Facebook Faces Questions over U.K. Taxes

Facebook has reportedly paid only about $315,000 in taxes in the United Kingdom last year, even though the social networking giant reported U.K. revenues of about $32.8 million and is estimated to have earned over $281 million in the U.K.

The reason for the discrepancy and Facebook’s tax savings is that much of the revenue was booked in the relatively low-tax country of Ireland, according to an article in The Guardian. The newspaper reported that the Menlo Park, Calif.-based company paid its 90 employees in the U.K. an average of $442,000 each, more than it paid to the British tax authorities.

A Facebook spokesperson told the paper, “We have our international headquarters in Ireland that employs hundreds and a series of smaller local offices providing support services all over Europe. Dublin was selected as the best location to hire staff with the right skills to run a multilingual high-tech operation serving the whole of Europe.”

Other U.S.-based technology companies have also taken advantage of the low tax rates in Ireland and other European tax havens. Google reportedly uses tax strategies dubbed the “Double Irish” and the “Dutch Sandwich” (see Google Does the “Double Irish” and the “Dutch Sandwich” to Save on Taxes). Apple has also reportedly shifted profits to Ireland, the Netherlands, Luxembourg and the British Virgin Islands (see Apple Said to Avoid Billions in Taxes).