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Google Invests $1 Billion To Build New London HQ 132

Posted by timothy
from the but-how-will-they-find-it? dept.
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."
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Google Invests $1 Billion To Build New London HQ

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  • by metrix007 (200091) on Saturday January 19, 2013 @04:30AM (#42632723)

    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?

    • Rules are country related, besides taxes, UK makes sense for the Google-in-Europe strategists: English speaking, 3 hours from Paris, and as they say We’re one of Google’s largest engineering operations in Europe. [google.com]

      --
      If you consider an idiot someone who ignores ACs for some reason, you're an idiot.
    • by SmallFurryCreature (593017) on Saturday January 19, 2013 @06:20AM (#42632807) Journal

      Ireland and say Spain have radically different tax rates over profits over a sale. So... what can you do if you are devoid of all morals?

      Say the product in Spain sells for 100 dollars but really costs 10 to produce in China. Then Ireland buys it from China for 10 and sells it to Spain for 99.99. The sale in Spain then to the consumer is for 100, giving the Spain division a 1 cent profit.

      Of course, since you are making so little money in Spain, you do claim all the subsidies and tax breaks you can to support your struggling business.

      The fact is that our society is run on the principle that everyone is nice, that everyone is going to try their best to live together and play well with each other. The order keepers can NEVER check everyone doesn't speed, doesn't run red lights, gives the right of way. AND we NEED that, just imagine HOW hard it would be to travel anywhere if you couldn't at least somewhat count of right of way, people stopping for signs and keeping a similar speed. Remember that those who hate the speed limit ONLY talk about the MAX speed limit, the speeders NEVER complain about SLOW vehicles being banned from certain roads. No speed limits means you can drive ANYTHING ANYWHERE.

      It is the same with taxes, it would be un-workable to check everybody, so the system relies on most people paying their tax neatly.

      Evil people/Republicans often claim the rich pay the majority of the tax burden... apart that from the fact it ain't as a big a burden if you are rich, that is only logical, those who have the majority of the money, pay the majority of the taxes. The hidden lie (you know it is a lie because a Republican said it) is that the rich SHOULD be paying FAR more. But countless loopholes make the likes of Romney have a taxrate of 11%. No wonder he wants to see a birth certificate but does not want to show his tax records. If the rich payed their due share (who benefits more from police patrols, the rich guy with police guard or the poor guy living in a police no-go area) there would be far more tax-revenue AND then EVERYONES taxes could come down. If one rich guy avoids paying 1 million, that is a LOT of minimum wage workers who have to make up the difference because no Republican tax avoider would think of spending less on the army.

      Tax avoidance is a gigantic business, the economy of Ireland practically runs on it. And that is the huge problem, there is ALWAYS someone who benefits when society is harmed.

      The funny thing is that any call for chance will get you millions of piss-poor Republicans living on benefits saying you shouldn't tax the rich! Willing slaves. Because one day YOU may own a slave, you defend your own slavery. The American Dream, the ultimate brainwash.

      • Re: (Score:3, Interesting)

        by Sun (104778)

        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, pa

        • by batkiwi (137781) on Saturday January 19, 2013 @07:47AM (#42632979)

          I don't find claiming 90+% of the profit from ireland as legit if 0% of the work involved was done there.

          • by Fastolfe (1470)

            Do you believe that intellectual property has value? If I produce a product that would sell for $5 without branding, but with my valuable brand, it sells instead for $10, wouldn't that imply my brand alone (few employees, few government services) is responsible for $5 of that $10?

            Is it immoral that the division of my company that produced the product only pays taxes on the $5 that they actually produced, and not the full $10? If I sold my brand to a separate company, with the agreement that we pay some fr

        • by alen (225700)

          Goog is a parent company that owns lots of subsidiaries around the world

          When they report earnings it's the combined earnings from all the worldwide companies even if they can't bring the money back into the USA

        • by Kjella (173770)

          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.

          Ah, but they're not. They're not moving the money to the parent company, they're saying we own 100% of an Irish company that last year made profits in Ireland. It is the consolidated financial statement people are looking at, which in short means "pretend all our holdings were the same entity", it is not for tax purposes but a mere aggregation for telling the market how you did in total across all countries and sub-sub-subsidiaries. It's not actual financial transactions, it is mere aggregation.

      • Say the product in Spain sells for 100 dollars but really costs 10 to produce in China. Then Ireland buys it from China for 10 and sells it to Spain for 99.99. The sale in Spain then to the consumer is for 100, giving the Spain division a 1 cent profit.

        So you're saying that the only moral course of action is to find the area that has the highest tax rate, the least subsidies and support, and operate entirely out of there, so as to pay the maximum tax you possibly can.

        Because everything else is tax avoidance and therefore immoral?

        • Re: (Score:3, Informative)

          by cheesybagel (670288)
          No. The moral course of action is to pay sales taxes where you sell the product and corporate tax where you actually operate your business. Which is certainly not Ireland.
          • Where does a sale occur when it's made over the internet for a non-tangible item? The place the customer is located in? The place the server is located in? The place the business operating the service is located in?

            And are you saying Google doesn't operate in Ireland?

      • Re: (Score:3, Insightful)

        by towermac (752159)

        There is another explanation for your apparent dichotomy, but I believe your vitriol for "Evil people/Republicans" is blinding you to it.

        You defined the problem: The cost of doing business in Ireland and China is far cheaper than Spain (and the US and other places). There are two solutions to that, although you only see the one of going after Ireland and the people who do business across borders. You could try to make it cheaper to do business in Spain. You can't magically lower the cost of commodities and

        • Want to make this entire discussion go away? Then eliminate the corporate tax altogether and treat capital gains the same as ordinary income (ie, wages and salary).

          At one stroke, this would make the whiners on all sides STFU. Both the Occupy people, and the CEO's would no longer be able to complain. The offshore accounting tricks would collapse, revenue would skyrocket, and companies would move back into the USA.

          That's what nobody in the political right has pushed yet, even though it was a major component o

        • by divisionbyzero (300681) on Saturday January 19, 2013 @11:18AM (#42633645)

          11% would be a decent tax, especially on a guy making millions. Romney's, like mine, was actually closer to 14%; which means about $7,000 for me, millions and millions for him. What's your moral justification for making either one of us pay a higher percentage than the other? Don't envy his stuff, man. Don't vote based on envy, which is simply self-justified greed.

          You are focused too much on the absolute value of the dollars. The moral justification is that beyond a certain number those millions of dollars have less value than your $50,000. In other words basic necessities take up a far larger percentage of your income than Romney's. The additional tax revenue from people like Romney helps pay for the social costs of company's like his that force other companies to pay their workers substandard wages and benefits and thus turn to the government for help in order to increase profit margins to give people like Romney even more money. Do you see how this cycle works? If companies paid their employees a more reasonable wage, a so-called living wage, I could see the case for lowering taxes.

          As for the rest of your post, competing on taxes is a downward spiral that leaves governments unable to take care of their people in order to export wealth out of the country. A certain amount of tax competition help keep things lean but it's better to compete on things like education and infrastructure that hard to replicate. The reason tax competition is so popular is that it just takes some paper shuffling rather than real investments in a country's future.

          • by stdarg (456557)

            The moral justification is that beyond a certain number those millions of dollars have less value than your $50,000.

            I don't think that in itself is a moral justification. The real moral justification is probably "taking something of little relative value from one group to help another group where it has a higher relative value is good" or something along those lines. Of course nobody who says that really believes it.. the amount of goodness in that act mysteriously vanishes when people point out that they themselves are pretty darn well off compared to some other group! Even if you're one of the working poor posting on S

      • by mnooning (759721)
        This can all be avoided if we get rid of corporate taxes. Corporate taxes are like taking little bits of flesh from the goose that lays golden eggs. Take the tax eggs from the owners of the goose instead! Corporations are not people. They are bricks, steel, and paperwork. If we had no corporate taxes, big corporations like Eaton won't move to places like Ireland.
    • by Znork (31774)

      As a general rule it's not 'one company', but many and varying forms of companies in many countries depending on the forms of incorporation that are available in each country. Most countries have variants that can be owned and controlled by outside entities, which is why the local ones don't go around doing their own thing.

      This of course creates all sorts of ways to move money around to the place in which profits are best taken, as they can usually make internal sales for imaginary numbers to their subsidia

    • by Anonymous Coward

      Precise laws ar going to vary by jurisdiction and also by the constitutional documents of the specific subsidiary company but broadly speaking...

      The company is owned by its shareholders. In the situation we're talking about this probably means that 100% (or at least sufficient to exercise majority voting rights) belong to the parent company.

      The shareholders appoint, and can remove and replace, a board of Directors. The Directors have rsponsibility and control over the company. They also have obligations und

    • by jonbryce (703250)

      Google's European base is registered in Ireland, not the UK. Google Inc owns 100% of the shares in Google Ireland, so can appoint the directors and vote them out if they don't do what the parent corp wants them to do.

    • Most MNCs are one company from a management control perspective, even though their subsidiary companies in different countries are different legal entities subject to many different laws and regulations. As usual, it all comes down to money, if the parent company put up the cash to create or buy the subsidiary, and they own a controlling interest in the share capital, then they call the shots.

      In theory, the legal local head of google UK could quite legally, under UK law, decide to tell his US bosses to tak

    • by gl4ss (559668)

      well, ownership of that independent company for one..

      it's all controlled by the same people.

    • Re: (Score:2, Informative)

      by Anonymous Coward

      OK, let's do this:

      Fred Smith works for Foo UK Ltd. He's running their whole Foozle operation on a day-to-day basis, most Foo workers in the UK think of Fred as the "big boss" but he's just an employee like them.

      Fred reports to Amy, Bob and Chris who are the Directors of the company. Some of the directors could also be employees, but in this case they're not, regardless they are responsible for the "big picture" of the company. The directors are legally responsible in some senses for the company, for example

    • by houghi (78078)

      Look at it from another angle.
      Imagine you have a small restaurant. You manage it yourself. You cook and you serve. However very soon you decide that you can not do both, so you serve and hire a cook. Your first employee.

      The business grows and very soon you have several people in service and several people in the kitchen. Then you expand even further and you notice you are doing so many things managing the restaurant and doing books and looking to buy food and drinks at the best price that you do not have t

    • by DaveGod (703167)

      It's basically the same as how it is done within one company.

      Usually, there will be a parent holding company that does nothing except own subsidiaries, which are the trading companies.

      The holding company owns the shares in the subsidiary therefore controls all shareholding voting therefore controls appointment of directors therefore controls the board and therefore controls everything below the board. It is also common for the holding company to appoint a director(s) who comes from the holding company for d

      • by metrix007 (200091)

        How does the holding company own the shares of the foreign company, if the holding company does not exist in the foreign country?

        Google US does not exist in the UK, Google UK does, so how can Google US (which does not exist,which is why Google UK exists) hold shares of Google UK?

        • by DaveGod (703167)

          Google Holdings US does exist in the eyes of the UK. A corporation is an artificial person, the place it is registered is pretty much the same as the place you got your birth certificate. You do not have to be a UK citizen to be recognised as the rightful owner of property.

          It is not necessary for Google to have a UK subsidiary, Google could operate within the UK. They will have created the UK subsidiary because they want to - it simply makes a lot of sense for quite practical reasons. If you operate in mult

    • by tlhIngan (30335)

      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?

      It's not usual

  • Hi Google,

    Please change industries and move to real estate completely.   While you are at it, do not send banks to the internet - we love our hysterical authentication on their sites.

    Thanks!
  • So are they now going to pay their god damn corporation tax like everyone else?

  • by Anonymous Coward

    Sure, it's likely it was tax motivated.

    But let's not overlook that value after construction: £1 billion ($1.6 billion) - value invested: £650 million ($1.04 billion) = £ ka-ching ($ ka-ching).

    • Depends. The price of construction was £1 billion - but the price of the land wasn't mentioned, and that's a decent chunk of some pretty expensive real estate.

  • by PolygamousRanchKid (1290638) on Saturday January 19, 2013 @07:06AM (#42632893)

    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 . . .

    • 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 . . .

      The King's Cross area is not remotely distressed. It's been undergoing a revitalization project for pretty much a decade right now. The restored St Pancras station there ranks among the nicest buildings in London (and that's saying something).

      So if Google would be a bit late to the party if this was their plan. But it's a great location. Central, on seven subway lines, and a 45 minute direct train to Cambridge.

      Good strategic spot, I'd say.

      • by welshie (796807)
        It's not like they can't afford to buy outright and have to rent (or lease). And so, it seems that some of Google'd UK-earned income will be re-invested in the country, in the form of (temporary) jobs for the construction workers, construction materials suppliers, and some profit for the developer that bought the surplus land from what used to be British Rail Property Board. It will therefore be interesting to see how the developer's tax affairs are (King’s Cross Central General Partner Limited by the
    • by mjwalshe (1680392)
      Bit late King Cross has been being developed for the last 15 years or so (I have been commuting through there for the last 20 odd years) all the cheap deals on land will have long gone there's a run down self storage building on the opposite side of the road that might be worth a punt.
  • The tax problem is a red herring.

    Google will have to leave the US if it wants to keep hold of the rest of the world. The fact that they are obliged to comply with PATRIOT in the US means it's services are not legally acceptible in many countries, notably the EU.
  • Google repatriating its profits without the Federal Government taxing them away? Heaven forfend! If untaxed, Google's money would just be invested in the American private sector, where it would create jobs. Or it might be lent to the Federal Government. Can't have that. After all, it's better for workers not to find jobs, to depend on the government (i.e., the American taxpayers). And it's better for the Federal Government to borrow capital from China and other countries with America's best interests at hea

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