On Fiat and Starbucks

There Will Be No Fines In The Starbucks And Fiat European Union Tax Cases

14 thoughts on “On Fiat and Starbucks”

  1. And what fun. This post has just been retweeted by the SVP of corporate communications of…..Starbucks

  2. Well, the person who would be fined is currently President of the EU Commission so what would you expect? Geese voting for Christmas, turkeys voting for Thanksgiving?

  3. “asked the controlling governments, Luxembourg and Holland”

    Holland doesn’t have a government, just as England doesn’t have a government.

  4. I see RM has not quite grasped that illegal stae aid is aid by the state which is illegal, not by the companies who have a letter saying it’s legal.

  5. Such is the paucity of Murphy’s tax knowledge that he misses the point. The idea behind the double company structures is to make a lending arrangement that is a bona fide lending arrangement from the point of view of the borrower while making it look like the topco is lending to its foreign branch (and entities that consolidate with it. In order to make this kosher the intermediate group companies have to make a taxable profit, so there is a relatively small tax cost because of the tax on the margin, and one of the negotiating points in getting a tax ruling from Luxembourg was what the amount of that de minimis margin should be. The Luxembourg authorities appear to have accepted one sixty-fourth of a percentage point as being enough whereas the EU says that is too small, but in the whole scheme of things if they paid tax on as much as 0.25%, the groups would still pay no tax on interest at 8.75% (assuming 9% interest on the loans (which many of them do). The rulings are only an agreement with the Lux tax authorities (who will presumably be happy to get paid a little extra tax) but do not affect the rest of the arrangements.

  6. I’m assuming that if we end up with country by country reporting that Murphy wants we are just going to end up with more of the Starbucks type of situation, where they report by country, but legitimately manage their structure and allocations so as to minimise their tax. So Facebook will happily declare a large UK revenue figure which will be mostly wiped out by cost allcations of central resources etc.
    Maybe I’ll ask Murphy what face books uk revenue should be

    Ad sales booked by uk residents/businesses
    Revenue from ads served to British IP addresses, which I would assume need adjusting for click through rate if part of the contract covers that

  7. -Rob Oxfam exists “help create lasting solutions to the injustice of poverty”.

    Just as well, there is not enough famine to justify all that management.

    Of course eradicating poverty is a noble goal but as Oxfam points out ‘one person in three lives in poverty’, so they’ll all probably make it through to their pensions…

  8. I was having a chat with a vice director of something or other at Starbucks on Monday at an event. They’ve all been briefed internally about this and that briefing was “We’ve done nothing wrong and we don’t care. Don’t rock the boat though guys”.

  9. Can one of the resident tax experts confirm if Mary Snell has handed him his arse on this in the comments on his article? I think I follow her argument, but as always Ritchie is giving one line answers which don’t shed any light on things.

    Also, I think this is priceless:

    “No idea if this is feasible but couldn’t UK tax law be changed so that we move towards sales taxes, against which corporation tax duties could be offset, set at rates whereby non-cheaters’ existing tax liabilities change very little but cheaters’ tax liabilities grow?

    Richard Murphy says:
    October 22 2015 at 9:21 am

    That is a tax in consumption and not capital

    It would be regressive

    And we already have a sales tax that is widely evaded”

    Wasn’t Ritchie’s big idea recently a consumption tax?

    Stump thinking again.

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