Facebook will pay in Spain the taxes for the income generated here

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Facebook gives a twist to its tax structure worldwide: from 2018 the technology giant will start to bill its advertising revenue wherever it is generated, provided it has a regional headquarters (it has 25 worldwide). Therefore, it will pay taxes in each country for its activity and the money that enters its coffers for international business will no longer always pass through Ireland, where its fiscal invoice is reduced. That is to say: that will enter and pay taxes in Spain for the Spanish business.

 

“Facebook has decided to switch to a local sales structure in those countries where we have offices, to support the sales of local advertisers, in simple terms: it means that the advertising revenues that our local teams support will not be accounted for by the international headquarters of Dublin, but will be registered by our local company in each country, “Dave Wehner, CFO of the company, announced in a statement.

The headquarters of Facebook of Menlo Park, in California, will continue to be its headquarters in the United States. And Dublin will continue to be its international headquarters. But not for tax purposes, nor in regard to sales around the world, which will now be distributed by all countries that have their own structure, 25 in total, including Spain, Italy, Germany and France.

Facebook, despite its strong implantation in Spain, in 2016 (the last accounts presented in the Mercantile Register), registered losses. Specifically, Facebook Spain, the subsidiary of the US social network, declared net losses of 486,917 euros in the last financial year of 2016, which is 50% more than those declared in 2015, which it restated when the last ones were published ( at the beginning, in that fiscal year of 2015, it had reported benefits, but corrected them after a plan of actions for employees).

The Spanish branch of Facebook is actually a company that acts mainly as an intermediary of Facebook Ireland Limited, the parent company that collects the income of the rest of the European subsidiaries, to reduce the tax bill. Dublin offers great tax advantages. That is why the big world corporations have moved their European headquarters there. It is a legal practice but it has aroused great criticism in recent years. And it has caused institutions such as the OECD or the European Commission to launch a crusade against these aggressive fiscal strategies.

In 2016, the income reported in Spain was 7.86 million euros. Paid only 182,775 euros for corporate tax. The social network employs 22 workers in Spain. Theoretically, when you apply the change you have announced today, everything that your Spanish office enters as advertising, will be invoiced and will pay taxes in Spain.

International pressure

The important fiscal change of the company follows in the footsteps of other companies such as Amazon, which also started paying corporate tax for its Spanish business in another country (in its case, until 2015 it did it in Luxembourg), but three years ago it transferred the individual business to each European country in which it operates. Facebook responds to the pressure of the European Commission and other international organizations, which have harshly persecuted in recent years the tax engineering that many multinationals apply to reduce their commitments to the treasury around the world. “We believe that changing to a local sales structure will provide more transparency to governments and regulators around the world, who have asked for greater visibility into the revenues associated with sales made by regional offices,” says the Facebook executive. .

The technology company has proposed to implement this fiscal change during 2018, with the objective of completing the process in all offices in the first half of 2019. “We hope to carry out this change in the countries where we have a regional office responsible for the Advertisers in that country said that each country is unique and we want to make sure that this change is done correctly This is a big challenge that will require significant resources to be implemented all over the world. possible to ensure a smooth transition to our new structure, “explains the company.

IN SPAIN HAVE PAID HALF A MILLION TAXES IN FIVE YEARS
Facebook generates a million-dollar business in Spain. Enter hundreds of thousands of euros for advertising. But he transfers the bulk of this billing to his Irish sister. The consequence is that in the last five years he has only declared income of 23.7 million euros. The bulk of this sales figure comes from the fees it charges the Irish delegation for “sales and marketing services for the Facebook group.” This strategy, legal and followed by most technological corporations, allows you to reduce the payment of taxes. Since 2012, Facebook has paid 491,000 euros for corporate tax.

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