Google Inc (GOOG), Apple Inc. (AAPL): Higher Digital Tax in France?

In a report on Bloomberg TV yesterday, Matt Miller discussed a rather interesting issue regarding Google Inc (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL), and other digital companies like Amazon.com, Inc. (NASDAQ:AMZN) and Facebook Inc (NASDAQ:FB). In the network’s “Global Outlook” program, Miller discussed how “France is saying that it’s going to look into changing its laws next year to try and block companies like Google and Apple from putting earnings in different European countries to avoid taxes that they would have gotten levied on in France.”

The Next Battleground for Apple Inc. (AAPL) and Google Inc (GOOG)?

Originally appearing on a lengthier print report on Bloomberg itself, Philippe Marini, a senator who heads France’s Senate Finance Committee, paraphrastically maintains that “[t]axing the digital sector like other industries could generate more than 500 million euros ($648 million) for the French state annually, enabling it to narrow its budget deficit.”

Now, it’s obvious that France – like the rest of the Eurozone – is being fiscally squeezed, but one can make the case that these pressures are a result of its own indebtedness and willingness to participate the European Economic Area – a classic single market system – not because of malice from Google Inc (NASDAQ:GOOG) or Apple Inc. (NASDAQ:AAPL). Consider the following: according to the IMF’s latest data, General government gross debt in France comprises just over 86% of its GDP, seventh worst in Europe. In fact, France is more indebted than nations whom many would consider to be ‘peers’ more or less, like the UK (82.5%), Germany (81.5%), and even Spain (68.5%).

Even more compelling, it can be argued that “the French don’t understand the very tax system they’ve spent decades building,” as Forbes‘s Tim Worstall discusses here. Worstall says that the methods used by companies like Google and Apple Inc. (NASDAQ:AAPL) are “not loopholes: they are the point and purpose of the system [...] the old national boundaries aren’t supposed to be important any more,” adding that the EU’s current tax structure gives companies “every right, indeed the system is set up to persuade you to do this, to sell from only one European base into all EU countries.”

One particularly important point that Worstall makes is about France’s 19.6% value-added tax, which, “on digital goods is paid at point of dispatch, not delivery,” meaning that the likes of AAPL, GOOG, FB, AMZN, and any other techie can set up their headquarters in a more tax-friendly country like Ireland, for example. Therefore, Apple Inc. (NASDAQ:AAPL) and the rest of the crew are well within the realm of legality to continue to use this system to their advantage; to expect corporations to not be profit-maximizers defies basic Economics 101.

What are your thoughts on this situation? Should digital VATs be levied in a similar manner as other VATs, and more importantly, should tech’s major players take the brunt of the French government’s frustrations?

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Top Reasons For Getting Fired

The 3 Best States to Start an LLC

10 Jobs That Allow You to Travel

7 High-Paying Jobs You Can Do From Home

12 Best Cities to Shop in USA

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!