Not sure how true this is. I'm based in dublin, and there's 40 people in final year engineering, plus about 100 in final year computer science, plus another 30 misc. final year students that will be looking for development positions from one university in Dublin. There's 4 major Irish universities in Dublin, and I'm in the smallest of them, so there's probably 900-1000 grads from CompSci/Software Engineering from just Dublin alone.
Add to that the pub standards meetups, where there's regularly 1-200 people there, and I know of plenty of other people that don't travel to the events. There's a large amount of talent in Dublin, and I would imagine all the other cities in Ireland too.
There are more people just in London than in all of Ireland. And London sucks in the ambitious and talented from the rest of the UK and to a lesser extent Ireland. It's also pretty accessible and attractive to the rest of the EU and not that hard to move to for most Commonwealth citizens.
And two of the world's top ten universities are in commuting distance. At a guess London's student population is larger than Ireland's too, and besides the aforementioned Oxford and Cambridge, London has two other top 100 universities, King's and Imperial.
The talent pool they'll be hiring from will probably be the EU anyway.
It's not tax avoidance either. It would only be tax avoidance if they moved from one EU country to another one that had a lower corporate tax rate. This is their first European office - it makes perfect sense to choose the location that brings the greatest benefits to the company.
> Tax avoidance is seeking to minimise a tax bill without deliberate deception (which would be tax evasion) but contrary to the spirit of the law. It therefore involves the exploitation of loopholes and gaps in tax and other legislation in ways not anticipated by the law. Those loopholes may be in domestic tax law alone, but they may also be between domestic tax law and company law or between domestic tax law and accounting regulations, for example. The process can also seek to exploit gaps that exist between domestic tax law and the law of other countries when undertaking international transactions.
(I'm a former tax accountant, at KPMG - these definitions are uncontroversial AFAIK)
You don't have to move offices to start doing the road of tax avoidance. It's all about where you channel your money internally if you have two companies operating in different tax regimes.
It'll be interesting to see what they do with the profits from their companies (both the US and Ireland).
If they keep a chunk of income in Ireland and only transfer it to the US during tax amnesties then that's one standard form of avoidance.
If the US Dropbox entity starts paying a large sum of to Dropbox Ireland in order to license some part of the technology then we're in to the cunning world of tax avoidance proper.
I guess it depends on whether they're going to use the Irish Subsidiary in such a way that it allows other legal entities to reduce their corporation tax bill in higher rate locations.
Although your hypothesis may even be right, it makes sense to deploy their first office in Europe in Ireland due to the low taxes there (in that sense, it makes sense to choose the least tax-loaded country to step in, I gather).
Not exactly the same as Starbucks/Google: they are starting right now to provide a service, they need to leverage everything.
Establishing an office (or even just a legal entity for the company) in Ireland to benefit from the various tax schemes can be done without needing to hire lots of devs there. This isn't all about tax.
Comments
I thought UK had a richer talent pool, for development positions and such. I really wonder if they chose Ireland to evade tax.
Not sure how true this is. I'm based in dublin, and there's 40 people in final year engineering, plus about 100 in final year computer science, plus another 30 misc. final year students that will be looking for development positions from one university in Dublin. There's 4 major Irish universities in Dublin, and I'm in the smallest of them, so there's probably 900-1000 grads from CompSci/Software Engineering from just Dublin alone.
Add to that the pub standards meetups, where there's regularly 1-200 people there, and I know of plenty of other people that don't travel to the events. There's a large amount of talent in Dublin, and I would imagine all the other cities in Ireland too.
There are more people just in London than in all of Ireland. And London sucks in the ambitious and talented from the rest of the UK and to a lesser extent Ireland. It's also pretty accessible and attractive to the rest of the EU and not that hard to move to for most Commonwealth citizens.
And two of the world's top ten universities are in commuting distance. At a guess London's student population is larger than Ireland's too, and besides the aforementioned Oxford and Cambridge, London has two other top 100 universities, King's and Imperial.
The talent pool they'll be hiring from will probably be the EU anyway.
I don't see how establishing your company in a country with a lower tax rate as opposed to some other country can be considered as tax "evasion".
It's not, it's "tax avoidance" which is entirely legal but various Governments (UK and France in particular) and starting to get upset about.
"Tax evasion" is not paying tax that you must pay. "Tax avoidance" is finding ways to not be liable for the tax in the first place.
It's not tax avoidance either. It would only be tax avoidance if they moved from one EU country to another one that had a lower corporate tax rate. This is their first European office - it makes perfect sense to choose the location that brings the greatest benefits to the company.
Quite so. Richard Murphy put together a set of definitions that might be of interest: http://www.taxresearch.org.uk/Blog/2010/07/07/tax-avoidance-...
> Tax avoidance is seeking to minimise a tax bill without deliberate deception (which would be tax evasion) but contrary to the spirit of the law. It therefore involves the exploitation of loopholes and gaps in tax and other legislation in ways not anticipated by the law. Those loopholes may be in domestic tax law alone, but they may also be between domestic tax law and company law or between domestic tax law and accounting regulations, for example. The process can also seek to exploit gaps that exist between domestic tax law and the law of other countries when undertaking international transactions.
(I'm a former tax accountant, at KPMG - these definitions are uncontroversial AFAIK)
You don't have to move offices to start doing the road of tax avoidance. It's all about where you channel your money internally if you have two companies operating in different tax regimes.
It'll be interesting to see what they do with the profits from their companies (both the US and Ireland).
If they keep a chunk of income in Ireland and only transfer it to the US during tax amnesties then that's one standard form of avoidance.
If the US Dropbox entity starts paying a large sum of to Dropbox Ireland in order to license some part of the technology then we're in to the cunning world of tax avoidance proper.
It depends how they structure the company: where will the workers be, are they going to cheat on their tax using a dodgy licensing scheme, etc.
I guess it depends on whether they're going to use the Irish Subsidiary in such a way that it allows other legal entities to reduce their corporation tax bill in higher rate locations.
The popular one at the moment being The Double Irish (http://en.wikipedia.org/wiki/Double_Irish_arrangement) which Google, Amazon and Starbucks have been using very successfully recently.
Not suggesting this is necessarily what Dropbox are going to do but it might enable something like this, should they wish to.
> Google, Amazon and Starbucks
Not forgetting:-
Facebook, Apple, Microsoft, Oracle, Pfizer, Adobe
(amongst others).
Although your hypothesis may even be right, it makes sense to deploy their first office in Europe in Ireland due to the low taxes there (in that sense, it makes sense to choose the least tax-loaded country to step in, I gather).
Not exactly the same as Starbucks/Google: they are starting right now to provide a service, they need to leverage everything.
Establishing an office (or even just a legal entity for the company) in Ireland to benefit from the various tax schemes can be done without needing to hire lots of devs there. This isn't all about tax.