The American social network, Facebook, will from now on adapt its tax structure. This is with a view to paying tax in each country where it generates local turnover. It does so in Belgium. Previously, all income was redirected to its Irish subsidiary, where tax was paid.
The company asserted on Tuesday that it was going to put in place a “local sales structure” in the countries where it already has a sales office to attract local investors. This is, for example, the case in Belgium, where the social network has offices in Rue de la Loi, as the publication De Tijd reports.
Advertising revenues will be accounted for locally from 2018, and will no longer be allocated to its European head office in Dublin. However this decision should not lead to a high increase in taxes paid according to the multinational.
In 2010, Facebook decided to combine its international activities in Ireland. However this fiscal optimisation was subject numerous criticisms, as much in the United States as in Europe. Last year, the social network promised that it would not account for its British turnover via Ireland. This came after media articles stating that it had only paid £4,327 in tax to HMRC (the tax authorities) in the United Kingdom. On the other side of the Atlantic, the company is involved in a legal dispute with US tax authorities, which may cost more than US$5 billion dollars to settle
Dave Wehner, Facebook’s Financial Director, stated, “We believe that this transfer to a local sales structure will enable greater transparency. Governments and legislatures throughout the world, have requested this. They desire greater visibility as to the turnover produced in their country.”
This adaptation is also a moral victory for the European Commission. The Commission considers that the multinational is paying too little tax at the present time. A few months ago, the European Commission had already decided that Apple ought to be paying €13 billion in taxes, as the Apple brand may have enjoyed unfair tax advantages in Ireland for a number of years.
The new tax structure should be implemented during 2018. This is according to the Financial Director, and the process should be completed in the first half 2019. This structure, already operated by the social network in Great Britain in 2016, has certainly led to an increase in taxes paid by the group in the country, but not spectacularly so.
Facebook has more than thirty local offices. Its main head office is at Menlo Park, in California, whilst Dublin will remain the international hub.
The Brussels Times
