Sunday 23 October 2016

Facebook defends its €3.4m tax bill as Irish revenues rocket

Gordon Deegan

Published 08/12/2015 | 02:30

Facebook: Irish revenues up
Facebook: Irish revenues up

Facebook Ireland last year paid only €3.4m in corporate tax in spite of revenues rocketing by over €1.8bn to €4.83bn.

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The Dublin-based firm, which serves as Facebook's international HQ, accounted for 47pc of Facebook's global revenues of $12.46bn as the Irish unit's revenues increased by 62.5pc over the 12 months.

However, in spite of the growing importance of Facebook Ireland to the social media giant's worldwide operations, its corporate tax bill rose by only €1.1m to €3.4m last year.

The accounts just filed with the Companies Office show that the firm recorded pre-tax profits of €12.8m.

The low profits - which represent a 76pc jump on the 2013 pre-tax profits of €7.29m - are primarily due to the firm's large administrative expenses rising by 62.5pc, from €2.9bn to €4.73bn.

These administrative expenses are mainly made up of royalty payments and fees to other Facebook entities.

The payments to the other Facebook firms are not disclosed in the 2014 accounts - however, in 2013, Facebook Ireland paid royalties of €1.53bn to its immediate parent, Facebook Ireland Holdings, for licence expenses and €969m to Facebook Inc for data hosting services and management fees.

On Facebook Ireland's corporate tax bill, a spokesman said yesterday: "We comply with all tax laws where we operate.

"We're committed to Ireland and are a significant contributor to the Irish economy - this is highlighted by the major investment in our new HQ and that we continue to hire employees locally."

The growth in Facebook's Irish operations has resulted in the firm moving into a bigger building in Dublin's 'Silicon Docks' area where it now employs 1,000 people made up of people from 65 different countries.

According to the firm's directors, the growth in revenues "was attributable to growth in online advertising revenue from third party customers".

Numbers employed at the firm last year increased from 425 to 478. The pay bill, including salaries, share-based payment and pension payments, totalled €57.6m - or an average of €120,000 each.

The average salary is inflated as it includes pay to executive directors and €9.79m in share-based payments while the pay-pot also included €39.98m in salaries and other benefits of €7.7m.

The only two directors to serve during the year were Facebook Ireland managing director Sonia Flynn and Shane Crehan. In June of this year Ms Flynn resigned with Gareth Lambe joining the board.

Directors' remuneration for the year increased from €495,000 to €596,000.

The workforce at Facebook in Dublin is made up of 227 in sales, 98 in community operations, 89 in administration and 64 in engineering.

The directors state that "in 2015, the company will expand operations in Ireland, continuing to support its international sales function".

Immediate parent Facebook Ireland Holdings is an unlimited firm and is not required to file accounts.

During the year, Facebook Ireland received a capital contribution of €659m.

Since year end, in a corporate reorganisation, Facebook Ireland has been sold to another Irish based firm, Facebook International Operations.

Facebook Ireland's shareholder funds at the end of December last year stood at €1bn. The firm's cash last year increased almost five fold from €146m to €729m.

The company officially opened its European headquarters in Dublin in October 2009 and followed the likes of other global tech giants, including eBay and Amazon, setting up here.

Irish Independent

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