Sunday 31 July 2016

Facebook paid corporate tax of €2.3m as revenue hit €3bn

Gordon Deegan

Published 05/12/2014 | 02:30

Facebook founder Mark Zuckerberg
Facebook founder Mark Zuckerberg

Facebook cut its Irish corporate tax bill by half last year in spite of revenues rocketing to almost €3bn.

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New accounts filed by Facebook Ireland Ltd show sales increased by a huge 66pc to €2.977bn, up from €1.789bn a year earlier. The revenues clocked up at the social networking giant's Irish unit represent 47pc of its entire global sales - which reached $7.8bn (€6.34bn) in 2013.

Along with fellow tech giants Apple and Google, Facebook's Irish tax bill has come in for scrutiny in recent years, because of the huge gap between the overall revenue figures and the figure for profits, on which taxes are levied.

The latest accounts for the Irish unit show that it recorded pre-tax profits of €7.29m last year, up from pre-tax losses of €626,000 in 2012. But its Irish corporate tax bill was more than halved from €5.2m in 2012 to €2.3m in the latest accounts.

The Dublin-based company bills third party customers for online advertising on the Facebook website. The huge gap between Facebook's pre-tax profits and its near €3bn of revenues is down to the scale of its administrative expenses. Those costs shot up by over €1bn last year, to €2.9bn.

That bill is largely made up of royalty payments to other Facebook companies, including €1.53bn to Facebook Ireland's immediate parent, Facebook Ireland Holdings Ltd for licence expenses; €969m to Facebook Inc for data hosting services and management fees along with an additional €259m in payments to related Facebook entities for marketing and support services.

In June, Facebook moved to a new European HQ in offices at Grand Canal Square in Dublin where there is enough space for a 1,000 strong workforce - more than double the current team.

An 11pc growth in employment in 2013 took the workforce to 425.

The pay bill for those staff; including salaries, share-based payment and pension payments totalled €45.917m - or an average of €108,000 each.

The average salary is inflated by the €4.95m payments to key management personnel, including directors. The bulk of that, at €3m, was in the form of share-based payments, €1.74m was payroll and €28,000 was in health contributions.

The only two directors to serve on the firm during the year were Facebook Ireland managing director, Sonia Flynn and Shane Crehan.

Directors' remuneration for the year last year increased from €413,000 to €495,000.

The workforce at Facebook in Dublin is made up of 209 staff working in sales, 83 in user operations, 82 in administration and 51 in engineering, according to the accounts.

The directors state that the revenue increase for the year "was attributable to the company billing third party customers for online advertising on the website and for Facebook credits revenue".

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

The profit last year takes account of non-cash depreciation costs of €3.3m.Facebook Ireland Ltd's shareholder funds at the end of December last year stood at €334m.

The company officially opened its European headquarters in Dublin in October 2009 and the US-company followed in the footsteps of other leading Internet-based firms including Google, eBay and Amazon by establishing a presence in Ireland.

Speaking previously on the issue of Facebook Ireland's corporate tax, a company spokesman said that Facebook complies with all relevant corporate regulations including those related to filing company reports and taxation.

Irish Independent

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