If the social network of the French tax authorities announced its actual financial results, it would have to pay taxes of approximately 80 million euros.
1.16 million euros: this is the calculation of the taxes on profits borne by the French subsidiary of Facebook for 2016. A ridiculous amount, which is explained by the same absurd turnover declared in France: 37 million euros.
An amount very far from the actual turnover achieved in France, which can be estimated at 540 million euros. In fact, the social network receives 32 million monthly users in France. However, each user in Europe generated a turnover of $19.7 or 16.8 euros in 2016, according to accounts from Facebook.
If the California giant were to report its actual sales figure to the French tax authorities, and if we applied California’s pre-tax gross margin (45%) to that actual figure, we could estimate that Facebook would have to pay the French tax authorities 80 million euros in taxes.
If Facebook reports only a fraction of its real sales, it’s because it created a tax optimization scheme. Officially, the French subsidiary is only responsible for marketing, research and development.
It is the Irish subsidiary that bills advertisements sold in France. Result: rotation announce Ireland has a lot of importance: 7.9 billion euros in 2015. But the taxes paid are also ridiculous: 14 million euros.
Explanation: This Irish subsidiary is of the view that its profits are deliberately dwarfed to reduce its profits as much as possible, and thus its taxes. Practically speaking, the Irish subsidiary is paying significant returns to be able to use the technology FB. These royalties are located in another subsidiary registered in the Cayman Islands. In practical terms, this Caribbean affiliate is a simple mailbox based in a law firm, Appleby, which proudly claims to be Site To be a specialist in tax havens, and was even awarded the Best Law Firm of 2010 Navy…
Tax adjustment from 3 to 5 billion
Last but not least, Facebook allows this money to accumulate in the Cayman Islands, and does not return it to the US, because it will then have to pay a 35% income tax. Result: At the end of 2016, $5 billion was sleeping like this Navy, out of a total cash position of $29 billion. Moreover, although Facebook is headquartered in California, it has been registered since its inception in Delaware, the internal tax haven of the United States.
This tax improvement arrangement has been the subject of tax audits in France And in Ireland. Above all, last year, the US tax authorities dispute The applicable royalty between the parent company and its Irish subsidiary (or transfer price, in tax parlance). The addition could amount to between $3 billion and $5 billion in additional taxes to be paid to US tax authorities, Facebook notes in its calculations.
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To improve its image, Facebook set up a center for artificial intelligence research in Paris, and commissioned a study from Deloitte on its impact on the economy for three consecutive years. In this way studyThe social network could have generated $7 billion of economic activity in France in 2014… or 0.3% of GDP alone! It would also have created 78,000 jobs in France in 2014, a thousand times more than its direct employees (73 in 2016). These very generous results ended up disputed, Facebook discontinued this study after 2014.
Across the channel, in the face of greater political pressure, Facebook has reacted differently: since April 2017 invoice Its advertising is no longer from Ireland, but from Great Britain, and thus declares its true turnover to the British tax authorities. This led him to tripartite Its British workforce, which now exceeds 1,000 employees, compared to 362 in 2014.
When asked, Facebook France did not respond.
Facebook France results (in millions of euros)
Source: social accounts