Facebook staff paid €123,000 as revenues surge to €7.9bn
Tech giant’s tax planning results in a taxable margin of less than 1.4% in Ireland
Facebook Ireland: In 2015, the Irish unit paid tax of €16.5m on profits of €109m.
The international revenues channelled by Facebook through its Irish unit surged 64.5 per cent to €7.9 billion last year, while its staff were paid on average €123,000 each.
The bulk of the €3.1 billion revenue increase was, however, wiped out by undisclosed royalty payments to other Facebook companies as part of its intricate tax planning, leaving relatively tiny taxable profits.
Facebook Ireland’s 2015 accounts, which have just become available in the Companies Registration Office, show its profits before tax were €109 million, nine times larger than the previous year. It paid tax of €16.5 million.
The taxable profit outlined in its accounts implies that Facebook Ireland has a profit margin of about 1.4 per cent. However, its stock market-listed parent group routinely reports profit margins to investors up to 25 times larger than this.
Facebook said the tax paid by its Irish unit is “in line with the statutory tax rate”.
“The increase in our revenue is attributable to growth in advertising from the international business community that advertise on our platform,” said Gareth Lambe, who runs Facebook Ireland.
The accounts directly attributed a costs spike that offset much of the revenue surge to the cost of extra staff, royalties to its holding company for the “use of the Facebook platform”, and service fees to its Californian group parent, as well as fees for “management-related services”.
Multinational groups sometimes detail transactions between related companies in their accounts, which in this instance would have shed light on the royalties shifted between different Facebook entities as part of its tax avoidance strategy.
Facebook Ireland, however, availed of an exemption to this disclosure requirement because all the transactions are between wholly owned subsidiaries of the wider group.
Facebook Ireland owns other group entities in Sweden, Luxembourg and Israel, according to its financial statements. During the year, ownership of the Irish unit was transferred from an unlimited holding company to a limited Irish company, Facebook International Operations.
Facebook now employs 1,500 staff in Ireland. According to the Facebook Ireland accounts, however, it employed on average 583 staff during 2015, who received more than €71.8 million in salaries, share payments and other benefits.
This works out at an average over the year of about €123,000 each.
Facebook has continued to increase staff numbers in 2016, recently adding another 200 in Dublin. It is also building a data centre in Meath and opening a research centre in Cork.
A report in the Sunday Business Post at the weekend suggested it may be planning to add a further 1,000 jobs in Ireland, although this has not been confirmed by Facebook.