Both of them now

At least we know why Soapy Joe is doing this, advertising to pay for that windmill conversion:

Tax barrister, Jolyon Maugham QC, said: “This is the same story as Google and Facebook which is that profits generated from the UK are not taxed in the UK. By using a company in a lower tax country, in this case Ireland, Airbnb looks to have arranged its affairs to avoid tax throughout Europe including the UK.”

The point being that they’ve every right to do this. Note well what the Commission’s complaint about Apple is. It is not that a profits tax is not being paid in the UK, France, or Germany. They’re just absolutely fine with that because it’s a Single Market you idiots!

Airbnb said the UK company processes payments from customers around the world on behalf of its Irish HQ. The “significant costs” of that process – such as any foreign exchanges losses – are reimbursed by Ireland at a profit which is then taxed in the UK, it said.

Airbnb said that its international HQ was based in Ireland to “capitalise on Ireland’s global reputation for technology and utilise the vast tech-savvy and bilingual workforce that Ireland has built.”

But Richard Murphy, a chartered account and director of Tax Research UK, said he thought Airbnb was “dumping its foreign exchange losses in this country to get tax relief on them but the income to which these foreign exchange losses relate never comes near the UK”.

“We get none of the upside on tax from Airbnb’s real income, which is taxed in Ireland, but are giving away tax relief on their costs,” he said. “The net result is to significantly increase the overall level of profits Airbnb can enjoy at low tax rates.”

Murphy said cost reimbursement “is not the basis on which international tax rules are meant to work”.

Actually, costs plus a margin is the way that much of this is indeed done. Because it’s an obvious, legal and simple way to do it.

Wouldn’t it all be so much more fun if those complaining about the tax system actually understood it?

29 thoughts on “Both of them now”

  1. Airbnb doesn’t make any foreign exchange losses because it charges you 3% on every transaction, even / especially if your payment card would not charge.

    The way to avoid this is to set your payment card country to the country you are visiting, which means you have to use a card which doesn’t verify billing addresses.

  2. Nowhere in the article (which they haven’t allowed comments on) does it state that the solution is to leave the single market.

  3. As this company recently drank a pint of Kool Aid with their smug email to all their subscribers about how progressive and diverse they were, they can jump in a lake with this one.

    Lie down with dogs, get fleas.

  4. Interested

    Absolutely agree – in some ways as bad as Murphy because on the outside he seems more reasonable but underneath is a vicious totalitarian oozing self-righteous superiority. Certainly is not hard to see him signing death sentences ‘for the greater good’

  5. “…cost reimbursement “is not the basis on which international tax rules are meant to work” – says Richard Murphy.

    Whereas Chapter II of the OECD Transfer Pricing Guidelines lists 5 acceptable methods of Transfer Pricing, the third of which is…

    Cost Plus. Paragraphs 2.39 to 2.55.

    There really is no start to Murphy’s knowledge, no end to his stupidity.

  6. So the “tax expert” and “inventor” of country-by-country reporting didn’t get as far as chapter 2 of hte OECD guidelines?

  7. Seems like Jolyon is simply stating the facts. Airbnb has indeed arranged its affairs to avoid [corporation] tax throughout Europe [except Ireland].

    A quick search for Airbnb on Jolyon’s website returns zero results. I’ve trawled through his articles on Apple, and he clearly states that this tax system (whereby a company can sell goods across the EU but only pay tax in one country) was devised by the European Commission. So both Timmy and Jolyon are in agreement.

    Where they differ is that Jolyon wants to see equalisation of corporation tax rates across the EU; whereas Timmy wants to abolish both the EU and Corporation Tax entirely. (I may be over-simplifying their positions.) Both positions are workable in the medium-term.

    Compared to Murphy, Jolyon’s IQ is a good 15-20 points higher. His articles aren’t just keyboard-bashing rants, even though his Murphy-esque desire for MOAR TAX sometimes finds him making odd arguments. Most importantly, unlike Murphy, Jolyon’s blog doesn’t have a smackable photo in the sidebar.

  8. I’d not trust someone actually called Jolyon Maugham even if he were the second coming of Milton Friedman.

    Who in their right mind decided that fucking Jolyon is a good name?

    Who throws a shoe?

  9. Where they differ is that Jolyon wants to see equalisation of corporation tax rates across the EU;

    I think Tim would be happy to see this too – as long as they were equalised at 0%.

    Jo may have a different view though.

  10. bilingual workforce that Ireland has built.”

    Bilingual in Irish and English? How is this an advantage? Over any other bilingual nation? Or even over nations that are predominately English only?

    This part just seems like PR/marketing feel-good fluff – and crap fluff at that as half a moment’s reflection destroys it.

  11. > bilingual workforce that Ireland has built

    They didn’t build it; they imported it. Over 300,000 people from the continent have settled in Ireland. More than half of those are from Poland and the Baltic states though; I can’t imagine the likes of Dell were attracted by the vast Lithuanian-speaking workforce.

  12. Bloke in Costa Rica

    There’s a hell of a lot more people speak Lithuanian than Leprechaun.

    Fun fact: about 6% of Lithuania’s entire population is now resident in the UK.

  13. I have never read a single post by Soapy Jo that has not left a nasty taste in my mouth – I suppose that’s why I termed him “Soapy”. It is his attitude that if you do not take every means to pay the maximum amount of tax then you are failing in your duty as a human being.

  14. So Wales is one of the more bilingual regions
    Of the UK then

    Apart from Westminster, where they are all fluent in both English and Bullshit.

  15. So Irish people bilingual in a language spoken by just over a million people, most of whom are also English speakers.
    Not sure there is an advantage there.
    Now if it was Spanish, Chinese or other language used by lots of other people then yes could see the point – if catering to that market.

  16. I quite like Jolyon. He seems to pick very precise points to argue, and unlike many lefties, he appears to understand what is ( council tax, TV, VED, price of a passport ) and isn’t ( VAT ) regressive taxation. He has a connection with the dependency classes that others on his side do not. He doesn’t seem to want a taxpayer hand out for his windmill project too.
    As a lawyer though he acts on the instructions of his customers, whether moral or not, his is not to question. And I’ve no doubt that the perceptive Van Patten is right, that he would pull the trigger at a summary execution if told to. Not one you’d want next to you in the trenches in case he started a crowd-funder for legal rights for conscripted Enemy Snipers.

  17. What Soapy Jo would do well to explain is his opposition to Land Value Tax. Consider how much it costs to collect and enforce income tax, Vat, income tax, CGT etc, compared with Council tax… So simple even a local authority can collect it with minimal arrears. How can you evade a Land Value Tax? For non – payment, seizure of the property. The rules could cover fewer than 6 pages unlike the 2000 for income tax. What place to tax experts and QCs play? Very little. What’s not to like? Soapy wants more tax as long as it is complex enough for him to have a job, oozing and pleading for his clients. Any sane person who advocates a Wealth Tax, such as he posited a year or so ago, needs to be ridiculed. And ridiculed repeatedly. It is the exact opposite of an easy tax to collect and calculate. So just a fee earner for the fleas in the Inns of Law

  18. I see Murphy is now back peddling regarding cost plus.

    Of course he knew about it…’s just errrrrrrrrr….not the appropriate method in this situation………

    So he’s gone from saying it’s not the way transfer pricing works to saying that well, it can be but it isn’t right for this situation.

    But cost plus is EXACTLY the method the OECD recommends for these situations. Airbnb UK just process payments. Just a service. They add nothing of intellectual or technical value. If Airbnb Ireland were to seek out a third party processer in the UK, they would likely strike a deal whereby that third party was guaranteed a small profit. Cost plus.

    Paragraph 2.39 of the OECD Transfer Pricing Guidelines actually reads “This method [cost plus] probably is most useful…” then it lists a number of situations, the last of which is “…where the controlled transaction is the provision of services”

    And that’s what Airbnb UK, Airbnb Ireland and the UK and Irish tax authorities would have agreed. Because, as is usually the case the tax authorities on both sides of this deal would almost certainly have discussed, examined and agreed the deal.

    And they would have used seasoned experts to do the negotiating and not fat know-nothing turds like Murphy.

  19. Yes and soapy Jo really hates people who are not barristers. They should have no say in the government of this country, hence his crowd funding campaign to overturn the Brexit Vote. In my world, he would present cases in a court ruled by 5 year olds. That is his true intellectual level

  20. Bloke in North Dorset

    “And that’s what Airbnb UK, Airbnb Ireland and the UK and Irish tax authorities would have agreed. Because, as is usually the case the tax authorities on both sides of this deal would almost certainly have discussed, examined and agreed the deal.”

    Isn’t that the key in this whole subject, nobody operates in a vacuum? Companies may try their own interpretations of what is written and push the boundaries but in the end they have to discuss it with the various tax authorities and as a last resort take it to court if they can’t agree.

    The idea that some blogger, sat in a shed in the middle of nowhere, can find a glaring gap in how tax is operated and applied that means Governments have a new money tree is bordering on the preposterous.

  21. > Most importantly, unlike Murphy, Jolyon’s blog doesn’t have a smackable photo in the sidebar.

    Christ, have you never seen his Twitter page? He has the most smug, punchable face on the planet.

  22. I think the bilingual thing is about the Irish education system being good at getting people adept at a third language (after English and Irish). Most of my (numerous) Irish cousins are comfortable in German, French or Spanish.

    For good reason, native English speakers often lack motivation to master other languages. I think that the continued requirement for Irish kids to learn Irish has the advantage of conditioning young kids to learning alternative languages. So companies can go to Ireland and find people with useful second languages.

    Of course, companies in the U.K. can just employ Germans/Frogs/Spaniards etc.. most of whom come over with their home tongue and excellent English.. but if my business was an English language business I’d prefer an English speaker who also speaks French over the converse, every time.

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