Industry & Business

Facebook defends its €3.4m tax bill as Irish revenues rocket

Facebook defends its €3.4m tax bill as Irish revenues rocket

Facebook defends its €3.4m tax bill as Irish revenues rocket
December 08
13:04 2015

Facebook Ireland paid only €3.4 million in corporate tax last year in spite of revenues risen to €4.83 billion from €1.8 billion.

The Dublin-based firm, which serves as Facebook’s international head offices, accounted for 47% of Facebook’s global revenues of $12.46bn (€11.44bn) as the Irish unit’s revenues increased 62.5% over the 12 months.

However, in spite of the growing importance of Facebook Ireland Ltd to the social media giant’s world-wide operations, its corporate tax bill increased only €1.1m from €2.3m to €3.4m last year.

The accounts just filed with the Companies Office show that the firm paid the comparatively low corporate tax bill as it recorded pre-tax profits of only €12.8m.

The low profits — which represent a 76% jump on the 2013 pre-tax profits of €7.29m — are primarily due to the firm’s very large administrative expenses increasing by 62.5% going from €2.9bn to €4.73bn.

These administrative expenses are mainly made up of royalty payments and fees to other Facebook entities. The payments to the other Facebook firms are not disclosed in the 2014 accounts.

However, in 2013, Facebook Ireland Ltd paid royalty payments of €1.53bn to its immediate parent, Facebook Ireland Holdings Ltd, for licence expenses and €969m to Facebook Inc for data-hosting services and management fees.

The growth in Facebook’s Irish operations has resulted in the firm moving into a bigger building in Dublin’s Silicon Docks district where it now employs 1,000 people from 65 countries.

According to the firm’s directors, the growth in revenues “was attributable to growth in online advertising revenue from third- party customers”. Numbers employed at the firm last year increased by 13% from 425 to 478.

The pay bill for staff including salaries, share-based payments and pension payments totalled €57.6m — or an average of €120,000 each.

The average salary was inflated as it includes pay to executive directors and €9.79m in share-based payments while the pay pot also included €39.98m in salaries and other benefits of €7.7m.

The only two directors to serve on the firm during the year were Facebook Ireland managing director Sonia Flynn and Shane Crehan. In June, Ms Flynn resigned and Gareth Lambe joined the board.

Directors’ pay last year increased by €101,000, or around 20%, from €495,000 to €596,000.

The directors say that, in 2015, Facebook will expand its operations in Ireland.

Its immediate parent, Facebook Ireland Holdings, is an unlimited firm and is not required to file annual accounts.

The accounts confirm that since the end of its financial year, Facebook Ireland Ltd was sold to another Irish-based firm, Facebook International Operations Ltd.

The company officially opened its European headquarters in Dublin in October 2009, following in the footsteps of other leading internet-based firms including Google, eBay, and Amazon by establishing a presence in Ireland.

On Facebook Ireland Ltd’s corporate tax bill, a spokesman for Facebook said yesterday: “We comply with all tax laws where we operate. We’re committed to Ireland and are a significant contributor to the Irish economy. This is highlighted by the major investment in our new HQ and that we continue to hire employees locally.”

Facebook is an online social networking service launched on February 4, 2004, by Mark Zuckerberg with his Harvard College roommates and fellow students Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and Chris Hughes.

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