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News : Innovation Last Updated: Jan 7, 2015 - 10:31 AM

Facebook booked 48% of global revenues in Ireland in 2013; 0.34% of profits
By Michael Hennigan, Finfacts founder and editor
Dec 5, 2014 - 9:48 AM

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Facebook Inc booked 48% of its global revenues in Ireland in 2013 and allocated 0.34% of profits to its Irish resident company.

Facebook in the UK paid no tax for a second year in 2013.

The leading social media company booked $3.6bn of its $7.9bn in 2013 revenues in the US and $4.3bn overseas - Irish revenues were €2.98bn ($3.80bn).

Net income before tax grew from $494m in 2012 to $2.75bn in 2013 and in Ireland net income rose from a loss of €626,000 ($799,000) in 2012 to a profit of €7.3m ($9.3m) in 2013.

Facebook Inc. provided for $1.25bn in taxes in 2013 (high effective rate explained by share-based compensation) and in Ireland its tax bill fell from €5.2m ($6.6m) to €2.3m ($2.9m).

Double Dutch Irish transfers to the Irish offshore company in the Cayman Islands accounted for most of the charges to avid tax. The company has four Irish companies in the Caymans.

425 people worked in Dublin from a global payroll of 6,337 - the Irish workers are very productive in a virtaul sense and it feeds into distorted national accounts indicators.

The idiot/ eejit's guide to distorted Irish national economic data

The Guardian has reported that Facebook UK made £371m in advertising revenue last year, a 67% year-on-year rise from the £222m in 2012, according to research firm eMarketer.

In its UK accounts revenues rose from £34.6m to £49.8m and it engineered a pre-tax loss of £11.6m.

Facebook UK incurred a corporation tax charge of just £3,169, and received a credit of £182,000.

The company employed an average of 172 UK staff, who were paid £40.8m last year, almost double the 2012 figure of £21m.

This is because of a £15.5m payment cost for “share-based payments”.

This week George Osborne, UK chancellor of the exchequer announced a 25% tax charge on diverted profits that has been called a "Google tax."

“The big technical companies are not stupid,” said Heather Self, a partner at law firm Pinsent Masons LLP according to The Wall Street Journal. “I find it very hard to believe that they will have a structure that fits the definition of being abusive.”

What might seem an obvious physical presence in a country may not be, under current international tax treaties. Based on long-standing interpretation of these treaties, foreign companies, for instance, only have to pay taxes on profits generated in the U.K. that are associated with a permanent establishment within the country, said Chris Morgan, head of tax policy at KPMG in London. But having a warehouse, for example, isn’t a permanent establishment. Neither is a sales team, as long as they don’t finish off the transaction, he said.

“Every single treaty would have to be changed,” he said.

The House of Commons Public Accounts Committe last year in a report said the claim that Google's big sales transactions in the UK were completed in Dublin was not credible.

Related tax links

Corporate Tax Reform: Ireland on sidelines as big countries make big moves

Germany, France and Italy call for EU directive on tax reform

Germany and UK agree to restrict 'patent box' tax incentives to local R&D

Architect of tax "racket" to commit EU to fight against tax fraud

Hidden Taxes Report: Kenny denies Irish special Apple tax deal despite contrary "evidence"

Luxembourg Leaks: Irish Government's guff on tax system exposed; "Racket" needs to stop

Luxembourg confirmed as massive facilitator of tax avoidance

Bono struggling again as anti-poverty campaigner and tax avoider

Apple says it may have to pay Ireland back tax; Foreign tax rate at 4.4%

Double Irish tax scheme axed; Conventional wisdom wrong again - Part 1

Replacing the Double Irish with Knowledge Development / Patent Box - Part 2

Ireland's small gain from Apple's possible EU tax probe payment

European Commission: Apple given special tax deals by Ireland

Apple's foreign tax rate tumbled after 2007 Irish 'advanced opinion'

G20 finance ministers reaffirm commitment to tax reform; Ibec takes Finfacts' advice

OECD & Tax: Everything grand in Ireland's Republic of Spin?

OECD proposes biggest reform of global business tax rules since 1920s

Finfacts submission to Department of Finance consultation on corporation tax reform

OECD BEPS Project submission from Finfacts: Ireland should embrace corporate tax reform - - includes analysis of underperforming indigenous tradable sector.

Irish corporate tax policy like property bubble driven by short-term interests

IMF explains “Double Irish Dutch Sandwich” tax avoidance

US company profits per Irish employee at $970,000; Tax paid in Ireland at $25,000

Estonia heads OECD tax competitiveness index; Ireland at 15, US at 32

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