Google has reportedly agreed to pay €345.2 million ($387.1m) in back taxes and interest to the Irish government.

The payment, discovered by the Irish Times in Google Ireland's accounts filings, included €218 million in back taxes to the Irish government and €127.2 million in interest. The payments are a tax settlement between Google and the Irish government that forms part of a total 2020 corporate tax bill of €622 million.

Google Ireland made €48.4 billion in revenues during 2020, representing a year-on-year increase of €2.7 billion from €45.7 billion. It also made €2.85 billion in pre-tax profits that year, up 46% from €1.94 billion during the prior year.

In April, the paper reported that Google had used an accounting technique called the 'double Irish' to siphon money from its Irish operation. Google's Irish operation licensed intellectual property from its tax-registered entity in Bermuda, paying royalties in return. This allowed the company to use Bermuda (which has a zero percent tax rate) as a tax haven. The Irish government viewed the company as tax-resident in Bermuda, while the US considers it to be tax-resident in Ireland.

That arrangement, abolished in 2015, was finally phased out for existing users in 2020. Google restructured its tax operation that year, moving its intellectual property holdings back to the US.

In October, Ireland said it would join an international agreement that would set a minimum 15% tax rate on multinational companies, up from its previous 12.5%. It's part of an OECD initiative that calls for companies to pay taxes in countries where their products and services are sold.

Last year, an EU court ruled that Apple didn't have to pay €13 billion in back taxes after a long legal battle.

Big tech companies have come under fire in the past for using tax loopholes around the world that enable them to escape payments.

If there’s anything that people use their laptops and smartphones for – apart from sending emails and Googling symptoms – it’s entertainment.

This is the central point of an open letter published in The Times earlier this week, written by painter Sir Frank Bowling, OBE and signed by some of the brightest stars of the UK’s arts sector: Academy Award-winner Olivia Colman, the Midsomer Murder-solving John Nettles, and Imelda Staunton, who has been in pretty much everything.

The artists are calling for a 1-3% tax to be added to the price of electronic devices such as laptops, smartphones, and tablets – basically, anything that is capable of streaming a film or song.

Estimated to generate £300 million a year, the levy would power a ‘Smart Fund’, which in turn would support the UK's creative sector – an industry which has been severely impacted by COVID-19, despite helping buoy all our spirits during lockdowns.

Think about it: In the colder months of the year, when you were stuck at home, with no one to visit and nowhere to go, what did you do? Most likely, read a book, watched a movie, or, if you’re me, binged the entirety of Bridgerton in one night. Throughout this year, I have seen Olivia Colman’s face on my screen more often than I’ve seen my own mother. Entertainment and the arts are what kept me sane in the long months of solitude. However, I also saw many of my artsy friends – DJs, writers, singers – left completely stranded in the face of the economic crisis caused by the pandemic. Gigs were cancelled, projects were called off, and the only advice the government was capable of giving was to retrain – in “cyber”, preferably.

This is probably why, when I found out about the Smart Fund proposal, my first reaction was “yes, please, tax us all!”. After all, the idea isn’t anything new, with a similar system operating in 44 countries worldwide, including France. This kind of tax rightfully assumes that, if people manage to get their hands on an electronic device, they are likely to use it for nefarious means such as pirating the entire six seasons of The L Word. My personal rationale behind welcoming such legislation was: “What harm can one 1-3% levy be capable of doing, especially if I only buy a new electronic device once in a blue moon?” And this is coming from a person who dies a little bit inside whenever she sees her council tax bill.

However, after the excitement subsided a bit and I examined my stance as a champagne socialist, it was hard to ignore the impact the tax would have on furthering the digital divide. Let’s face it, tech devices are notoriously expensive. Even the so-called ‘budget’ options are often a good chunk of the average UK resident’s salary, and eligibility for an installment scheme isn’t automatic. I might be privileged enough to not have to worry too much about an additional 1-3% charge for a smartphone or laptop, but for many families who want to invest in the future of their children, this tax isn’t going to be helpful – unless all of their children grow up to work in the creative arts, that is. So the question is, why burden consumers with an additional levy, when the tech industry has plenty of billionaires who are not being taxed enough?

Earlier this year, it was revealed that 10 of the world’s richest people had seen their fortunes grow by $540 billion since March 2020. Unsurprisingly, the list included tech magnates such as Jeff Bezos, Elon Musk, Bill Gates, and Mark Zuckerberg. These four men have enough money to end global poverty several times over, so I’m sure they have enough to support the arts as well. If there’s anyone who needs to be taxed, it’s them, even if only one of them (Bezos) can be considered an actual electronic device manufacturer (Amazon’s Echo Show, Dot, and Kindles). However, Zuckerberg’s Facebook could spare the UK some cash just based on its long history of being exceptionally stingy: In 2019, the tech giant paid just £28 million in corporation tax despite recording gross UK revenues of £1.6 billion. Musk, on the other hand, managed to play a heart-warming role of a comedian thanks to his silver-screen appearance on Saturday Night Live. This PR stunt alone should be taxable, in my opinion.

Next in line to be taxed is Apple, which last summer, at the height of the pandemic, became the first US-based company to reach a valuation of $2 trillion only two years after hitting a $1 trillion market cap. iPhones, iPads, and MacBooks would definitely be covered under the proposed Smart Fund levy. So why not shift the £7-36 additional charge to Apple? Surely, they can afford that.

It’s no surprise to hear that tech giants were the “real winners” of the pandemic, making millions while swathes of the general public – not just the artsy types – were furloughed or made redundant. I’m all for funding the UK’s actors, writers, and musicians, but it shouldn’t come at a further cost to the consumer. With the Digital Services Tax recently branded as just a "temporary solution", we should think about the future: Funding another season of The Crown before a new lockdown is announced.

For many businesses and independent IT professionals, IR35 was set to dominate this year; the expanded tax legislation was going to crack down on the use of limited companies by contractors in order to exploit tax loopholes, while simultaneously forcing organisations to pay the national insurance contributions of many of its temporary freelancers.

The ongoing coronavirus crisis has now kicked those plans into touch, with the enforcement of the new legislation pushed back until next year - but what impact will this delaying have on IT contractors and those that employ them, and how should they be preparing for when it does finally come into force in 2021?

In this week’s episode of the IT Pro Podcast, Adam and guest host Keumars Afifi-Sabet talk to James Poyser, InniAccounts CEO and founder of IR35 comparison site Offpayroll.org.uk, to find out exactly what the changes mean, and how those affected should respond.

Footnotes

News

• Xerox officially drops hostile bid for HP amid coronavirus crisis
• Zoom’s legal woes continue with class-action lawsuit in California
• Elon Musk's SpaceX bans Zoom over security fears
• Zoom admits meetings don't use end-to-end encryption
• Supreme Court rules Morrisons was not liable for 2014 data breach

In-depth

• IR35 news: COVID-19 knocks IR35 reforms into 2021
• How to pick the best cloud accounting software
• What is Making Tax Digital and how does it affect your business?
• How to choose the right accounting software for Making Tax Digital

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The USA is under fire from two of its allies and fellow members of the Organisation for Economic Cooperation and Development (OECD) over plans to set digital tax rates at an international level.

The OECD is in the process of developing rules that would see digital companies, such as Facebook, Google or Amazon, pay tax where they do business and not where they set up subsidiaries, with the aim of having technical details agreed by July this year.

On Sunday, finance leaders for the G20 group of economically advanced nations met in the Saudi Arabian capital, Riyadh, where they broadly supported the proposal.

That doesn’t mean it’s all plain sailing, however, particularly as it seems the U.S. is starting to get cold feet.

In late 2019 the country threw up a hurdle to negotiations, demanding last minute changes that would see the implementation of a “safe harbour” arrangement.

As reported by Reuters, critics say such a provision would allow tech companies to decide whether they play by the new rules, or stick with existing ones.

The Japanese Deputy Prime Minister and Minister of Finance, Taro Aso, took an open swipe at the “safe harbour” proposal following the G20 meeting, telling reporters: “I told my counterparts that Japan is very concerned about the ‘safe harbour’ proposal.

“It would extremely diminish the regulatory effect of what we’re trying to do. That is a view expressed by various countries.”

Indeed, Bruno Le Maire, France’s Minister of Finance, hit out at the idea in January, telling a press conference: “The only reasonable, wise and effective solution is the international fiscal agreement proposed by the OECD. We ask our American partners to support it.”

Speaking during this weekend’s G20 meeting, Le Maire told Reuters that failure to agree on tax rules for digital business at a global level would lead to a fragmented system where potentially conflicting rules were set at a national level.

“We have to address the issue of digital companies making profits in many countries without any physical presence, which means without paying the due level of taxes,” Le Maire said.

“There is wide consensus among the G20 members on the necessity of having a new international taxation system,” he continued.

“Let's be clear - either we have at the end of 2020 an international solution... clearly in the interest of all countries and digital companies, or there is no solution and ... then it will be up to the national taxes to enter into force.”

The row comes at a politically sensitive time for the USA and President Trump’s administration, which has railed against the proposals as “discriminatory” against US interests.

On Sunday, U.S. Treasury Secretary Steven Mnuchin said that while the country hoped to have a deal in place by the end of the year, it wouldn’t hesitate to hit back against what it perceives as discriminatory against US businesses.

“We’ve been very consistent in saying we think the digital services tax is discriminatory in nature against digital companies, and specifically a handful of U.S. companies,” Mnuchin said, according to Reuters. “The president was clear that we were proceeding with ... reciprocal tariffs.”

Regular readers will understand the power of the cloud to streamline and simplify their business processes, and accounting department work is one of the many areas that stand to benefit from the technology. Businesses both big and small can benefit from the various cloud accounting software solutions available, which allow accounts to be processed without the need to repeatedly buy expensive licenses for on-premises packages that require frequent patching and updating.

And it almost goes without saying at this point that cloud-based software that can be used and maintained remotely and on a variety of devices will help your accounting department to better work and collaborate with the minimum of disruption during this time when most of us are working remotely and on-prem solutions are becoming increasingly difficult for dispersed workforces to manage.

There are many different services to choose from, and it can be challenging to identify which cloud accounting software will be the best for your business. To help you make the right choice, we have broken down some of the key things to consider – including how cloud software can assist with the Making Tax Digital initiative – and some of the best options that are available.

How much does cloud accounting software cost?

For microbusinesses and SMBs, cloud accounting software is a blessing. Most providers have tiered offerings with prices based on criteria such as the number of users or the amount of data you process.

For example, Xero's base level plan is 10 per month, allowing you to send five invoices and quotes, enter five bills and reconcile 20 bank transactions each month.

Zoho Books, meanwhile, has an entry-level tier that costs 6 per month, allows two users, five automated workflows and 50 contacts, as well as Bank reconciliation, custom invoices, expense tracking, projects and timesheets, recurring transactions and sales approval.

Most providers also offer a free trial period, which may help you make up your mind as to which service to choose - just don't forget to cancel before the time's up if you decide it's not for you!

Does cloud accounting software replace normal accounting software?

Yes. Cloud accounting software is a standalone product and doesn't require you to keep any software you have already.

There are several advantages to this type of software versus normal buy-once products too. First, you can scale up or down to fit the needs of your business - as you grow, you can move up tiers depending on your needs. Or, should you need to scale back, you can move back down tiers too.

Second, you don't need to create independent backups of your data. The beauty of the cloud is that everything is stored off site with redundancy built-in. So if all your computers suffer from a ransomware infection, for example, or the building you work from floods and your IT hardware is destroyed, at least your accounts will be safely held off-site.

Third, if you decide the service you've chosen isn't right for you then you can move over to a different one without the burden of knowing you've sunk a lot of money into your initial purchase and will have to do so again, as is the case with traditional software.

Does cloud accounting software replace my accountant?

No. Cloud accounting software helps you manage your accounting workflow and keep track of transactions. A professional accountant helps you make sense of all this information and make sure it's all in order before you submit it to the tax authorities or take it to your bank if you're seeking a business loan, for example. So it's best for you to retain the services of the person who deals with your accounts now, as you would with any other accounting software.

Is cloud accounting software good for larger businesses?

That largely depends on how large your business is and how many users you would like to add. Some offerings cap out at around a dozen users even on the most expensive plan, which might not be enough for a large business, or even organisations sitting at the top end of medium-sized.

Other products, however, offer unlimited users, although they may have other limitations that make them unsuitable for your needs. Whatever size business you are, it pays to shop around, but this is especially the case for bigger organisations.

Will cloud accounting software help with Making Tax Digital?

It can do. Making Tax Digital (MTD) is the government's initiative to modernise the way businesses submit their tax records. It wants to move all tax filing - including VAT, Corporation Tax and Self-Assessment - to electronic systems by early 2020. This means that whatever the size of your business, from micro through to enterprise, MTD is something you will need to get to grips with sooner rather than later.

Some services pitch themselves as being "MTD-ready", especially at the top tier, but it's worth familiarising yourself with the requirements of Making Tax Digital, if you aren't already. Take into account what each product offers, how comfortable you are with the needs of MTD and how helpful (or convenient) something that's MTD-ready will be for you.

More information on Making Tax Digital can be found in our guide to MTD preparation, but it's worth speaking to your accountant to work out what's best for your individual business needs.

Which is the best cloud accounting software for me?

As alluded to above, this will largely depend on your situation. Consider your needs - not only things like the number of users you have or the number of contacts you can add, but also what you can really afford. Remember, as your business grows you can always move up a tier to unlock those extra bells and whistles that were a nice-to-have but are now more necessary to your operations.

To help you make your decision, check out IT Pro's reviews of some of the major cloud accounting software offerings, including details on pricing, features and configuration.

• Zoho Books review: Everything but the kitchen sink
• Sage Accounting review: A capable but imperfect accounts package
• FreeAgent review: Financial software you can count on
• Intuit QuickBooks review: Quick to impress
• Xero review: Xero to (almost) hero
• FreshBooks review: Slick, but shallow

The European Commission has revealed that technology companies pay less than half the tax that traditional business pay to operate in the EU.

Within the EU, businesses with an international reach typically pay a 10.1% tax rate while traditional companies pay 23.3%, due largely to the difficulty of taxing digital assets that are typically internet based. This is particularly important given that more than half of the world's top 20 companies are technology-based.

This new report comes just two weeks after finance ministers from France, Germany, Italy, and Spain penned a letter to the EU Commission. The letter requested taxes on the revenues of tech giants' rather than just their profits, as well as an "equalization tax" which would make companies pay corporate tax in countries where they have earned revenue.

The discussion of taxation of international digital businesses is not a new one. In July, Apple found itself in trouble with the European Commission which stated that because Apple's corporate tax on its European profits fell dramatically from 1% in 2003 to 0.005% in 2014, Apple needed to pay 13 billion in unpaid taxes to the Republic of Ireland.

To prevent similar cases in the future, the European Commission plans to "act now to ensure that businesses in the digital economy pay their fair share of tax" through a tax reformation. According to the report, members of the EU, have agreed "to a series of ambitious new rules to tackle aggressive tax planning and increase tax transparency."

The report states that "a common EU approach will strengthen our position in the international discussions to push for progress on this issue and the development of meaningful, multilateral solutions." The Commission's idea is to use the Common Consolidated Corporate Tax Base (CCCTB), the EU's regulations for the calculation of taxable profits, as a guide for revising the rules for the recording of profits of large groups. Once implemented, this should make it easier to see the flow of revenue, assets and labour across businesses with intangible assets, such as technology companies.

As it is now, tax is based heavily on physical presence, however digital companies do not need to necessarily have physical offices in a region to operate their business. Instead, the new reforms would see taxation based on the number of users, the amount of data collected, the local domain name or the digital transaction revenue.

As a short term solution, the Commission is considering a tax on turnover, a levy on revenue from digital services, and withholding tax on digital transactions. These solutions would protect direct and indirect tax bases for Member States; however, there is some work to be done before the proposals are usable with tech companies operating in the Single Market.

Although there is no set date for these changes, a preliminary report will be published in early 2018 which will set out policy options to the G20. Ultimately the hope is to come to an agreement on "the most fair, efficient and permanent solution."

If you work in the public sector as a self-employed contractor, then IR35 might affect you. The legislation is designed to crack down on tax avoidance via what HMRC calls 'disguised employment', targeting contractors who set up limited companies, paying themselves dividends instead of drawing an income.

This means they don't pay National Insurance, and they aren't taxed like regular workers (though nor do they receive full-time employment benefits like sick leave and holiday pay).

For more details on what IR35 is and how it could affect you, read our article summarising the legislation.

So, if you're employed by a public body, and run a limited company through which you pay yourself in dividends, should you get IR35 insurance?

What is IR35 insurance?

The government renewed its focus on cracking down on disguised employment from April 2017, making public bodies responsible for ensuring their internal and outsourced staff pay what it deems to be the correct amount of tax.

This made IR35 a renewed priority for HMRC, which is consequently selecting more contractors to investigate their tax status.

IR35 insurance helps contractors find experienced legal representation to defend their tax status and represent their interests if they are selected for review - effectively, it's insurance in case you're investigated.

Typically, you can get insurance for two separate aspects of an investigation - the legal costs of defending yourself in an investigation, and the financial consequences of being found to be 'inside' IR35.

One contractor insurance broker, Qdos, offers such insurance. CEO Seb Maley explains to IT Pro: "Some policies only offer cover for the legal or defence costs involved in a tax or IR35 case. This means you get an expert fighting your corner from day one, managing the case on your behalf and dealing directly with HMRC.

"A popular extension to this type of cover is to also indemnify the IR35 liabilities, so if the expert loses the case, all of the backdated tax is covered."

Such costs include any interest added to unpaid tax, national insurance contributions, and penalties levied by HMRC.

Do you need IR35 insurance?

If the HMRC decides to investigate your tax status and you don't have insurance, you could end up paying a specialist far more to represent your interests. With investigations potentially taking years to conclude, this could leave you with a huge bill, even if you win.

"With IR35 at the top of HMRC's agenda, the need for insurance has never been greater," argues Maley. "IR35 is a complex and continuously evolving legislation which can easily be misinterpreted. Insurance brings peace of mind should a contractor be subject to an investigation by HMRC, with the option of covering any tax or NIC (National Insurance contributions) liabilities, interest and penalties should you be 'caught' by IR35."

Most HMRC victories in IR35 investigations come when the contractor lacks expert representation, according to Qdos.

Even if you soak up the penalties and backdated tax if HMRC decides IR35 applies to you, on average you'll end up paying 25% more tax on your future earnings, saysContractorCalculator, making insurance a relatively cheap way to make this outcome less likely, even if you don't think you'll be investigated.

"Thousands who have been through enquiries will testify that insurance has been a huge benefit, both financially but also in removing a great deal of stress from the process," Maley concludes.

What else should you consider before deciding whether to insure yourself or not?

Firstly, review the nature of your employment to make sure you can't be accused of dodging IR35 tax status. In HMRC's eyes, there's a lot of difference between a so-called 'disguised' employee, and a genuinely self-employed worker. Your working practices should reflect these differences if so. For instance, if you offer your services via an intermediary - a limited company, a partnership, or even another person, you could be liable to pay IR35 taxes.

The nature of your contract is also essential in determining your tax status. HMRC uses three tests to check if you're 'inside' or 'outside' IR35, ContractorCalculator explains.

If a contractor's client tells them how, when and where to complete their work, the contractor is inside IR35. If a contractor can't offer a replacement worker to substitute for them when sick or on holiday, they're inside IR35. If a contractor is reliant on the client giving them work, and the client reliant on the contractor completing it, the mutuality of obligation test is fulfilled and the contractor is deemed inside IR35.

To check your IR35 status on these, you can get your contract reviewed by an expert contract review service to determine your tax status.

The US government is seeking to intervene in Apple's appeal against paying back 13 billion euros in Irish taxes.

An anonymous source toldReuters: "I can confirm the United States filed an application with the European Union General Court to intervene in the case involving the retroactive application of state aid rules to Apple."

A different source said that the General Court, Europe's second highest court, is expected to hear the case in late 2018.

The European Commission demanded that Apple hand over 13 billion in unpaid taxes to the Republic of Ireland last August, saying that Apple's corporate tax on its European profits was 1% in 2003 and that it fell to 0.005% in 2014. The Commission claimed that Ireland was allowing Apple to avoid taxes so long as it kept jobs in the country, which both the company and the country denied.

Apple's general counsel, Bruce Sewell, said at the time that Apple was being targeted because "it generates lots of headlines" and that the competition commissioner Margrethe Vestager wanted attention. Vestager has previously targeted other tech giants such as Google with anti-competition charges, and stung Google with a 2.42 billion finelast month for promoting its shopping results over those of rivals.

Sewell also accused the Commission of exploiting a loophole produced by differences between the European and US tax rules, as the former set of rules is localised whereas the latter set relies on a global deferred system.

Apple officially launched an appeal against the antitrust ruling in February when it filed 14 'pleas' with the European Court of Justice defending itself from the allegations. It said that its Ireland operations only cover "routine functions" and that its profit-making activities were controlled by the US. Its appeal demands that the Commission's decision is dropped in part or in full, and wants it to cover legal costs.

Sewell said back in December that Apple hopes President Donald Trump tackles this to avoid companies holding cash abroad, despite an Oxfam report that revealed Apple held $181 billion offshore.This year the Trump administration has proposed a tax break on $2.6 trillion in corporate profits which are held offshore as part of its tax reform, although it has not said anything public about the case.

21/02/2017:Apple says "fundamental errors" made in Irish tax case

Apple has accused the European Commission of making "fundamental errors" in an antitrust ruling that alleges the tech giant owes Ireland $13 billion in unpaid taxes.

Claiming that its Ireland operations only cover "routine functions" and that its profit-making activities were controlled by the US, the company filed an appeal with the European Court of Justice yesterday, demanding that the Commission's decision is dropped in part or in full.

It also wants the Commission to cover its legal costs, claiming the body has overreached its authority.

The iPhone maker entered 14 'pleas' to defend itself from allegations arising from the EU's competition investigation last summer, which found that the Irish government had granted the company illegal tax benefits that amounted to state aid.

Apple's effective corporate tax rate on its European profits was 1% in 2003, falling to 0.005% in 2014, according to the EU, which published its findings in August 2016.

Central to the EU's argument was its claim that two Apple companies, Apple Sales International and Apple Operations Europe, were based in Ireland but were allowed to allocate most profits to internal "head offices" with no geographic location, meaning these profits were not taxed anywhere.

Back in August, the Commission said: "Apple set up their sales operations in Europe in such a way that customers were contractually buying products from Apple Sales International in Ireland rather than from the shops that physically sold the products to customers. In this way Apple recorded all sales, and the profits stemming from these sales, directly in Ireland."

This arrangement meant that despite Apple Sales International recording 16 billion profit in 2011, just 50 million of that was considered taxable in Ireland.

However, Apple has accused the Commission of making "fundamental errors" regarding the two firms, saying their "profit-driving activities" were controlled and managed in the US. In fact, their Irish branches simply carried out "routine functions", according to Apple's lawyers.

They "were not involved in the development and commercialisation of Apple IP which drove profits", Apple said.

Apple Operations Europe was responsible for manufacturing some Apple computer lines, while Apple Sales International sold Apple products in Europe, the Middle East, India and Africa.

Some of the other 12 pleas accused the Commission of failing to examine all evidence, including that of experts supporting Apple's viewpoint. The company also denied that it received preferential treatment from the Irish government, another key finding from the Commission.

Apple finished by accusing the Commission of overstepping its reach by "attempting to redesign Ireland's corporate tax system" with its interpretation of state aid law.

"The Commission will defend its decision in court," a Commission spokesperson said in a statement sent toIT Pro. Apple is yet to respond to a request for comment. A court hearing is not expected until the end of summer.

Picture credit: Mike Deerkoski

19/12/2016:Apple set to challenge 13bn EU tax charge

Apple will challenge a "maddening" tax repayment, saying the EU ruling from earlier this summer doesn't add up.

At the end of August, the European Commission demanded Apple cough up 13 billion euros, with Competition Commissioner Margrethe Vestager saying the taxes it paid Ireland suggested a rate of 0.005% - and that is the right number of zeros.

In the case, the Commission said Ireland was allowing Apple to avoid taxes so long as it kept jobs in the country. Both the company and the country deny the charge.

Apple's general counsel Bruce Sewell and CFO Luca Maestri told Reuters the company will appeal the ruling this week. CEO Tim Cook called the back-tax demand "maddening" at the time of the ruling, saying he was "very confident" it would be over-ruled.

Sewell told Reuters that Apple was not an "outlier" on tax structure, suggesting it was targeted because "it generates lots of headlines," and that Vestager wants attention. She has previously targeted other tech giants, including Google, with anti-competition charges.

Sewell also argued the Ireland itself defended Apple's tax structure with an "expert opinion from an incredibly well-respected Irish tax lawyer," but that the Commission ignored his statement.

He also accused the Commission of exploiting a loophole created by differences in European and US tax rules, as the former use a localised tax system while the US uses a global deferred system. Sewell said Apple hopes American President-elect Donald Trump tackles that to avoid companies holding cash abroad to avoid being taxed on it. Earlier this year, an Oxfam report revealed Apple itself held $181 billion offshore.

Richard Murphy, director of Tax Research UK, noted in a blog post that the system is set up to allow Ireland to turn a blind eye to concerns with the tax structure if it so chooses.

"The difficulty for [Irish Finance Minister, Michael Noonan], Ireland and Apple is that there is now an EU Competition Commissioner who, with eyes wide open, looks at the deal Apple did and says that Ireland knowingly and wittingly assisted that outcome by allowing the existence of companies not taxable anywhere for which only they could be responsible in the scheme as a whole," Murphy wrote, referencing Vestager. "The result is that the EU says it is inevitable that tax should be due in Ireland. Ireland's claim, they say, is not true because it let is eyes glaze over, knowing the consequences."

He added: "This is the conflict to be played out in the European courts: may a country turn a blind eye to tax abuse or not? For the sake of tax justice there is only decision the court can make."

Airbnb next?

Airbnb is the latest company to be criticised for its tax arrangements with Ireland, paying only 317,000 in taxes in the UK over the past year. The company appears to use a similar structure to other web-based firms such as Google and Facebook, which post little actual profit in the UK, instead using Ireland as a base of operations as it has a lower tax rate.

In the 11 months ot the end of last year, Airbnb's British divisions posted only 1.4 million in profit, despite one arm holding at one point 430 million in cash, according to a Guardian report. It posted 145 million in revenue that year.

Airbnb suggested the difference between its revenue and profit was down to "investing heavily in our future", as well as a 100 million foreign currency loss pinned on delays between getting a payment from a guest and handing it over to the person letting out their home.

The home-sharing site said it was based in Ireland not to cut its taxes, but to "capitalise on Ireland's global reputation for technology and utilise the vast tech-savvy and bilingual workforce that Ireland has built," according to the Guardian report.

Murphy said there was an easy way to answer such ongoing tech industry tax complaints. "If Airbnb published country-by-country reporting data we could see what contribution it really made to each economy in which it operates, how much profit it declared there and what any misalignment might be," he wrote. "Then really informed discussion might take place on the tax that was really due."

He added: "Instead we are left speculating. Airbnb may not like that but the alternative is in its own hands: it can provide the data to let us decide. And at a time when global corporations really do need to account locally for what they do if they are to retain their licence to operate which is a crucial issue for companies like Airbnb then this should be a matter of the highest priority for them."

Google's tax bill totalled 36 million in 2016, according to its accounts for the year - although the government still doesn't think it's paying what is owed in this country.

The company took on an additional 600 staff last year, taking its total workforce up to 3,000 in the country, but as many of those staff members are employed as part of its product development and marketing services, the tax rules are slightly different compared to a wholly operated company based over here.

That is what the government thinks is unfair when compared to other companies that fully disclose their business as operating on our shores.

Google's parent company, Alphabet, show sales of 6 billion in the UK, but said it had turnover of just 1 billion. That 5 billion discrepancy is what's causing all the commotion, because most of its sales are recorded in Ireland, where tax rates are lower compared to the UK.

"As an international business, we pay the majority of our taxes in our home country, as well as all the taxes due in the UK," a Google spokesman told the BBC.

"We have recently announced significant new investment in the UK, including new offices in Kings Cross for 7,000 staff."

Last year, Google came up against the same problems and was ordered to pay 130 million back in taxes for all the payments it had miscalculated since 2005. HMRC launched an enquiry into the company's accounting and found it had miscalculated.

Labour's John McDonnell thinks the latest figures are a miscalculation too.

"It is a national disgrace that by paying just 36 million in tax Google could have an effective tax rate lower than many working families in our country," he commented. "And it exposes the complacency at the heart of this Tory government, which is allowing this to still continue despite last year's scandal."

"It seems that the so-called 'successful' tax deal with Google that George Osborne boasted about last year has meant that they are still not paying their fair share under his successor Philip Hammond."

HMRC said it would not comment on Google's specific circumstances, but added it does not settle for less when it comes to companies paying the tax owed.

"Our most recent figures show that HMRC brought in a record 26 billion in extra tax for our public services, with 7.3 billion of that total coming from the 2,100 largest and most complex businesses in the UK," it said in a statement issued to the BBC.

Snapchat's parent company, Snap, plans to set up a London office, demonstrating its faith in the British economy ahead of the UK's impending departure from the European Union.

The current Snap office in London, which opened in late 2015 and houses 75 employees, will be expanded into a new site in Soho with the creation of additional job roles, according to the Financial Times.

"We believe in the UK creative industries. The UK is where our advertising clients are, where more than 10 million daily Snapchatters are, and where we've already begun to hire talent," said Claire Valoti, general manager of Snap Group in the UK, speaking to the FT.

Ahead of Brexit, many smaller technology companies have expressed concerns over the effects leaving the EU will have on the economy. Some larger firms, however, have recently announced greater commitments to the UK, including Facebook and Google.

Snap will use the London office to book advertising sales from the UK and any countries where the company has no local operations. The new British company will now use the name Snap Group Ltd, following rebranding of its US counterpart from Snapchat to Snap Inc.

This will expose Snap to the UK's higher tax rate, deviating from the trend set by companies such as Facebook, Google, Apple, and Amazon, which have favoured the lower tax regions of Ireland and Luxembourg. The move will see Snap dodge the criticism levied at Silicon Valley companies accused of avoiding paying their fair share in tax.

Snap said: "Today, the media reported that we selected London as our International HQ. That is not true. We have one HQ, in Venice, and many offices throughout the world.

"We did, however, make a change to the way we operate our business in London. Going forward, we will bill our advertising revenue from the UK (and a few other countries) through a UK entity. This allows us to pay taxes in the UK, which we believe is part of being a good local partner as we grow our business.

"We want to pay taxes in the countries where we sell advertising, and this is an important step in building the infrastructure to achieve that goal."

Facebook's tax bill in 2015 amounted to just 4.1 million after it was able to route revenue through Ireland, in a scheme dubbed the 'double Irish'. The US company was also awarded an 11.3 million credit against future tax bills, despite earning almost 5 billion globally that year. Apple plans to challenge a 13 billion tax bill from the European Commission, which said the tech giantpaid Ireland an effective tax rate of 0.005% in 2014.

Snapchat has yet to make significant revenues outside of the US so far, and as a result immediate tax bills are not likely to be significant. However, it has proven popular among young customers in the US and UK, with over 60% of British smartphone users aged between 13 and 34 being 'snapchatters', according to Snap.

This popularity is likely to lead to an estimated $1 billion in ad revenue for 2017, according to research company eMarketer.

The news comes ahead of Snap's planned IPO, which could come as early as March, reportedly valuing the company between $20 billion and $25 billion.

IT Pro contacted Snap about the news but had received no reply by the time of publication.

Apple CEO Tim Cook has said the recent European Commission ruling that it should pay 13 billion in back taxes to the Irish Republic as "maddening" and not based in law.

Speaking in an interview with RTE News, Cook said scale of the bill shocked the company and described the Commission's findings as political and lacking any level of fairness.

Cook added that Apple had not been given any preferential tax breaks in the country and was "very confident" that the ruling would be overturned on appeal.

"It's clear that this comes from a political place, it has no basis in fact or in law, and unfortunately it's one of those things we have to work through," he told RTE. "When you're accused of doing something that is so foreign to your values, it brings out an outrage in you, and that's how we feel. Apple has always been about doing the right thing."

He added that Apple had done nothing wrong and neither had the Irish government. Cook also disputed the Commission's assertion that Apple had in effect, paid a corporate tax rate of just 0.005%.

He said that Apple paid $400 million to Ireland and this was based on based on the statutory Irish income tax rate of 12.5%.

"We paid $400 million to Ireland, we paid $400 (million) to the US and we provisioned several billion dollars for the US for payment as soon as we repatriate it and right now I forecast that repatriation to occur next year," he said. He added that Apple was the largest corporate taxpayer in Ireland.

"Right now I would forecast that repatriation to occur next year," he said.

31/08/2016: 13bn bill 'won't affect Apple's results'

The EU's demand that Apple pays Ireland 13 billion will not have any immediate impact on its financials, the company has reassured investors.

Both Apple and Ireland plan to contest the European Commission's decision yesterday that Ireland must recover 13 billion in back taxes spanning a decade from the tech giant.

The Commission ruled that Ireland gave Apple preferential treatment that amounted to state aid by allowing it to pay an effective tax rate of 1% in 2003, down to 0.05% in 2014.

However, in an FAQ for investors, Apple called that figure "extremely misleading and deceptive", saying it paid Ireland $400 million in taxes in 2014.

"We were certainly one of the largest corporate taxpayers in Ireland that year, if not the largest," the company added.

While the tech giant believes its appeal will prove successful, it will take several years for the process to be completed.

"We are confident that [the ruling] will be overturned by the courts of the European Union," Apple said, before adding: "While we desire a resolution as soon as possible, the process is likely to take several years."

However, it ruled out any impact on its tax rate or near-term financial results.

Apple said: "We do not expect any near-term impact on our financial results nor a restatement of previous results from this decision. We have previously accrued U.S. taxes related to the income in question. The tax rate guidance for Apple's fourth fiscal quarter that we provided on July 26, 2016 does not change as a result of this decision."

The EU states that Ireland must recover the full amount from Apple while it appeals the ruling, and could place it in an escrow account subject to the outcome of the appeal.

But Apple said: "At this point we do not know the size of the escrow amount, but we expect that it will be reported as restricted cash on Apple's balance sheet."

30/08/2016: Apple owes Ireland 13 billion in unpaid taxes, EU rules

Ireland must recover up to 13 billion from Apple in unpaid taxes, the EU has ruled.

Apple received unfair tax benefits that amounted to illegal state aid from the Irish government for 24 years, the European Commission said today. However, both Ireland's finance minister and Apple plan to appeal the decision.

The arrangement gave the tech firm unfair advantages over other companies, the Commission found, allowing it to pay an effective corporate tax rate on its European profits of 1% in 2003, dropping to just 0.005% in 2014.

"Member States cannot give tax benefits to selected companies this is illegal under EU state aid rules," said the EU's antitrust chief, Margrethe Vestager. "The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years."

The Commission's investigation, which started in June 2014, centred around two tax rulings issued by the Irish government in 1991 and 2007, which stood until 2015.

Calling them "comfort letters" to Apple, the Commission said the rulings established what constituted taxable profits for two of Apple's Irish businesses in ways that "did not correspond to economic reality".

Both Apple Sales International, responsible for selling Apple products in Europe, and Apple Operations Europe, which manufactured computers for Apple, allocated the majority of their profits to internal head offices, and only a fraction to their Irish branches that were subject to tax in Ireland.

Apple Sales International's head office had no employees, no premises, and was not based in any particular country, meaning the profits allocated to them were not taxed at all.

For example, Apple Sales International recorded $22 billion in profit in 2011, but only 50 million was subject to tax in Ireland, effectively giving Apple a corporate tax rate of 0.05%.

As Apple's profits subsequently increased, its Irish branch allocation of those profits did not, meaning its tax rate fell to 0.005% in 2014.

The Commission said: "The Commission's investigation has shown that the tax rulings issued by Ireland endorsed an artificial internal allocation of profits within Apple Sales International and Apple Operations Europe,which has no factual or economic justification."

The EU pointed out that the ruling does not question Ireland's existing corporate tax rate of 12.5%. While the tax arrangements date back to 1991, under the EU's rules it can only order Ireland to recover ten years of back taxes from the date of its investigation.

Michael Noonan, Ireland's finance minister, said he will seek the Irish Cabinet's approval to appeal the ruling.

He said in a statement: "The decision leaves me with no choice but to seek Cabinet approval to appeal the decision before the European Courts. This is necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into the sovereign Member State competence of taxation.

"It is important that we send a strong message that Ireland remains an attractive and stable location of choice for long-term substantive investment. Apple has been in Ireland since the 1980s and employs thousands of people in Cork. The company has continued to expand its operations in Ireland in recent times."

Apple also said it will appeal the ruling, claiming it will harm job creation and investment across Europe.

A spokeswoman for the firm said in a statement: "The European Commission has launched an effort to rewrite Apple's history in Europe, ignore Ireland's tax laws and upend the international tax system in the process. The Commission's case is not about how much Apple pays in taxes, it's about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe.

"Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned."

Google will not be paying any more tax until international laws force it to, CEO Sundar Pichai has said.

Pichai has defended his the company's tax practices, explaining that most companies pay the majority of their taxes in their home countries.

"As a global company, we find ourselves between the conflicting priorities of international tax law," Pichai told German newspaper Welt am Sonntag (via the Independent).

The company's taxes have landed it in hot water with multiple European governments, and tax officials have raided Google's offices in both Paris and Madrid in recent months. The company was also criticised for paying a UK corporation tax bill of just 130 million.

The controversy centres around Google basing European operations in countries with low tax rates, such as the Republic of Ireland. Offices in countries like France, Spain and the UK, it has claimed, merely act in a 'supporting role' for these larger headquarters, which mean the company can pay a lesser rate of tax than if they were fully-functional branches.

But Pichai said Google abides by current international tax regulations, saying: "Only the further development of the global tax system by politicians can lead to better results."

He added that Google had invested "very heavily" in Europe, and warned that Brexit could have a huge impact on digital businesses. "As companies we see great value in Europe as a unified digital market," he said.

The company currently employs roughly 14,000 people across the EU, and Pichai cautioned that more diverse regulation could prove difficult to keep up with. "The complexity makes a bigger commitment difficult, which can be seen in investments," he said.

30/06/2016: Spanish taxman 'raids Google's Madrid offices'

Tax investigators in Spain have raided Google's Madrid offices as part of an inquiry into tax evasion and fraud, according to Reuters.

The investigation comes barely a month after the search giant's headquarters in France was searched on suspicion of tax evasion.

The firm said in a statement that it complies with all Spanish fiscal legislation just as it does in all countries it operates in. IT Pro has contacted Google for comment.

The raid was approved by a Madrid court after a request by Spain's tax authorities. Media reports in Spain said that the probe was in relation to suspected tax fraud and tax evasion. It will also look at value-added tax and the payment of non-resident taxes.

Tech companies and multinationals have come under fire in recent years for using loopholes in laws to minimise tax bills. Google, which now forms part of Alphabet, has sales staff in the Republic of Ireland who conclude all sales contracts in that country. The arrangement has been scrutinised by European tax authorities.

In January, the firm agreed to pay HMRC 130 million in back taxes to cover a decade of underpayment. However, this was criticised as a "sweetheart deal" and resulted in uproar from MPs and tax campaigners, who accused the HMRC as being complicit in allowing Google to route UK sales through Ireland. France is also seeking 1.2 billion in back taxes from the firm.

The tax raids have added to Google's European woes. The firm is facing pressure from the European Commission and is set to make a new official complaint about alleged abuses of market power connected with its online advertising and shopping business.

It also faces antitrust charges stemming from its Android operating system.

Facebook is to pay millions more in UK tax following changes to its tax structure.

The world's biggest social network has been under criticism for paying low tax rates, despite the UK being one of its most significant markets outside of the US.

Facebook will not longer divert sales through its Ireland division for its largest advertisers, according to an internal memo.

Companies such as Sainsbury's, Tesco, healthcare goods manufacturer Unilever and advertising group WPP will all be handled by its UK division.

By booking advertising through its UK division, its is believed Facebook will account for substantially more revenue, and will pay a higher level of corporation tax at least 20 per cent on profits in the UK as a result.

The changes are due to take place from 1 April, and the social networks first inflated tax bill will be at the start of the 2017 fiscal year.

A Facebook spokesman provided the following statement which matches that of the internal update to IT Pro: "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 company has been under mounting pressure to pay taxes that are more in line with the large profits it earns. There was widespread outrage when it was revealed that Facebook paid just 4,327 in corporation tax in the UK in 2014 less than the average British taxpayer who pays approximately 5,500 in tax.

Facebook is believed to have been planning to make this change for some time.

This change is said to be about making Facebook more transparent following changes to UK tax law more notably the government's newly introduced diverted profits tax, set at 25 per cent, and specifically targeted at companies using loopholes to move profits out of the country.

However, it will not be paying back taxes on the profits it has already made. And smaller businesses booking online advertising will reportedly still be invoiced by Facebook Ireland the company's international base of operations, which currently houses almost one thousand employees

The social networking giant, which has over one billion global users, and an estimated 30 million in the UK, made $17.93 billion in 2015.

How much of that revenue came from its UK operations is unknown. But its UK business is one of its largest operations outside of its home nation, as evidenced by the fact it now employs around 850 staff at its UK offices. It is currently building a new London HQ to house a range of staff, which will likely include its current UK sales and engineering teams.

Google has also been under fire for its UK tax. Earlier this year the UK government coaxed the search giant into paying 130 million in tax.

Google's 130 million UK tax deal could be crushed by the EU following complaints suggesting the arrangement amounts to special treatment.

Both the Labour Party and Scottish National Party (SNP) appealed to the European Union's Competition Commissioner, Margarethe Vestager, to investigate the terms of the deal and determine if it was unfair.

Vestager said she would be willing to investigate the 130 million settlement, which covers a period of 10 years and allegedly amounts to just three per cent tax.

Vestager told BBC Radio 4's Today programme: "If we find there is something to be concerned about, if someone writes to us and says this maybe not as it should be, then we will take a look.

Stewart Hosie, deputy leader of the SNP, said the fact little is known about how the 130 million figure was reached is of greatest concern.

"The truth is we know very little about the settlement reached between the tax authorities and the company. These discussions have taken place in private; little detail has been revealed by the Treasury and the methodologies employed by HMRC are shrouded in Secrecy," Hosie said.

"The only way to put these ... issues beyond doubt is to refer the settlement to the European Commissioner for Examination; a commissioner who is independent of the UK Government and who has a reputation for pursuing tax transparency," he added.

The arrangement is also set to be scrutinised by the Commons Public Accounts Committee, which is the hold a session on corporate tax deals on 11 February. Matt Brittin, head of Google Europe, plus three senior representatives of HMRC, will give evidence. The National Audit Office is also understood to be considering a call by Labour to carry out a formal probe into the matter.

The tax contributions of large tech multinationals have been a cause of controversy for many years, particularly since the 2007/08 global economic downturn and European Commission is currently investigating tax agreements between Apple and Ireland.

The EU does have precident for quashing so-called sweetheart deals, ruling they amount to illegal state aid for the companies in question. Belgium has recently been ordered to collect an additional 700 million from 35 companies, and in October overruled private settlements reached between Starbucks and the Netherlands and Fiat Chrysler in Luxembourg.

Nevertheless, both Chancellor George Osborne and Google insist that the deal is fair and appropriate.

Peter Barron, a Google spokesman, said the company complied with UK tax law, paying corporation tax at the standard 20 per cent rate.

Osborne meanwhile, told Sky News: "When I became Chancellor, Google paid no tax. Now Google is paying tax and I have introduced a new thing called a diverted profits tax to make sure they pay tax in the future. I regard that as a major success."

Google has agreed to pay the UK government its 130 million tax bill for the last ten years of its operation in the UK.

The company also agreed to start paying tax according to the law in future, meaning this issue should not come up again. A statement by the company said it would "pay tax based on revenue from UK-based advertisers, which reflects the size and scope of our UK business."

However, the internet giant said it had not been avoiding tax in the past, but had been paying what it believed it owed based on the previous tax laws.

"We were applying the rules as they were and that was then and now we are going to be applying the new rules, which means we will be paying more tax," Matt Brittin, head of Google Europe said.

The news comes as the government has started to crack down on some of the biggest technology companies and retailers in the world, trying to recoup money the corporations have previously avoided paying.

Also under investigation for avoiding paying the tax they owe on revenues from their UK business are Amazon and Apple, who have previously used loopholes in the law to avoid paying taxes on revenues generated in the European Union.

Methods include setting up companies in Luxembourg, Ireland and the Netherlands, which all have more relaxed laws. Additionally, some UK legislation makes it easy for companies to transfer funds into tax havens around the world, including Bermuda.

However, the law changed in January 2015, stating online businesses, such as those targeted by the UK government of late, have to pay VAT in the country of the purchaser rather than the country where the business is registered.

In March, it was added that those who channeled sales into other countries would have to pay a 25 per cent levy on profits too, scraping back some of the money dissipated into some of the world's biggest companies' bank accounts.

Both Amazon and Apple have agreed to pay back a big slice of the money they owed last year and now many of the other companies using these loopholes are agreeing to pay.

The US's tax agency, the IRS has reported that more than 330,000 citizens may have had their personal information stolen following a data breach.

Hackers managed to siphon off the data using the organisation's Get Transcript feature, which enables taxpayers to video their tax account transactions or line-by-line return information for the tax year.

Officials at the IRS think the data taken could be used to fraudulently claim tax refunds, explaining the information stolen relates to the 2016 tax year rather than 2015. It revealed that claims for $5.8bn (3.7bn) in fraudulent refunds were made in 2013.

"We're confident that these are not amateurs. These are organised crime syndicates that no only we, but everybody in the financial industry, are dealing with," IRS commissioner John Koskinen said.

"Unfortunately, the high number of large-scale data breaches has essentially transformed our personal information into public information; and this data should not be used as security or authentication checks."

Initially, the IRS thought that 200,000 attempts were made by hackers to obtain the information, but it has now reassessed its predictions, revealing nearer 600,000 attempts were made. So far, it would seem 330,000 requests were successful, with the others failing to make contact.

Immediately following the hack, the IRS's Get Transcript was taken offline, although it is now back up and running again it would seem. It advised taxpayers to file their tax returns as soon as possible before hackers used any information stolen to file fake tax returns.

It also said it would be offering those people affected with free credit protection on their accounts to prevent criminals claiming for credit cards falsely.

The European Parliament has overruled a proposition by the EU to charge a tax on search engines if they display news results from traditional publishing sources.

Spain has already implemented the tax - one promoted by the country's daily newspaper association that believes online-only news sources are a threat to its members' livelihoods.

The proposal was put forward as an amendment of copyright reforms, which argues there should be a fair balance between the right and interests of both media consumers and creators with easy access to content across borders and implementation of territorial licences.

The Save The Link campaign, led by community organisation OpenMedia has built up a strong following, comprising 75,000 organisations and individuals supporting freedom of expression and the right to share and read whatever content they like online, without a tax being imposed.

"A Link Tax' is essentially a cash-grab from giant media conglomerates, desperate to shore up an outdated business model off the backs of Internet users," said Meghan Sali from OpenMedia said. "It's great to see MEPs reject this tax while backing positive steps forward on copyrightnow we need to build on this progress."

Now, campaigners are trying to convince the EU Commission to take onboard what internet users and the EU Parliament has said about copyright reform, OpenMedia said.

"This is good news for internet users everywhere," Sali added. "A Link Tax' would have had devastating consequences for freedom of expression and our right to access and share information online. Today's big win shows the power that Internet users have when we stand together."