5 ms·

I don't see how establishing your company in a country with a lower tax rate as opposed to some other country can be considered as tax "evasion".

talkingquickly 14y ago
I guess it depends on whether they're going to use the Irish Subsidiary in such a way that it allows other legal entities to reduce their corporation tax bill in higher rate locations. The popular one at the moment being The Double Irish (http://en.wikipedia.org/wiki/Double_Irish_arrangement http://en.wikipedia.org/wiki/Double_Irish_arrangement) which Google, Amazon and Starbucks have been using very successfully recently. Not suggesting this is necessarily what Dropbox are going to do but it might enable something like this, should they wish to.
- alexkus 14y ago
  > Google, Amazon and Starbucks Not forgetting:- Facebook, Apple, Microsoft, Oracle, Pfizer, Adobe (amongst others).
alexkus 14y ago
It's not, it's "tax avoidance" which is entirely legal but various Governments (UK and France in particular) and starting to get upset about. "Tax evasion" is not paying tax that you must pay. "Tax avoidance" is finding ways to not be liable for the tax in the first place.
- john_flintstone 14y ago
  It's not tax avoidance either. It would only be tax avoidance if they moved from one EU country to another one that had a lower corporate tax rate. This is their first European office - it makes perfect sense to choose the location that brings the greatest benefits to the company.
  - nodata 14y ago
    It depends how they structure the company: where will the workers be, are they going to cheat on their tax using a dodgy licensing scheme, etc.
  - alexkus 14y ago
    You don't have to move offices to start doing the road of tax avoidance. It's all about where you channel your money internally if you have two companies operating in different tax regimes. It'll be interesting to see what they do with the profits from their companies (both the US and Ireland). If they keep a chunk of income in Ireland and only transfer it to the US during tax amnesties then that's one standard form of avoidance. If the US Dropbox entity starts paying a large sum of to Dropbox Ireland in order to license some part of the technology then we're in to the cunning world of tax avoidance proper.
  - chalst 14y ago
    Quite so. Richard Murphy put together a set of definitions that might be of interest: http://www.taxresearch.org.uk/Blog/2010/07/07/tax-avoidance-evasion-compliance-and-planning/ http://www.taxresearch.org.uk/Blog/2010/07/07/tax-avoidance-... > Tax avoidance is seeking to minimise a tax bill without deliberate deception (which would be tax evasion) but contrary to the spirit of the law. It therefore involves the exploitation of loopholes and gaps in tax and other legislation in ways not anticipated by the law. Those loopholes may be in domestic tax law alone, but they may also be between domestic tax law and company law or between domestic tax law and accounting regulations, for example. The process can also seek to exploit gaps that exist between domestic tax law and the law of other countries when undertaking international transactions. (I'm a former tax accountant, at KPMG - these definitions are uncontroversial AFAIK)

talkingquickly 14y ago

I guess it depends on whether they're going to use the Irish Subsidiary in such a way that it allows other legal entities to reduce their corporation tax bill in higher rate locations. The popular one at the moment being The Double Irish (http://en.wikipedia.org/wiki/Double_Irish_arrangement http://en.wikipedia.org/wiki/Double_Irish_arrangement) which Google, Amazon and Starbucks have been using very successfully recently. Not suggesting this is necessarily what Dropbox are going to do but it might enable something like this, should they wish to.

alexkus 14y ago
> Google, Amazon and Starbucks Not forgetting:- Facebook, Apple, Microsoft, Oracle, Pfizer, Adobe (amongst others).

alexkus 14y ago

It's not, it's "tax avoidance" which is entirely legal but various Governments (UK and France in particular) and starting to get upset about. "Tax evasion" is not paying tax that you must pay. "Tax avoidance" is finding ways to not be liable for the tax in the first place.

john_flintstone 14y ago
It's not tax avoidance either. It would only be tax avoidance if they moved from one EU country to another one that had a lower corporate tax rate. This is their first European office - it makes perfect sense to choose the location that brings the greatest benefits to the company.
- nodata 14y ago
  It depends how they structure the company: where will the workers be, are they going to cheat on their tax using a dodgy licensing scheme, etc.
- alexkus 14y ago
  You don't have to move offices to start doing the road of tax avoidance. It's all about where you channel your money internally if you have two companies operating in different tax regimes. It'll be interesting to see what they do with the profits from their companies (both the US and Ireland). If they keep a chunk of income in Ireland and only transfer it to the US during tax amnesties then that's one standard form of avoidance. If the US Dropbox entity starts paying a large sum of to Dropbox Ireland in order to license some part of the technology then we're in to the cunning world of tax avoidance proper.
- chalst 14y ago
  Quite so. Richard Murphy put together a set of definitions that might be of interest: http://www.taxresearch.org.uk/Blog/2010/07/07/tax-avoidance-evasion-compliance-and-planning/ http://www.taxresearch.org.uk/Blog/2010/07/07/tax-avoidance-... > Tax avoidance is seeking to minimise a tax bill without deliberate deception (which would be tax evasion) but contrary to the spirit of the law. It therefore involves the exploitation of loopholes and gaps in tax and other legislation in ways not anticipated by the law. Those loopholes may be in domestic tax law alone, but they may also be between domestic tax law and company law or between domestic tax law and accounting regulations, for example. The process can also seek to exploit gaps that exist between domestic tax law and the law of other countries when undertaking international transactions. (I'm a former tax accountant, at KPMG - these definitions are uncontroversial AFAIK)