I know that, and that is a problem. But even if they stopped doing that, Italy could easily see none of the taxes on profit. Italy's new law doesn't actually fix the underlying problem. Instead it's a tariff that somewhat works around the problem but also bans an entire category of inter-country trade, which is quite problematic.
Maybe I wasn't clear enough when I used a hypothetical situation to illustrate why Italy's law is attacking the wrong thing.
Italy's law blocks a German corporation from selling German-served ads on German servers to Italian customers. That's a problem.
Italy's law doesn't block a German corporation from using tax loopholes to never pay anything. Therefore those loopholes shouldn't be mentioned as a justification.
Yes, you don't seem to be in disagreement with me. It doesn't block German companies from serving ads off of German servers, featuring Italian businesses. But they can only do so for free. They cannot be paid by the Italian businesses. I find this to be a rather ridiculous restriction on the purchase of services.
Especially if there is no exception allowing Italian companies to use German-served ads to target Germans.
It's not that they're selling American ads.
They're selling essentially nation-less 'let's not pay any tax to anyone at all' ads.
They're not paying any tax on this stuff. They're not paying EU tax, they're not paying US tax, they're taking advantage of all the local infrastructures, the laws, the protections from harm, all of which cost the nations a shit load of money to maintain, and not paying a penny.
Just to be clear. On Italian sales, they aren't paying Italy taxes. They're not paying Ireland taxes where they claim the sales are to do a Double Irish. They're not paying Holland taxes where they route the money through to do the Dutch Sandwich. They're not paying the US taxes, they park the money in an offshore account and lobby congress to grant a tax asylum.
They are simply not paying taxes.
This is happening in all the EU countries.
And then every now and then they lobby the US congress for a massive tax holiday to bring the money back to America tax free.
And what really confuses me is that they then often have the cheek to claim that they are contributing to the countries they're scamming because they employ people and those people pay tax, which is disgusting as it's actually the tax of their employees that they're merrily claiming is their contribution!
This is as far as I understand the issue. I think in some places you should probably replace 'not paying' with 'paying a ridiculously small amount'.