The Sunday Times and The Guardian have just announced that Facebook has decided to close three Irish holding companies in order to repatriate their intellectual property to the United States. This decision by the group led by Mark Zuckerberg will allow the management of user data in the United Kingdom according to American and non-European laws. In a statement, the company said: “Like other companies, Facebook must make changes in response to Brexit.” To put it simply, the legal liability of UK users will shift from Facebook Ireland to Facebook Inc.
Many tech giants like Facebook have benefited (and still do) for many years from Ireland’s tax arrangements to avoid paying taxes. In 2016, the Internal Revenue Service (IRS) sued Facebook and launched an investigation to find out more about the company’s practices. In this huge legal battle, the Internal Revenue Service managed to prove that Facebook had lied about its true worth and owed it more than $ 9 billion. Following this, the G20 countries agreed to try to review tax legislation by trying to squeeze the benefits reaped by these large companies.
Today, on leaving Ireland, Facebook pledges to pay the taxes the company owes. For example, in 2019, Facebook paid just £ 100,000 in additional taxes in the UK as its profits rose 25%. Without the benefits of Irish politics, payments made by Facebook are expected to increase significantly in the near future.
If Facebook is making this decision, it is not out of good conscience. The company is primarily seeking to escape some of the most stringent European regulations in the world regarding the management of user data. Jim Killock, managing director of the Open Rights Group, said: “This announcement means that the actions of Europeans to limit the power of tech giants will not apply to British citizens.” Facebook can therefore try to impose its law on the United Kingdom without worrying about the European Union.