America's biggest tech companies make enormous piles of money from their operations across the pond, but don't seem that concerned about paying tax. The UK, for instance, recently celebrated a deal with Google to pay $185 million on back taxes of revenue of $24 billion that it makes in the country. It was pleased to be able to offer the search engine a 3 percent rate of corporation tax, a far cry from the 21 percent rate that UK businesses must pay. Similarly, Italy fined Apple $347 million for irregularities in its tax accounting, despite being owed closer to $961 million over the past few years.
Many of these companies base their European HQs in Ireland, which has a significantly lower tax rate than many of the countries in the union. A quirk of the local laws means that firms can push their profits offshore without having to pay any tax on them at all. These sort of deals, however, are illegal under Europe's rules preventing countries to give companies based there a leg-up over rivals, and will be closed before 2020. It means that further investigations into US' firms tax affairs are inevitable, with Facebook likely next to be probed.
Much like a pair of neighbors who have lived together for a little too long, the US and Europe are letting old hostilities come to the forefront. Robert Stack's appearance in Brussels comes amid a series of rows about the role and powers that American tech companies have. For instance, Google is currently being investigated on two different counts of antitrust dealings surrounding Android as well as Google Shopping. In addition, the European Court of Justice ruled that Facebook (and others) can't move your data from Europe to the US.
Where all of this saber-rattling is likely to end, no-one knows, but we imagine this passive-aggressive war will continue for ages yet.