Facebook’s alleged use of legal loopholes to dodge taxes in Spain

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LOOPHOLES: EU authorities are concerned that some companies are abusing legal loopholes. Photo Credit: Shutterstock

THE Spanish subsidiary of the US social media giant, Facebook, reported net losses of nearly €1 million last year, a 96 per cent rise on 2016.

And is now being warned sanctions could be imposed as the European Union ‘loses patience’ with the internet company’s alleged tactics to avoid paying tax by transferring revenues to Ireland.

Facebook Spain acts as an intermediary of the group’s Irish branch, Facebook Ireland, providing it with sales and marketing services support.

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The transferring of revenues is a ‘theoretically legal’ corporate activity which is common among global tech companies, with multi-national firms also moving profits to other low-tax jurisdictions such as the Netherlands and Luxembourg.

But EU authorities are concerned that some companies are abusing legal loopholes, and have pledged to ensure that ‘digital businesses are taxed in a fair and growth-friendly way in the EU’.

According to the annual accounts filed with the Business Registry, the €957,829 in losses in 2017 is due to higher advertising costs. It shows there was also a notable rise in personal expenses as a result of commissions, bonuses and other employee benefits.

As a result of the international pressure with regards to payment of tax, Facebook has reportedly claimed that as of 2018, it will begin paying taxes in the country where sales are made, rather than transferring revenues to Ireland where it pays less duty.

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