IMO your comment would read better and be more persuasive if you'd simply downcase the allcaps.
Not really, if it's a regional talent center; Google needs physical locations where it wants to spend money by hiring people more than it needs them where it makes money, since it's moneymaking operations are not high-tech in-person interactions.
It wants workers educated by the State, who travel on infrastructure maintained by the State, who have healthcare provided by the State, security provided by the State, yadda yadda yadda. All the advantages, but none of the costs.
Now, all that said, I don't think subsidiaries should be able to use licensing agreements and other loopholes to move revenue to eliminate profit and reduce corporate tax. To me the solution is just to disallow any movement money related to intangibles (payments or license fees) unless the exchange is a bona fide transaction between unrelated parties. These subsidiaries in different jurisdictions are all entities owned by the same holding co's. It's like selling your brother a house for $1 (or more like the use of your last name for $1 Billion).
If you have employees in a country, then you necessarily will pay income tax in that country.
These are normal accounting standards.
If we decide that the double duct/Irish sandwich/etc are loopholes that are being explored and we'd like them closed, then it's entirely valid to do so.
Money made in the past does not mean that your are entitled or guaranteed to make money in the future.
I am completely in favor of designing new tax laws that close such loopholes. But taxing revenue in this way is a very, very dumb idea.
It's surely also most impossible prosecute, but speculation wrt. taxes is generally not legal.
That accounting should show a nice profit in EU countries.
External accounting is what you show your investors and tax authorities. It has to conform to all relevant laws, and you play your usual tax avoidance games. Both of those make it fairly unusable for decision making.
Internal accounting is what you base your decisions on, and you can do whatever you like (since you aren't showing it around). It just has to provide insight. For example you can have departments do virtual payments to each other for production steps and services to help you quantify how well departments are doing.
In English/US accounting traditionally you would only do fiscal accounting, but doing internal accounting as well is getting popular.
The issue is that accounting is very complicated. Like really, really complicated. And that's because you're trying to make a lot of very different companies follow the same rules on how to recognize revenue, costs, investments, etc.
For example, here's a real world problem I came across once: how do you recognize the revenue of selling virtual tractors on FarmVille?
- When the sale takes place?
- Over a pre-set period of time, determined by the average lifetime of an user?
- Over a pre-set schedule that follows depreciation schedules of real tractors?
Economic is even more complicated. Economic profit takes in account the cost of opportunity, so a company might have accounting profit but no economic profit. It gets even worse when you're talking about cross-border accounting.
In other words, companies usually have managerial accounting using their own internal rules, and standards-based accounting (GAAP, IFRS, etc.), to report operations to the government and to the owners.
But what if by SHEER COINCIDENCE the profit you would have made by normal accounting standards just so happens to be EXACTLY the licensing fee an overseas subsidiary charges to use your own brand?
Google spent a billion quid on their new HQ building in London. That's an awful lot to invest in a country where you make no profits...