The Financial Times of London reported that the Obama administration is continuing its protest of the gangster-like theft by the EU and the UK government’s. This week President Obama told the EU to back off from taxing Apple (more on this link).
But if you can’t make your wealth, you need to take it from others. This is called taxes.
As the socialist spending of the UK and the EU countries increase European poverty in France, Spain, Greece and Italy, the EU continues its raid on the U.S. Treasury.
To get America’s money, these countries merely break the tax treaty that has prevents tax wars. Each tax treaty has a “permanent establishment” safeguard. So, far the White House is silently allowing the English and the Europeans to win this war.
The Financial Times of London reports, that European Commission is intensifying its attack on American digital and wealth companies. The list includes, Skype, Netflix, Amazon, Apple and Google. And why not? All the U.K and EU taxes will be paid by you and me. Why? Will read a little more. (Update Sept. 17, 2016: Microsoft has moved Skype from the U.K. laying off all the British employees; Update Sept 19, 2016 the UK wants McDonalds to pay half a $billion despite the U.S-U.K. Tax Treaty).
Since I first posted this article, the UK intimidated Starbucks to make a “donation” of million of dollars. The EU has gone after McDonald’s fast food. Maybe it is time for the U.S. to get tough. We can save $billions by letting bringing home our troops in Germany.
The Times reports “The EU’s intensifying assault on big American tech groups has triggered mounting criticism in the US, including by President Barack Obama, of European protectionism.” But there is more at stake. It is money….lots of money.
The Raid on the U.S. Treasury
The Europeans and the British are simply ignoring the tax treaty with the United States. For a century, these treaties do not tax a foreign business unless they have a “fixed place of business” and a “permanent establishment” in the other country. The EU and the UK is squeezing money out of American businesses by ignoring these rules.
The raid on the U.S. Treasury is from a flaw in U.S. tax law: The U.S. is one of the few countries that taxes its businesses on their worldwide income. EU countries do not tax worldwide income. Thus, by targeting American business, they know that Uncle Sam will be force to give them money. And why not.. .it is the history old battle between the haves (USA) and the have nots (UK and EU).
(Learn how small international businesses are protecting themselves at the end of this article.)
When the UK and the EU violate the treaty and grab taxes from an American business, “foreign tax credit” law requires the US Treasury to pay the foreign income tax.
The U.S. Treasury needs U.S. companies to compete in the global market. The Federal, and state are about 43%. While EU companies pay taxes at 25% and foreign profits are tax free. EU firms have more money to expand into international markets and into their domestic markets.
The U.S. Treasury reimburses Americans their foreign taxes. This is known as the “foreign tax credit” (American business pays tax at 43% while EU firms pay tax at 20% to 25% and nothing on foreign profits).
Congress Blasts EU for Raiding the U.S. Treasury, on this link, but does nothing.
Starbucks is an example of the EU and UK successful raid on the U.S. Treasury. Starbucks announced that it was moving its headquarters to Britain so that it can pay more taxes. Yes, it is moving to increase their taxes which will be paid by us.
By the way Starbucks and Amazon have both paid more than a $billion dollars in value added tax each year and every year to the UK and the EU. But, these governments want more… they want all that they suck from you and me.
U.K. and E.U. international taxation is based on the location of the firm headquarters. Starbucks headquarter is in Holland. The Netherlands is one of the few European countries that provides a lower tax to create jobs. The Dutch tax laws are always in the news. The U.S., U.K. and E.U. disdain Holland for its tax policy.
Starbucks UK tax is paid by the American population. Because the U.S. taxes everyone’s worldwide income, we all get a credit for the foreign income taxes we pay (the “foreign tax credit”). The British Government knows this.
Starbucks, after being bullied in the British press and threaten by the UK Government, gave up and move its headquarters to the UK to pay more UK taxes.
This week, the UK Government is bullying Amazon. As an American company, Amazon is protected by the US-UK Tax Treaty. However, this protection requires the Department of the Treasury to say “no” to the UK.
Small business international tax planning
The advantage of being a small business is being small. They do not have 1000s of employees in the UK and Europe. So, small business with the help of a smart computer can run their operation from zero tax haven countries.
The two best are the Isle of Man (in the North Irish Sea) and the British Virgin Islands. In third place are two U.S. tax havens – Puerto Rico (business and personal tax at 4%) and the U.S. Virgin Islands with a 90% tax abatement.
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