To be fair, some level of “government-shopping” is also part of the design and purpose of the EU. But it’s harder for ordinary people to take advantage of it because the language barriers and culture differences are larger than in the US.
That’s not an impediment for corporations though. Ireland and Luxembourg have done very well attracting rich companies that can choose whose taxes to pay within the EU.
This is one of the main criticism about how the EU was made: freedom for funds goods and (mostly) workers to move around in the EU zone, without tariffs or constraints but no fiscal harmonization has been done.
Therefore countries with low taxes (Ireland but also Luxembourg) attract a disproportionate amount of big companies HQ. Ikea, for instance, is officially declared in Luxembourg.
Why so many people in EU rejoice about the Brexit is because UK has been one of the main force opposing fiscal harmonization (apparently London is a bit of a tax haven for financial service companies) so hopefully this kind of efforts can go forward.
Btw. Ireland is one of the best examples why the EU doesn't work.
A lot of the good parts of Ireland happened, caused by the low cut tax rates. Even german companies used some tricks until 2014/2015 to get money out of the EU by using some 'double Irish arrangement' or other stuff. Ireland is actually one of the best countries for businesses inside the EU and it can't be good that one country is better than any other country inside the EU. In a group of countries with the same exchange it should be forbidden to have different tax rates and some other specials for companies.
Also I doubt that 90% of the stuff you said would be possible just without the EU. I also thing that actually most things would actually be easier.
Actually there is way more controversial stuff inside the EU that I know of and that is publicly available.
Also I live in germany and we profited the most from the things happened inside the EU, that's actually controversial as well.
This is hypothetical. Irish people do have network infrastructures and French people do have a huge amount of redundant/useless bureaucrats.
But still, a country lowering taxes to a point where it would attract most of the income of companies operating throughout EU is acting like a parasite, the host being the EU, the blood being the income.
Lowering corporate taxes should be made at the EU level. Because the EU was not intended as a playing field with EU countries competing against eachothers but rather as something more symbiotic where countries specificities would help compete against the rest of the world.
This isn't only ongoing, this is by design, and being actively pushed further, because in the EU if you are by definition an equal opportunity tax haven like Luxemburg you are golden.
Luxembourg is like the delaware of Europe, it's a banking and financial institution state and both its own laws and the EU laws and policies it lobbies (and when you effectively are not only Delaware but also the DC of the EU it kinda helps) for ensure that it would continue to operate as one.
The bad thing that Ireland and is a big no-no in the EU is to go to the likes of apple and say:
Hai Apple I really want you inside of me!
I know I'm small, and I don't have a huge workforce and internal market, I'm not like Germany.
I also don't have a huge economic and financial infrastructure like Luxembourg, Switzerland or UK (London) but I'm a really hard worker!
Tell me what skills you need, and I'll educate my people, I'll give you low interest loans to build your shiny offices and I will give you tax deduction if you employ my peeps.
I would do all that I can to make sure it will be easy for you to operate here because I really don't have much to offer and I need to compete with the bigger countries since the euro is expensive and the price stability is managed by the ECB and my people need to eat and loans I've been taking on are becoming harder and harder to pay.
Now this is the only way that Ireland can really attract large corporations and make it more lucrative to invest in its industry, this is what effectively every country on the planet does when it wants to grow.
And since Ireland can't control it's own monetary policy and currency it also can't just be a cheap place to be, while there is some local variation because of the mandate of the ECB to control the price stability within the Eurozone the prices of many goods and services are quite similar (Ireland is actually more expensive than Germany because it's an island which increases the costs of logistics and it has lower production which means more imports which add costs even if they import within the EU) it needs boost its economy in order to match the salary level of the other Eurozone states and to do it it needs to offer something to corporations.
It can't offer them a huge workforce because it doesn't have one, It can't offer them access to financial and banking infrastructure because it doesn't have that either, what it can offer is English, fund both academic and vocational education and training based on the skills those companies need and give them tax incentives to come and employ Irish people.
Ireland isn't Luxembourg Apple didn't set up effectively a "shell" there that's pretty much there for easy tax loopholes and actually employes no one, Apple employees directly over 6000 people in Ireland and indirectly 4-5K more, same goes for Microsoft, Google, Facebook, Amazon and the likes.
This isn't some tax break Island that those companies incorporate in by name only and don't actually have staff, companies have "real" employees in Ireland because the Irish "incentives" are tied to direct employment.
Ireland isn't trying to create tax loopholes to make a quick buck to split it between a few 100's residents, it tries to keep it's 5M people employed, forcing them to play by the "same rules" as 4 of the world's 10 largest economies is asinine.
The problem is not that Ireland is a country using its taxes more efficiently than another. The problem is that one country can offer a much lower rate that is only viable for them if companies make their entire EU business as if it was happening in this country.
Let say you are Luxembourg, and the average tax is 30% of your profit in the EU. Luxembourg is roughly .1% of the EU population. Assuming an ideal world, a company would them make .1% of its profit in Luxembourg. Now, let say Luxembourg offers a deal with a company so that they can artificially put all the profit from its EU operations in Luxembourg: in order for the country to keep the same taxes, it would only need to have a tax rate of 0.03%. From the Luxembourg point of view, they have the same tax amount as before. And from the company perspective, they are now paying taxes as if they were only paying taxes in Luxembourg, which is peanuts for them.
Now, the current situation is not as caricatural as this scenario, but that is what is happening. The end result is just lower taxes created artificially (but legally). And the big problem is that it is not easy to fix while being in a EU context: the easiest solution would be to have common tax rates, though that would create some other issues. At the very least, closer tax rates would help the matter as moving your profit from one country to another is not free for the companies.
It is a sad example the one they give, being Irish though makes me think a bit deeper.
Citizens from EU not being the Netherlands or Ireland have to witness how international big corporations pay taxes in countries different to the ones they are doing their business and big local companies moving their headquarters to neighbor countries. Which benefits their citizens.
AFAIK Luxembourg and Ireland's focuses are slightly different. They both have very low rates of corporation tax, and that is starting to be addressed by things like the US plan for a minimum tax level.
Also they're much smaller countries I can't see luxembourg being able to opt out of the EU to protect financial arrangements...
It's very easy for companies. Netherlands and Luxembourg are tax havens inside the EU, and of course Ireland tailors her laws specifically to "sell" tax evasion products.
The EU isn't treating you any different from any other EU country. I live in Norway and we are not even EU members but we still have to abide by EU laws. It is a very frequent occurrence that something can't be done because it means preferential treatment to a specific party. We must often buy things abroad because we can't give preferential treatment to Norwegian companies who would most likely do the job better for Norwegian conditions.
I don't know how many times we have bought stuff from Spain or Italy or some other southern European country that simple broke down and didn't work in Norwegian climate and conditions. They won because they undercut out companies in price but they can't deliver quality. But these are EU rules. I get why they have to be there.
I don't think it would be fair if Ireland would skip on the rules. I already think it is grossly unfair how Ireland is operating.
Irish tax policies is hurting everybody else. We are also a small country and are under severe pressure to lower corporate taxes to stay in the game. Ireland is creating a race to the bottom. If everybody did like Ireland, everybody would be big losers. Everybody can't be a tax heaven. Tax heavens benefit at the expense of everybody else.
I've worked with a lot of people who got laid off in Norwegian games industry because Canada offered special tax incentives so they moved everything there. Countries should compete on talent, infrastructure, salaries, regulation etc not on a race to the bottom on taxes.
They should really tune down the tax breaks too though. They're basically screwing the rest of Europe by allowing these companies to avoid taxes in the whole EU. Just for a few measly jobs (even Apple only has a few thousand employees in return for literally billions of revenue going through the country). https://www.theguardian.com/technology/2020/sep/25/european-...
That money could really have been put to good use in the EU. The EU should present a more united front here IMO instead of allowing companies to cherry pick countries and make them compete against each other for the lowest tax rates.
Luxembourg has a 29% corporate tax rate the 4th highest in Europe.
This isn't Liechtenstein, Ireland or Estonia...
Unlike Ireland Luxembourg also did not hand out tax credits.
Shell paid less than 1 bln US in tax last year in the EU, and less than 5 bln US globally, and overall it's by far much more subsidized than Apple or Amazon, the difference being it's a European corporation.
Most of not all of the largest European corporations excel at Tax avoidance, in fact they are the ones Google, Apple and Amazon learned the tricks of the trade from, heck the EU was just fine establishing tax heavens for their own corporations and canonizing them in EU law as long as they are the ones benefiting from them.
And then we add the calls to set a minimum corporate tax rate to the mix and realize that the EU does this because Germany and France don't want businesses to go to Ireland instead of them.
The EU allows a couple of its countries to act as tax havens. Ireland and the Netherlands are probably pretty pleased that EU citizens seem to direct all their outrage at the companies that do the obvious thing instead of at their tax laws.
Isn't Ireland is home to these business because they have lower corporate taxes than the rest of the EU? Lower taxes likely make it harder to fund the regulatory agencies that should oversee these companies, which were intentionally courted to Ireland with lower taxes.
I don't disagree with you, but it seems to be largely a problem of Ireland's own making.
That’s not an impediment for corporations though. Ireland and Luxembourg have done very well attracting rich companies that can choose whose taxes to pay within the EU.
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