The firms that avoid creating tax bases in major markets

A REUTERS examination of accounts for hundreds of subsidiaries of the biggest US technology companies shows most do not declare a tax residence for their main business in the biggest European markets.

Historically, tax residence has been determined by where companies make sales. By basing themselves in countries like Ireland, the Netherlands, and Switzerland — which offer low tax rates or the ability to send money tax-free to tax havens — these companies legally save tens of billions in tax.

Many of the firms examined declare Irish subsidiaries as their sole or primary tax bases in Europe, even though they operate others in countries like Britain, France, or Germany where most of their sales or marketing staff are based. This helped them to pay an average effective tax rate on overseas income of 5.7%, less than half Ireland’s 12.5% headline rate of corporate income tax.

Companies which do business across Europe from Ireland include Microsoft, VMware, Oracle, Adobe, Symantec, Red Hat, Synopsys, Cadence Design Systems, Google, Facebook, LinkedIn, Apple, EMC, Dell, SanDisk, Analog Devices, Xilinx, Altera, and Juniper Networks. Most of those companies contacted by Reuters defended their set up.

Adobe said it “pays the lawful amount of tax owed in the countries where we do business”.

Microsoft said its Irish operation was “established largely in response to customer demand to consolidate shipments” and that it pays all the taxes it should.

Symantec said its “investment in R&D, M&A and its employee base impacts its pretax profits and tax credits in the countries in which it does business… Symantec works in accordance with tax laws in all markets in which it is present.”

Google said it chose to base itself in Ireland for of a variety of reasons including its educated workforce, good communication and low taxes. It said it followed the tax rules in all the countries where it operates.

Facebook said it “takes its tax obligations seriously, and works closely with national tax authorities to ensure we comply with the law”.

A LinkedIn spokesman said Dublin was the hub of its European operation, employing around half of its European staff: “LinkedIn abides by all tax laws as determined by the authorities in all the markets in which we operate.”

Apple has said it pays all the taxes it is supposed to.

EMC that it “complies with the tax laws in the jurisdictions in which we operate. Our profits are taxed in the countries in which they are generated.”

Altera said it “pays all the taxes we are required to pay”.

A spokeswoman for Juniper Networks said it “takes compliance matters very seriously. We look to government bodies to set tax policies, and comply with applicable tax laws and regulations.”

Oracle, VMware Red Hat, Synopsys, Cadence, Dell, SanDisk, Analog, and Xilinx did not comment.

Reuters was unable to determine the location of the European tax residences, and therefore what if any tax was paid, by companies including Linear Technology, Netsuite, Broadcom, and Qualcomm.

Companies that do not use permanent establishment structures to shift the bulk of their revenues include IBM, Cognizant, Teradata, Priceline.com, TripAdvisor, Intel, Hewlett-Packard, Texas Instruments, Motorola, Western Digital, Micron Technology, and Intuit. All declined to comment, except TripAdvisor, which said it complies with rules within each EU country where it operates.