US-headquartered online service providers like Amazon, Apple and Google are having a hard time these days in Europe. There are political hearings going on in the UK, the European Commission is unhappy with the reduced VAT rate on e-books that Luxembourg allows and now France has raised tax issues as well. It is rare that US brands generated so many headlines.

Even brick-and-mortar multinational Starbucks is being scrutinized in the UK and elsewhere.

The reason is obvious: economic times are hard, tax revenues are down and U.S. company trumpet the profits realized in Europe to their shareholders. Tax authorities are then raising red flags when the tax returns show losses – US companies profit, and don’t pay their fair share of taxes!

The gap is not only in the difference between tax accounting and financial reporting (carry-forward of past losses significantly reduce profits for tax for years to come), but also in how US companies deal with their public and shareholder relations. Again, transparency is key to keeping shareholders, the public and the tax man happy.

Nevertheless, now is a good time for US-based retailers of e-services to regroup and contemplate their European business operations!

In what may be Europe’s first such effort, President Francois Hollande’s government says it will look into changing laws next year that will block the ability of online companies to pay levies on French earnings in European countries with lower tax rates. The government is also weighing options for common European value-added taxes.

French politicians, like their European counterparts, have stepped up efforts to go after Internet giants who they say collectively avoid paying hundreds of millions of euros in value-added and corporate taxes using loopholes in European Union laws and different tax regimes across the region.

Google Joins Apple in Drawing French Tax Collectors’ Indignation – Bloomberg.

Days after a U.K. parliamentary committee accused Amazon U.K.’s representative of “hiding” company sales numbers, the same committee publishes the firm’s confidential figures.

http://www.zdnet.com/amazon-confidential-sales-figures-outed-by-u-k-parliament-7000007951/