Cheaters cheat: VW swears the €17B it stashed in a web of Luxembourg companies has nothing to do with tax-avoidance


#1

Originally published at: https://boingboing.net/2017/11/02/dieselgate-for-money.html


#2

Sounds like they have a proper bullshit problem in Wolfsburg.


#3

VW swears the €17B it stashed in a web of Luxembourg companies has nothing to do with tax-avoidance

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#4


#5

You have to understand. It’s not safe to put all your money in one bank. What if a really big dude shows up and steals it all? With a shadowy web of shell companies, he probably couldn’t get more than a billion, tops!

Oh, and he had one of those domino masks.


#6

Ohne Titel


#7

This seems downright mundane compared to how a company like IKEA shuffles money around to avoid taxes.


#8

So what reason OTHER than regulatory/tax arbitrage and accounting gimmicks could there BE to stash all that cash in Luxembourg?


#9

Nevermind the way they hid funds from that awful Følding Cøuch settlement!

Also, @simonize - this wasn’t (ETA: JUST or I think even primarily) about taxes. It’s about the emissions scandal and playing poor when the German People come to take what THEY are due from their peoples car company.


#10

I was just thinking that these shell companies would be a great target for electronic theft. You could probably get away with several million without anyone even realizing it was missing due to the complexity of the setup.


#11

None of that actually makes sense. It is pretty clearly all about taxes.

If it was about hiding money when it comes to paying for the emissions scandal, the money wouldn’t still be sitting in Luxembourg.

From the Spiegel article it’s pretty clear that this is the usual merry-go-round where taxable profits are transferred from high tax countries and end up in low tax countries via a web of inter-group ‘loans’ and other payments. Licences are popular alternatives/adjuncts to loans.

So long as the profits never leave the low (or no) tax country, happy days.

Quite what good it does you is a mystery so far unexplored since pretty much every higher tax country has rules making it clear that as soon as you bring the money into their country you have to pay tax.

I am not a high-flying tax advisor or a financial officer for a major multinational so I cannot explain what benefit there is in stashing your money away in off-shore locations and never touching it rather than spending it on something useful but I suspect it has something to do with the sums being so stupendously large that it doesn’t matter if you salt 90% of it away and never touch it and there is sod all you can usefully think of to do with it other than return it to shareholders and (pay tax), and that would never do would it.

Taxes must not be paid, even if it means you effectively chuck money down the back of the sofa.

(I gather the theory is at least in part that you repatriate the money in years when you make ‘losses’ at home so as to minimise/negate any tax but as I say I glaze over when it comes to these schemes.)

Maybe one of our more financially savvy mutants can enlighten us.


#12

Empasis mine: I could have been more nuanced, and I can see a lack of nuance in internet comments really bothers you. :wink: Will try to be clearer.

"a move the company swears “has nothing to do with a tax-shelter scheme.”

I’m not taking their word for it. But really, it’s all related. Quintessentially. They’re clearly infected by some seriously toxic shit. Folks who evade responsibility, evade responsibility.

Do you remember the anti-drug ad’s? “I learned it from watching you!” in the sense that they learned it from watching V-Dub.

Oh, so maybe it’s not just about taxes you mean? I think it’s about taxes and more, too.

Neither am I, but I know German courts only held sway in Belgium from ~1939-1944.

Or as I joked, the Følding Søfa? :wink:

Yes. And losses are what V-Dub faces, in Germany, for many years over the emissions scandal.

Using tax shelters in other nations does rather keep them in-pocket - even when they can show their own regulators their books - showing they are our-of-pocket.

That would be nice!


#13

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#14

What makes it even funnier is that the state of Lower Saxony owns more than 20% of VW.


#15

Sorry… Must try and keep my pendantry (sic, see I can’t manage it even for a joke) under control. :slight_smile:

Definitely. Try googling ‘VW prostitution scandal’ if you want/need further examples. A horrible company all round and a great example of the sort of stuff that goes on routinely certainly in German boardrooms and workplaces and probably in varied degrees and forms around the world.

Luxembourg not Belgium. They both get quite aggrieved if you mix them up. :slight_smile:

In any case both are EU countries. Assets in one can be seized by order of a court in another.


#16

All that money can be used as collateral to take out cheap loans on the international market. If I need a bit of quick cash, I can go to BigBank and say “hey, I’d really like a loan at 0.5% interest. I know it’s a low rate, but if I default you can have compensation pretty quickly from my yuge foreign reserves.” That 0.5% is much less than they would pay in tax; and if they are ever in a position where they cannot repay such low-rate debts, they have bigger problems anyway.

But yeah, we need to find a way to block these flows without getting politicians (character-)assassinated. One first step would be to tax the shit out of any IP or brand relicensing across countries.

That’s a bit harsh. As many German conglomerates, they have worker representation on the board, are part-owned by their home state, and (emission scandal aside, which was a game everyone played anyway) they enact pretty decent industrial policies while still producing quality cars. With all their defects, they are a much better version of capitalism than the overwhelming majority of US conglomerates, from Walmart to Nike; and this is probably why the anglo-saxon press loves to shit on them.


#17

Is that like ‘huge tracts of land’? :wink:


#18

The nuance is in the distinction between setting up a structure that avoids their operational profits being taxed (like Ikea) vs. a structure that’s designed to avoid inter-company transfers being taxed.

Let’s say that SEAT is making a big profit in Spain, for example, but parent company VW wants to build another Skoda factory in the Czech Republic. SEAT pays tax on its profit. It could then send what’s left all the way to the parent company in Germany, paying another 5% tax on the transfer, and only have 95% of the cash left to send to Skoda for the new factory. Or it could send the money to a company in Luxembourg, paying 0.05% tax on the transfer, and still have 99.95% of the cash left to send to Skoda for the new factory. Is the latter really cheating?

BoingBoing is owned by Happy Mutants LLC. LLCs can elect to be taxed as a partnership (where the LLC itself pays no tax, but the owners of the LLC pay tax on the profits as if it were their personal income) or a corporation (where the LLC itself pays corporate income tax, and then any profits it chooses to distribute to its owners are taxed again as dividends). I’ll bet $10 that Happy Mutants is a partnership and not a corporation for tax purposes. Assuming I’m right, is Cory a “cheater” engaged in a tax avoidance scheme? Or just a rational businessperson?


#19

I’ll concede you the worker-involvement, comparatively excellent working conditions, pensions, etc.

Unfortunately, that does not add up to socialist utopia or good corporate morals. German corporations do like their corruption to be more inclusive than US or UK equivalents, I’ll grant you.


#20

I didn’t say it does, but it’s still way better than the typical slavedriving still predominant in most of the world.