How big tech companies avoid taxes

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Sometimes you hear the bells ringing and think they’re singing. But they aren’t.

Every now and then we hear them pealing about tax avoiding in the media. We hear them talk about the last trending ways of the staying away from the treasury’s eyes and fingers. In Spain it has become a regular thing. Spaniards are harassed everyday about the corruption scandals of the Bárcenas case, the last adventures of family Puyol and the hidden-in-Switzerland millions of the Falciani’s gentlemen.

Anyone would listen to the numbers with astonishment. With a stupid look in the face, actually. You could even feel dwarfed around those digits. What they have stolen seems outrageous.

But, is it?

Not at all.

That’s minutiae. Insignificant trifles. Moreover, why would anyone get himself mired in those ways, that of breaking the law to save part of the hard-worked wages. Crime is gross thing, of uncouth. Why would you dirt your honor in such a sludge, being as easy as it is to do everything legally. If what thou truly want is thy precious to stay away from the treasure’s eyes, thou shalt not let thyself be dragged by those evil arts, by those low-class despicable methods of the worst kind.

You should rather order a Double Irish Coffee. Yep. And no, we ain’t talking about drowning your justified greed in the next bar. The double Irish coffee is the truly last trend in the avoiding taxes deeps. How do you think the Top 8 Worldwide Technology Companies paid in 2013 only €17 million in Spain for taxes? Think that number is too low? Well, they probably thought it was way too high. The year before they managed to drop those digits down to a pitiful €1,25 million.

But what the hell is that double Irish coffee? An appropriate answer would be that it’s the last demonstration of the European organisms inability to agree their disciplines and legal regulations in the interests of a European Union that is a European Union de facto and not just bluffing. But for now we answer it through a more practical point of view and let twitter fight those battles.

Double Irish is a system of corporate tax avoidance that takes advantage of the laws of exploitation of intellectual property rights to avoid paying taxes that should be paid in the country where those rights have generated profits. The magic trick is in Irish law since, according to the it, a company is tax residents where it has its center of administration, no matter where it does most of its business.

Why it is called Double Irish? Because in order to take the benefits you need two companies, one in Ireland and one in a tax haven. This way, and to avoid the suspicious, the tax haven company sells the rights to exploit its intellectual property to the Irish company , which will do the same with the country they want to draw their benefits, for example, Spain. Thus, the Spanish company can sell, say, a million units of a mobile phone for a total 600 million euros, which, having paid for the rights to use that phone 599 million, will make appear a ridiculous €1 million profit in your sheets. The 599 million benefits that have flown away will now suffer the same process in Ireland. The company based there will pay 598 million euros to the located in the tax haven, also by way of royalties.Cafe Doble Irlandes english

Those 598 million will be taxed, of course, according to the tax legislation of the tax haven, usually by 1% or, in many cases, subject to full exemption. That money, of course, will only come back to the country from which it was extracted depending on the investment incentives the Government of that country applies in the future.

Now that’s how big tech companies avoid taxes. And all of it, of course, is done within the strictest legality. So be smart. If you just want to hide most of your fees from the aquiline noses of the public funds, it is highly advisable to request an Irish Double Coffee rather than resort to those shameful practices that will do nothing but take your bones to Spain’s most infamous prison, Soto del Real.

 

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