholes make the likes of Romney have a taxrate of 11%. No wonder he wants to see a birth certificate but does not want to show his tax records. If the rich payed their due share (who benefits more from police patrols, the rich guy with police guard or the poor guy living in a police no-go area) there would be far more tax-revenue AND then EVERYONES taxes could come down. If one rich guy avoids paying 1 million, that is a LOT of minimum wage workers who have to make up the difference because no Republican tax avoider would think of spending less on the army.

Tax avoidance is a gigantic business, the economy of Ireland practically runs on it. And that is the huge problem, there is ALWAYS someone who benefits when society is harmed.

The funny thing is that any call for chance will get you millions of piss-poor Republicans living on benefits saying you shouldn't tax the rich! Willing slaves. Because one day YOU may own a slave, you defend your own slavery. The American Dream, the ultimate brainwash.

Re:One trick is through sales (2, Interesting)

Sun (104778) | about 2 years ago | (#42632835)

I think that's only telling part of the story, and the wrong part, at it.

If all those companies were doing was setting up most of their profit areas in low tax countries, I, personally, would find that legitimate. Ireland has low taxes, so Google, Microsoft, Facebook and many others have huge development centers there. That's just called a "tax plan", and is legitimate.

The point at which, IMHO, this crosses the line is where all of those companies want to show profits for their publicly traded, US based, parent companies. "Google Ireland Inc" (or whatever) is not traded in wall street. Nobody gives a rat's !@%!@# how much profit it made. It's the US based GOOG that is traded, and in order for its stock price to rise, they would really want its balance to show a huge profit.

That's the part I don't understand. How do you get the American company to show profit, and yet claim that the taxes for those profits need to be paid in Ireland. That's the part I suspect is breaking some laws.

Shachar

Re:One trick is through sales (4, Insightful)

batkiwi (137781) | about 2 years ago | (#42632979)

I don't find claiming 90+% of the profit from ireland as legit if 0% of the work involved was done there.

Re:One trick is through sales (1)

Fastolfe (1470) | about 2 years ago | (#42634543)

Do you believe that intellectual property has value? If I produce a product that would sell for $5 without branding, but with my valuable brand, it sells instead for $10, wouldn't that imply my brand alone (few employees, few government services) is responsible for $5 of that $10?

Is it immoral that the division of my company that produced the product only pays taxes on the $5 that they actually produced, and not the full $10? If I sold my brand to a separate company, with the agreement that we pay some fraction of that $5 in licensing fees, does that materially change things for anyone?

Re:One trick is through sales (0)

Anonymous Coward | about 2 years ago | (#42634647)

>Do you believe that intellectual property has value?

Since the words do not even make sense when used together, no.

Re:One trick is through sales (1)

alen (225700) | about 2 years ago | (#42633071)

Goog is a parent company that owns lots of subsidiaries around the world

When they report earnings it's the combined earnings from all the worldwide companies even if they can't bring the money back into the USA

Re:One trick is through sales (1)

TheLink (130905) | about 2 years ago | (#42634099)

If that's the case why not require the US reported earnings to be limited to whatever that's taxable in the USA? So if you're going to count it in the USA you're either going to have to bring the money in to the USA, OR you could leave it in Ireland, but pay the tax as if you earned that the USA.

They might have to tweak this clause a bit too: http://www.forbes.com/sites/ericsavitz/2012/11/13/revealed-how-u-s-companies-can-repatriate-cash-tax-free/ [forbes.com]

Re:One trick is through sales (0)

Anonymous Coward | about 2 years ago | (#42633077)

You don't understand how accounting works. If "Google Ireland Inc." is a wholly owned subsidiary of Google Inc, for tax purpose, activities "done" in Ireland will be tax in Ireland. Profit can be reported as part of Google Inc. The issue is that if Google wants to bring the profit in its US books, it need to do dividends (or whatever), from the subsidiary to the parent company. And guess what? they are taxable in the US. That's why all those big companies using the double Irish arrangement (or the like) are wining about not being able to bring back profits due to the prohibitive tax rate in the US (eyes going to the sky) so they can create JOBS.

Re:One trick is through sales (1)

Kjella (173770) | about 2 years ago | (#42633211)

That's the part I don't understand. How do you get the American company to show profit, and yet claim that the taxes for those profits need to be paid in Ireland. That's the part I suspect is breaking some laws.

Ah, but they're not. They're not moving the money to the parent company, they're saying we own 100% of an Irish company that last year made profits in Ireland. It is the consolidated financial statement people are looking at, which in short means "pretend all our holdings were the same entity", it is not for tax purposes but a mere aggregation for telling the market how you did in total across all countries and sub-sub-subsidiaries. It's not actual financial transactions, it is mere aggregation.

Re:One trick is through sales (1)

TheLink (130905) | about 2 years ago | (#42633347)

Why can corporations move money around so easily to make more money or cut costs but why can't we move books and music around to do the same?

https://www.eff.org/deeplinks/2012/12/first-sale-under-siege-if-you-bought-it-you-should-own-it [eff.org]

Re:One trick is through sales (1)

DrEldarion (114072) | about 2 years ago | (#42633725)

Companies cannot move money around easily. If a US company made their profits in an Irish subsidary, that money has to stay with the Irish subsidary. They can't bring it back into the US without paying a giant repatriation tax. ... so actually it's quite similar to your example.

Re:One trick is through sales (0)

Anonymous Coward | about 2 years ago | (#42633955)

Oh really? How did their US profits end up in their Irish subsidiary in the first place?

Re:One trick is through sales (1)

alexander_686 (957440) | about 2 years ago | (#42634801)

They don’t. Ireland’s (and generally speaking European) profits wind up in Ireland. When Ireland’s profits are repatriated to the US then it’s taxed a second time at the US tax rate (less any foreign tax credit.)

Re:One trick is through sales (1)

LordLucless (582312) | about 2 years ago | (#42633093)

Say the product in Spain sells for 100 dollars but really costs 10 to produce in China. Then Ireland buys it from China for 10 and sells it to Spain for 99.99. The sale in Spain then to the consumer is for 100, giving the Spain division a 1 cent profit.

So you're saying that the only moral course of action is to find the area that has the highest tax rate, the least subsidies and support, and operate entirely out of there, so as to pay the maximum tax you possibly can.

Because everything else is tax avoidance and therefore immoral?

Re:One trick is through sales (3, Informative)

cheesybagel (670288) | about 2 years ago | (#42633305)

No. The moral course of action is to pay sales taxes where you sell the product and corporate tax where you actually operate your business. Which is certainly not Ireland.

Re:One trick is through sales (3, Insightful)

towermac (752159) | about 2 years ago | (#42633179)

There is another explanation for your apparent dichotomy, but I believe your vitriol for "Evil people/Republicans" is blinding you to it.

You defined the problem: The cost of doing business in Ireland and China is far cheaper than Spain (and the US and other places). There are two solutions to that, although you only see the one of going after Ireland and the people who do business across borders. You could try to make it cheaper to do business in Spain. You can't magically lower the cost of commodities and land, but you can cut taxes. Especially if that was one of the major costs of doing business.

11% would be a decent tax, especially on a guy making millions. Romney's, like mine, was actually closer to 14%; which means about $7,000 for me, millions and millions for him. What's your moral justification for making either one of us pay a higher percentage than the other? Don't envy his stuff, man. Don't vote based on envy, which is simply self-justified greed.

The corporate rate over here is 35%. That's not a tax, that's a freakin' partner. It's obviously too high. "Tax" is supposed to be an incidental cost, not a major portion of a transaction. I'm not talking opinion here, the proof is in the facts. All these companies holding money offshore; they don't get to have that money either. It's still their money, but while it sits in the Caymans, not really earning enough interest to cover inflation; they don't get to have it, use it, spend it; just like we don't get to tax it. Google needs a billion dollar building in London about as much as you or I do. Hell, I guess that's better than it sitting in a damn bank somewhere though.

The fact that they would rather do without their own money, rather than have it, and pay the tax on it, proves the tax is too high. And if they are truly as greedy, and covet their money as much as you say, then you can trust their judgement on this one.

Re:One trick is through sales (1)

inode_buddha (576844) | about 2 years ago | (#42633527)

Want to make this entire discussion go away? Then eliminate the corporate tax altogether and treat capital gains the same as ordinary income (ie, wages and salary).

At one stroke, this would make the whiners on all sides STFU. Both the Occupy people, and the CEO's would no longer be able to complain. The offshore accounting tricks would collapse, revenue would skyrocket, and companies would move back into the USA.

That's what nobody in the political right has pushed yet, even though it was a major component of Reagan's 1986 Tax Reform act. You know, the one that totally saved the economy back then and caused a long boom.

Re:One trick is through sales (3, Insightful)

divisionbyzero (300681) | about 2 years ago | (#42633645)

11% would be a decent tax, especially on a guy making millions. Romney's, like mine, was actually closer to 14%; which means about $7,000 for me, millions and millions for him. What's your moral justification for making either one of us pay a higher percentage than the other? Don't envy his stuff, man. Don't vote based on envy, which is simply self-justified greed.

You are focused too much on the absolute value of the dollars. The moral justification is that beyond a certain number those millions of dollars have less value than your $50,000. In other words basic necessities take up a far larger percentage of your income than Romney's. The additional tax revenue from people like Romney helps pay for the social costs of company's like his that force other companies to pay their workers substandard wages and benefits and thus turn to the government for help in order to increase profit margins to give people like Romney even more money. Do you see how this cycle works? If companies paid their employees a more reasonable wage, a so-called living wage, I could see the case for lowering taxes.

As for the rest of your post, competing on taxes is a downward spiral that leaves governments unable to take care of their people in order to export wealth out of the country. A certain amount of tax competition help keep things lean but it's better to compete on things like education and infrastructure that hard to replicate. The reason tax competition is so popular is that it just takes some paper shuffling rather than real investments in a country's future.

Re:One trick is through sales (1)

mnooning (759721) | about 2 years ago | (#42633963)

This can all be avoided if we get rid of corporate taxes. Corporate taxes are like taking little bits of flesh from the goose that lays golden eggs. Take the tax eggs from the owners of the goose instead! Corporations are not people. They are bricks, steel, and paperwork. If we had no corporate taxes, big corporations like Eaton won't move to places like Ireland.

Re:One trick is through sales (0)

Anonymous Coward | about 2 years ago | (#42634589)

And whose fault is this?? Morons over in Ireland and elsewhere that allow this to happen!

Say whatever you want, but at least in the US when you move money (profits) from overseas into US, you pay the tax difference on the funds. No tax loopholes. No free money.

Why do you think all the US companies are bitching about this? Why do they want another no-tax amnesty that George W. gave to business that allowed Microsoft to repatriate $50B, then pay all that in one tax tax-free dividend (he dropped dividend tax to 0 too). Why was better off? The little people? Or Bill Gates had an income of about $15,000,000,000 that year paying exactly $0 in taxes. Not one penny.

So, EU, fix your tax system for corporate profits. Until you fix that, you'll keep moaning and bitching about companies not paying taxes, about deficits and high personal taxes. You allow leeches to feed on you, and soon you'll be bled dry. One set of EU-wide laws for corporations, inability to repatriate funds without paying tax difference would be a good start. I know, UK is very much against it - all super-rich reside there because of their laws that allow this.

Re:Can someone explain how multinationals work? (2)

Znork (31774) | about 2 years ago | (#42632825)

As a general rule it's not 'one company', but many and varying forms of companies in many countries depending on the forms of incorporation that are available in each country. Most countries have variants that can be owned and controlled by outside entities, which is why the local ones don't go around doing their own thing.

This of course creates all sorts of ways to move money around to the place in which profits are best taken, as they can usually make internal sales for imaginary numbers to their subsidiaries which allows them to control exactly where the profit goes. For the specific corporate structure used by google and many others you can look up Double Irish on Wikipedia, which is a structure that allows any corporation to basically pay very close to no taxes at all.

Re:Can someone explain how multinationals work? (1)

Anonymous Coward | about 2 years ago | (#42632827)

Precise laws ar going to vary by jurisdiction and also by the constitutional documents of the specific subsidiary company but broadly speaking...

The company is owned by its shareholders. In the situation we're talking about this probably means that 100% (or at least sufficient to exercise majority voting rights) belong to the parent company.

The shareholders appoint, and can remove and replace, a board of Directors. The Directors have rsponsibility and control over the company. They also have obligations under local laws and can be held accountable by the courts. Their obligations can include all sorts of things e.g. compliance with anti-money laundering regulations, environmental protctions, workers rights etc. but subject to all those other obligations they also have a responsibility, variously phrased, to act in the interest of their shareholders (i.e. the parent company). The directors either run the company themselves or else they hire others to do it for them.

So, if parent company wants the local company to do something then the directors can refuse and might do so just like in any other employment position if e.g. they feel it's illegal or immoral, and they do carry an extra responsibility for their decisions to their local courts. But pretty much like in any other employment position, they can be fired and replaced. They can also be sued if they fail to act in the interest of their shareholder (but obviously if they do so in order to carry out some other legal responsibility then thy should be in the clear) and potentially they could face criminal sentences if they misappropriate company property for their own purposes instead of to carry out their legal responsibilities.

Re:Can someone explain how multinationals work? (1)

jonbryce (703250) | about 2 years ago | (#42632887)

Google's European base is registered in Ireland, not the UK. Google Inc owns 100% of the shares in Google Ireland, so can appoint the directors and vote them out if they don't do what the parent corp wants them to do.

Re:Can someone explain how multinationals work? (1)

Bearhouse (1034238) | about 2 years ago | (#42632895)

Most MNCs are one company from a management control perspective, even though their subsidiary companies in different countries are different legal entities subject to many different laws and regulations. As usual, it all comes down to money, if the parent company put up the cash to create or buy the subsidiary, and they own a controlling interest in the share capital, then they call the shots.

In theory, the legal local head of google UK could quite legally, under UK law, decide to tell his US bosses to take a hike, and invest all his profits in buildings, R&D, whatever instead of sending them back over the pond. Except he'd be fired, and his decisions reversed, pretty damn fast.

The example of Coke that you cite is a little different, since in many instances the production and distribution of the product in done by independent bottling companies. Coke just sells them the concentrated syrup, and they add fizzy water...here's an example from the USA...

http://en.wikipedia.org/wiki/Coca-Cola_Bottling_Company_of_Northern_New_England [wikipedia.org]

Re:Can someone explain how multinationals work? (1)

gl4ss (559668) | about 2 years ago | (#42632897)

well, ownership of that independent company for one..

it's all controlled by the same people.

Re:Can someone explain how multinationals work? (2, Informative)

Anonymous Coward | about 2 years ago | (#42633035)

OK, let's do this:

Fred Smith works for Foo UK Ltd. He's running their whole Foozle operation on a day-to-day basis, most Foo workers in the UK think of Fred as the "big boss" but he's just an employee like them.

Fred reports to Amy, Bob and Chris who are the Directors of the company. Some of the directors could also be employees, but in this case they're not, regardless they are responsible for the "big picture" of the company. The directors are legally responsible in some senses for the company, for example if a court felt that the company as a whole had done something wrong, and the directors had been aware, or should have been aware and did nothing, the directors could go to jail.

Amy, Bob and Chris report to the shareholders of Foo UK Ltd, as the name suggests the shareholders own some "share" in the company. Shareholders can get rid of directors and find new ones, but they don't have any direct control over the company. If Foo UK was an independent privately owned business these shareholders would be various ordinary (but probably rich) individuals. Most people who work for Foo UK would have no idea who the shareholders were. If Foo UK is a public company, its shareholders could include almost anyone, you can buy shares online for a few dollars right now, but most would probably be held by pension companies and other "hands off" institutional investors. Finally, if Foo UK exists only to make life easier for Foo International Corp, who are based in Australia, then there is only one shareholder, Foo International Corp, and obviously if the directors do anything except what Foo International Corp wants, they'd be dismissed immediately. Also some or all of them would probably be Foo International Corp employees. Amy, Bob and Chris, as directors of Foo UK Ltd might actually all live in Australia and perhaps never even have seen the UK, they could still give orders to Fred maybe over a weekly video conference.

In the specific example you gave, the UK Google has exactly one shareholder, Google Inc in the US. This gives them 100% control, which they exercise by appointing directors who are also Google US employees. The UK staff are just employees, including the head of the UK business.

Re:Can someone explain how multinationals work? (0)

Anonymous Coward | about 2 years ago | (#42633855)

The UK staff are just employees, including the head of the UK business.

After opening chase sequence through Teheran, involving firefights with Iranian agents and solving the P=NP problem...

Cut to Silicon Valley USA...

"Try not to muck it up next time, Google UK".

Re:Can someone explain how multinationals work? (1)

houghi (78078) | about 2 years ago | (#42633047)

Look at it from another angle.
Imagine you have a small restaurant. You manage it yourself. You cook and you serve. However very soon you decide that you can not do both, so you serve and hire a cook. Your first employee.

The business grows and very soon you have several people in service and several people in the kitchen. Then you expand even further and you notice you are doing so many things managing the restaurant and doing books and looking to buy food and drinks at the best price that you do not have the time to stand all the time in the restaurant. So you hire a maitre'd to do this for you.

So many people come over from far away that you extend it to a small hotel. You put a manager in there. Now you have basally two different businesses in your company. Hotel and restaurant. Sometimes they overlap. Breakfast for the hotel is an example. Sometimes they compete. e.g. a big company who needs the rooms, while people eating in the restaurant also want those rooms.

However you are so successful that you build out and build a similar place in the next city. And then the next state. Soon you have 100 Hotel/restaurants and you notice that you can save money if you buy out the small company that made towels, linen and curtains. So now you add something indirectly related to the company.

That linen is so wanted by people that you start selling it directly. That leads you into the market of home-decoration.

Now what you see is that you make a LOT of money with that last business, but the hotel business is not going well. So to make it more interesting, you start to buy hotels even faster, because that way you can deduct the profit and you do not need to pay as much taxes.

Then finally you stop working and you give the business to your two kids. One takes over the Hotel part. The other the home-decoration parts. So even if there are two bosses now, they will keep working together. One will be pouring the profits into the others company.

The fact that they might be doing business in different countries or different continents does not matter. Also this is an extremely simple example. What would more likely happen is that there would be a holding company of which they both own 50%. The holding company is owner of the two parts of the company.

This could even mean that the company is not directly owner of the hotels, but rather owns companies that are in different states or even countries that own the hotels. Then each hotel might be a different situation where some a owned, others only partly or not the ground or just leased. And perhaps they split up the hotel and restaurant in some places, due to the local laws.

But no matter how complex it becomes, it will be owned and managed by one group of people. In this case the brothers.

You can also look at it from a different angle. Look at each department in the company where you work as a different company. Split them up in larger groups. e.g. by director and those are the different countries. In the end it is the directors who decide.

So es, they have a LOT to say about the UK iteration, because they are the owners. What the exact relationship is and how strongly it is enforced will depend on a LOT of different things, including the temperament of the shareholders wife that morning.

Re:Can someone explain how multinationals work? (1)

DaveGod (703167) | about 2 years ago | (#42633357)

It's basically the same as how it is done within one company.

Usually, there will be a parent holding company that does nothing except own subsidiaries, which are the trading companies.

The holding company owns the shares in the subsidiary therefore controls all shareholding voting therefore controls appointment of directors therefore controls the board and therefore controls everything below the board. It is also common for the holding company to appoint a director(s) who comes from the holding company for day-to-day influence and to take action without bothering with the paperwork of shareholder voting etc.

The whole thing with parent and subsidiary companies can get incredibly complex. Generally, for someone like Google the general public can just ignore the corporate structure and just consider it all one company. All these subsidiaries, they're basically there for practical administrative, tax and legal reasons.

It can get vastly more complex when you have a company like BP, who have loads of arrangements where they might own varying proportions of other companies set up for some specific venture. They might also have various contracts which provide certain degree of control - maybe only over certain things. Or various contracts which provide for a certain degree of interest (e.g. share of profit) without actually having any control as such. Maybe BP does a survey, finds a viable but risky field, and receives an offer from a more prospective company to sink a well. BP could sell their interest in that field, or they could draw up a contract whereby the other company can drill it but has to pay BP 1/3 their profits.

yeah, new industry (2)

bmimatt (1021295) | about 2 years ago | (#42632735)

Hi Google,

Please change industries and move to real estate completely.   While you are at it, do not send banks to the internet - we love our hysterical authentication on their sites.

Thanks!

So are they going to pay like everyone else? (1)

Anonymous Coward | about 2 years ago | (#42632747)

So are they now going to pay their god damn corporation tax like everyone else?

Likely tax motivated (1)

Anonymous Coward | about 2 years ago | (#42632761)

Sure, it's likely it was tax motivated.

But let's not overlook that value after construction: £1 billion ($1.6 billion) - value invested: £650 million ($1.04 billion) = £ ka-ching ($ ka-ching).

Re:Likely tax motivated (1)

LordLucless (582312) | about 2 years ago | (#42633125)

Depends. The price of construction was £1 billion - but the price of the land wasn't mentioned, and that's a decent chunk of some pretty expensive real estate.

$1 billion will buy you some excellent tax lawyers (3, Interesting)

PolygamousRanchKid (1290638) | about 2 years ago | (#42632893)

They'll personally pick up that $1 billion wherever you want, and hand it back to personally wherever you want it. All perfectly legal. Oh, they will want a small "taste" of that $1 billion. Hell, they'll take it to the Moon or Mars for you. The first manned colonies there will be tax shelters.

Or they could mint some $1 billion platinum coins, and take them in their pockets on flights from London to San Francisco.

Evading taxes, is never a problem for big corporations. Now that they are investing $1 billion in the property in London, the rent rates in that neighborhood will surely skyrocket. Who owns, or partially owns, the real estate in the area . . . maybe Google, as well . . . ?

Buy up some cheap real estate in a distressed area, and then build something big there. The cheap real estate suddenly becomes quite valuable. A nice business plan . . .

Re:$1 billion will buy you some excellent tax lawy (0)

Anonymous Coward | about 2 years ago | (#42633611)

Or they could mint some $1 billion platinum coins, and take them in their pockets on flights from London to San Francisco.

Now that's something they can't do.

Well, they could try, but they'd get laughed at, then arrested.

Re:$1 billion will buy you some excellent tax lawy (1)

hotdiggity (987032) | about 2 years ago | (#42633841)

Buy up some cheap real estate in a distressed area, and then build something big there. The cheap real estate suddenly becomes quite valuable. A nice business plan . . .

The King's Cross area is not remotely distressed. It's been undergoing a revitalization project for pretty much a decade right now. The restored St Pancras station there ranks among the nicest buildings in London (and that's saying something).

So if Google would be a bit late to the party if this was their plan. But it's a great location. Central, on seven subway lines, and a 45 minute direct train to Cambridge.

Good strategic spot, I'd say.

sonny (-1, Troll)

sonnycleon (2817857) | about 2 years ago | (#42632971)

Here is a web page and is one of the pages I like outside f5movies.com. Movie download site that I like is the continuous updates f5movies.com download a movie [f5movies.com]

Need to drop the neo-con's bill (0)

Anonymous Coward | about 2 years ago | (#42633157)

This is insane. The neo-cons passed a bill that said that no taxes would be paid until brought back to the American shores. So, now American companies enjoy sending the work elsewhere, while getting all of the benefits of being HQed in America. It is time to roll that bill back.

kings cross? (0)

Anonymous Coward | about 2 years ago | (#42633489)

I suspect google may be building hogwarts..

Load More Comments
Slashdot Login

Need an Account?

Forgot your password?