Thursday 29 September 2016

Facebook moves UK sales from Ireland

Published 05/03/2016 | 02:30

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Facebook is to stop routing advertising sales from its major UK customers through Ireland.

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The social media giant has started informing its larger UK customers that from April they will begin receiving invoices from Facebook UK rather than Facebook Ireland.

It is understood that companies such as Tesco and Sainsbury's are among the big firms affected.

Facebook, and other big tech companies, have routinely moved profits from other countries through Ireland and on to countries with very low corporate tax rates in a completely legal manner.

The method, known as the "Double Irish" has however attracted criticism from European politicians who believe tech firms should pay more tax in their own countries.

Google has reached an agreement on tax with the UK worth £130m, and is in talks with other countries.

In a statement, Facebook said that from Monday, "we will start notifying large UK customers that from the start of April they will receive invoices from Facebook UK and not Facebook Ireland.

"What this means in practice is that UK sales made directly by our UK team will be booked in the UK, not Ireland. Facebook UK will then record the revenue from these sales."

Facebook, which employs around 1,000 people in Ireland, has ruled out any job cuts as a result of the change in policy. However the move will increase concerns that the tax incentives for a company to set up in Ireland and create jobs here are being eroded.

The move will likely see a significant increase in the amount of tax Facebook pays in the UK.

The firm said the change would "provide transparency" to its operations in the UK.

"The new structure is easier to understand and clearly recognises the value our UK organisation adds to our sales through our highly skilled and growing UK sales team," the spokesman said.

The arrangement will not see a change in the way in which Facebook processes smaller advertising deals in the UK. Those firms will continue to deal with sales staff in Ireland and will in turn continue to receive invoices from the Republic.

Facebook's European headquarters will remain in Ireland.

It is understood the company expects revenues at its Facebook UK firm to increase as a result of the change.

The move is specifically about future arrangements and will not include any arrangements around back taxes.

In 2014, the social media giant's UK arm paid just £4,327 in corporation tax.

Irish Independent

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