What a surprise, AirBnB chooses Dublin as its European headquarters, here is the tax rate of 2%

It would have been almost criminal if AirBnB had not chosen somewhere in Ireland to be its European headquarters: no doubt, given what we know of the tax advantages of doing so, perhaps coming close to a violation of the fiduciary duty to shareholders.

The reason given by the company is interesting:

Chief Executive Brian Chesky said in a blog post that the company would set up its European headquarters in Dublin because it was an emerging tech hub and had a tradition of hospitality.

“Dublin is known around the world for its warm hospitality. The city has a reputation for being one of the most hospitable and friendliest places in the world,” Chesky said.

That’s true enough, but it’s even truer for Cork. And there are also plenty of other places that would welcome high-paying tech jobs with open arms. Taxation is singled out as truly responsible:

Fast-growing online vacation rental service AirBnB to establish European headquarters in Ireland, joining other US tech companies
who take advantage of the country’s low corporate tax rate.

Yes, the corporate tax rate in Ireland is low at 12.5%. But that’s not at all the reason why everyone settles there. It’s because Ireland operates a territorial tax system that they do (I should note that my native UK is moving towards such a system but no one really believes it will stay that way in the long term).

In Ireland you pay the full Irish rate of corporation tax on any profits you make in Ireland. However, on any profits you make in the UK, Germany or Spain, you pay absolutely no Irish tax. For a company like AirBnB, this is of course terribly attractive. Of course, the apartments they will rent to people will be all over Europe. But all transactions are online and can therefore be processed anywhere. What will actually happen is that Hans in Stuttgart rents his place for a weekend, Jeorg from Dresden, or Denmark rents it, the money goes in and out of Dublin.

This is a business activity that takes place within an Irish company (and EU rules insist that you can operate across the EU in this way), but this does not happen. not in Ireland. Thus, no tax to pay on the profits that can be made. Of course, the company may have to pay taxes to Uncle Sam if it then brings those profits back to the United States, but that’s a rather different issue.

This is the real reason why Ireland is a great place to set up shop if you want to sell in Europe. It’s also why at least one Apple annual report has pointed out that their effective corporate tax rate on foreign earnings is just under 2%. It’s not hard to do and if you are moving to Europe why not? The company is supposed to be run for the benefit of shareholders, after all, not workers or customers and certainly not for the benefit of the various tax collectors of the world.

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