Tornado Red Pearl (TRP) R32 build thread
Typical political spin“When global companies can save billions with such tax tricks, then every taxpayer has to feel like they’ve been had,” Rainer Bruederle, parliamentary leader of the Free Democratic Party, Chancellor Angela Merkel’s coalition partner, told German business newspaper Handelsblatt yesterday. “Many skilled workers can only dream of so much charity from the tax offices.”
Well hell, it's legal, but I bet it won't be in the future.
Last edited by Turbio!; 07-06-2012 at 10:14 AM.
VW had the money, by the way. This little move increased their earnings per share by 7%.
Last edited by Turbio!; 07-06-2012 at 10:34 AM.
It's a very good outcome to be sure, but frankly I don't understand all of the pats-on-the-back.
Using non-cash consideration in order to re-classify a transaction (ex. from a take-over to a restructuring) isn't exactly novel. Stuff like that is done all the time in order to get better tax consequences.
Just last month a colleague of mine closed a deal wherein they devised a way to have a transaction considered a basic share purchase in lieu of an amalgamation in order to avoid both hefty tax implications and a prolonged legal process.
Maybe I'm being naive -- quite possible cause I am not familiar with the intricacies of the VW deal -- but I don't really see what E&Y and VW's lawyers did that was so novel. Absolutely it's a good outcome, but IMO it's exactly what any good accounting/ legal team would have done......
Maybe I'm missing something.
Good job by VW, they are in the business of making stake-holders happy, not the tax-man. Besides the added business will help the places they do business in the long run....that's why governments put loopholes on the books.
Seeing as germany has bailed out most of the euro-zone, they're just happy the VW business is growing.
First Ducati now Porsche...along with the current AudiSport success means more racing, so we all win.
99.5 A4 2.8 Q Tip
73 914 2.0 / 2.7 conversion in progress
64 356 SC
65 Ducati Falcon 80
Not sure how you can say that there shouldn't have been an expectation for tax revenue...
The spirit of the law clearly called for taxes to be paid.
Kudos to the accounting firms for coming up with a creative way to circumvent the tax code, but to act as if no harm was done and that the maneuver isn't ethically questionable seems a bit over the top.
The money certainly would have been far more useful ending up as tax revenue than being distributed to shareholders.
How can you be so sure that the money that VW earned would be more beneficial as tax revenue? The term 'loophole' is a misguided one, and does not necessarily mean that a firm/individual is circumventing the law. They are following the law, and it is their duty to generate wealth for shareholders.
"I don’t want the company to be driven by numbers. I want it to be driven by making better cars and contributing to society. That will turn into profit, which we can use to develop better cars. That should be the cycle, and that will, as a result, build a company with a strong foundation."
I don't know, the term loophole seems to fit quite well.
The point I made wasn't that it was illegal, I simply pointed out that it was ethically questionable.
Perhaps Germany deviates from the US in that aspect, but in Germany's social market economy the duties of enterprises go far beyond generating wealth for stakeholders.
Social welfare is just one of many other duties that corporations are expected to be mindful off, and I think it's reasonable to argue that such a maneuver doesn't put them in to favorable of a light in that aspect.