Google Invests $1 Billion To Build New London HQ 132
redletterdave writes "Google just purchased a 2.4-acre plot in the King's Cross Central development in London, where the company plans to build a brand-new, 1 million square foot office. Google reportedly invested about £650 million ($1.04 billion) on the property, which, when finished, will be valued at more than £1 billion ($1.6 billion). While Google traditionally leases its overseas offices, the company's decision to buy rather than rent in this case was likely tax motivated, since Google can't repatriate its cash to the U.S. without paying a hefty tax."
Can someone explain how multinationals work? (Score:5, Interesting)
With companies like Google or Coke or Sony, is it one company....say Sony is a Japanese company, that incorporates businesses in many countries which are owned by the Japanese company, and just funnel the money back into the Japanese parent corp? What is to stop the independent company from doing its own thing or making different decisions?
Or in the case of Google, how do they have say over the UK iteration of the company? Are they all controlled by the same people? What are the relationships?
Re:Can someone explain how multinationals work? (Score:3, Interesting)
Re:One trick is through sales (Score:3, Interesting)
I think that's only telling part of the story, and the wrong part, at it.
If all those companies were doing was setting up most of their profit areas in low tax countries, I, personally, would find that legitimate. Ireland has low taxes, so Google, Microsoft, Facebook and many others have huge development centers there. That's just called a "tax plan", and is legitimate.
The point at which, IMHO, this crosses the line is where all of those companies want to show profits for their publicly traded, US based, parent companies. "Google Ireland Inc" (or whatever) is not traded in wall street. Nobody gives a rat's !@%!@# how much profit it made. It's the US based GOOG that is traded, and in order for its stock price to rise, they would really want its balance to show a huge profit.
That's the part I don't understand. How do you get the American company to show profit, and yet claim that the taxes for those profits need to be paid in Ireland. That's the part I suspect is breaking some laws.
Shachar
$1 billion will buy you some excellent tax lawyers (Score:4, Interesting)
They'll personally pick up that $1 billion wherever you want, and hand it back to personally wherever you want it. All perfectly legal. Oh, they will want a small "taste" of that $1 billion. Hell, they'll take it to the Moon or Mars for you. The first manned colonies there will be tax shelters.
Or they could mint some $1 billion platinum coins, and take them in their pockets on flights from London to San Francisco.
Evading taxes, is never a problem for big corporations. Now that they are investing $1 billion in the property in London, the rent rates in that neighborhood will surely skyrocket. Who owns, or partially owns, the real estate in the area . . . maybe Google, as well . . . ?
Buy up some cheap real estate in a distressed area, and then build something big there. The cheap real estate suddenly becomes quite valuable. A nice business plan . . .
Re:Can someone explain how multinationals work? (Score:5, Interesting)
The unfortunate fact is that tax laws are fucking complex, and contain loopholes smart people can find and exploit.
If you are a large corporation, do you:
A) Pay a hundred million in tax.
B) Pay 20 million in legal research to find completely legal loopholes and ways to arrange your corporate structure so you can pay 10 million in tax.
There is then the wrinkle that to not do 'B' may be against your shareholders best interests.
Re:Can someone explain how multinationals work? (Score:4, Interesting)
Over here, I am called a conservative, but yes; we are classical liberals.
As your simpler, dumber brother on the other side of the pond; please allow me to condense your thought into a sound byte so we can understand it over here:
If a billion dollar building in downtown London is cheaper than the tax, then the tax is too high.