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Ireland could lose millions in tax as Facebook shifts UK profits back to UK

The tech giant paid just €5,000 in corporate tax in the UK in 2014, by routing its profits through Ireland.

Spain Wireleless Show Source: Associated Press

FACEBOOK TODAY SAID it would declare advertising revenue from its top British clients in Britain instead of Ireland, where it has its European headquarters, meaning it will have to pay more tax.

In a statement sent to TheJournal.ie, the company said:

On Monday we will start notifying large UK customers that from the start of April they will receive invoices from Facebook UK and not Facebook Ireland.
What this means in practice is that UK sales made directly by our UK team will be booked in the UK, not Ireland. Facebook UK will then record the revenue from these sales.
In light of changes to tax law in the UK, we felt this change would provide transparency to Facebook’s operations in the UK.
The new structure is easier to understand and clearly recognises the value our UK organisation adds to our sales through our highly skilled and growing UK sales team.

The result is that Facebook will end up paying more tax in the UK, although the precise amounts will not be known until 2017.

The company did not make clear what proportion of revenues from smaller companies would continue to be routed through Ireland.

In 2014, Facebook Ireland paid €3.4 million in tax on gross profits of €4.7 billion, while in the UK the company paid just £4,327 (€5,214) that year.

It is not known exactly how much of the tax paid into the Irish exchequer will be shifted to the UK under the new arrangement.

A Department of Finance spokesperson told TheJournal.ie they could not comment on the affairs of an individual company.

The announcement comes amid public outrage in many parts of Europe over the tax arrangements of US tech multinationals including Amazon, Facebook and Google.

There has been outcry in the UK over Google’s tax arrangements, and in January the company agreed to pay Her Majesty’s Revenue £130 million (€172 million) in back taxes.

The BBC reports that Facebook’s major British clients include the supermarket chains Tesco and Sainsbury’s, as well as food giant Unilever and advertising group WPP.

The corporate tax rate here is just 12.5%, one of the lowest in the European Union.

In Britain it is 20%.

Contains reporting by AFP.

Read: Facebook didn’t pay a whole lot in Irish taxes last year>

Read: Google is to pay its UK taxes in Britain from now on, rather than in Ireland…>

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Dan MacGuill

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