# ABC Australia: How Uber Australia fills a Dutch 'cash pool' and why it is fighting an $81.5m payroll tax bill



## Jack Malarkey (Jan 11, 2016)

ABC Australia:









How Uber's '$8 billion Dutch tax shelter' could see its 'profits shifted to the Netherlands for decades to come'


Uber Australia's latest financial accounts show revenue flowing offshore, while also revealing an $81.5 million payroll tax bill.




www.google.com.au






*How Uber Australia fills a Dutch 'cash pool' and why it is fighting an $81.5m payroll tax bill*

By business reporter Nassim Khadem


Posted Tue 7 Sep 2021 at 7:48pm, updated Thur 9 Sep at 1:44am


Uber Australia has continued its longstanding practice of sending revenue to its head company in the Netherlands.

*Key points:*

Uber's financial accounts show that the directors of Uber Australia Holdings for the 2020 year were its own tax advisers
The company sends much of its locally earned revenue to its Netherlands parent, which it describes in its accounts as a Dutch "cash pooling arrangement"
Experts say the company uses this model to minimise tax but the company says it pays all taxes it owes in each jurisdiction it operates
The ridesharing and food delivery platform's latest financial accounts also reveal the Australian
company has entered a stoush with the NSW government about whether it should remit payroll tax for drivers and has been hit with an $81.5 million tax bill, which it is disputing.

In 2015, Uber told a Senate corporate tax avoidance inquiry that about 25 per cent of each transaction in Australia was routed to its head company in the Netherlands.

This entity — Uber's Netherlands-based wholly owned subsidiary called Uber International Holding BV — then paid Uber Australia a fee for providing service support in Australia.

Uber Australia's 2020 accounts state that: "The Group has a cash pooling arrangement with Uber BV and all cash at bank is transferred to Uber BV at the end of every day."

There were interest expenses for having this money in the Dutch "cash pool" of $5.5 million in 2020 and $9.5 million the year before.

Uber Australia reported more than $1 billion in revenue and almost $7 million in profit after tax for the 2020 year. This is compared to $906 million in revenue and $1.6 million in profit after tax in 2019.
Its accounts also show a $643 million "service fee paid to related companies", equal to more than half of its total reported revenue.

It is not clear which company or companies this service fee was paid to – whether it is Uber BV or another related entity offshore.

In the same section of its accounts, Uber Australia notes a nearly $6 billion "collection on behalf by a related company" largely offset by an almost $5.3 billion "payment on behalf by related companies".
Its accounts state it paid $17.3 million in corporate income tax, up from $11.1 million the year before.
Uber has long argued that it pays all taxes it owes in Australia.

An Uber spokeswoman did not respond to ABC News questions about its financial accounts and the company's offshore structures, but said she was pleased that after eight years in Australia the company's brands Uber and Uber Eats "continue to show strong growth".

*$81.5 million NSW payroll tax stoush*

Uber's accounts also reveal further details about a payroll tax dispute with the New South Wales Government.

They reveal that on September 12, 2018 Revenue New South Wales issued a payroll tax audit against the company, and in February this year issued tax bills against the group totalling $81.5 million.

This is for amounts the state considers Uber owes through June 30, 2020 and the accounts note that "the Group has filed an objection to each of the assessments".



> "The group considers that payroll tax should have no application to arrangements with Driver Partners and has not remitted payroll tax on payments received by Driver Partners on this basis.”


The company says that if its appeal "is not favourable, this would decrease the Group's operating profit".

"The Group expects to get a response, and therefore certainty about the payroll tax position, before the next reporting date," its accounts state.

"As of the date of the consolidated financial statements, management continues to believe that it will succeed in the appeal and thus it would not be liable for the assessed payroll tax amounts under dispute.



> "The Group has not recognised a provision for this dispute on the basis that it is not probable that the Group will be liable for this obligation."


But TWU National Secretary Michael Kaine argued, "NSW taxpayers have joined rideshare drivers and delivery riders as the latest group Uber is prepared to rip off".

Mr Kaine called on the NSW government to "listen to its own government department which says these are workers with rights, and finally call the Silicon Valley behemoth to heel".

He said if the NSW government "caves", then "Uber will be laughing all the way to the bank at taxpayers and workers' expense".


> "The erosion to the state's revenue base here is just one example of a downward spiral governments must address as a public policy priority."


Uber also notes in its accounts the recent class action Australian law firm Maurice Blackburn has filed on behalf of thousands of taxi and hire-car drivers against Uber.

The law firm is alleging the company's operations in Australia were illegal because the company knew its drivers were not properly licensed and did not have proper accreditation.

"The Group deny these allegations and intend to vigorously defend against the lawsuit," the accounts state, noting that "as the proceeding is still at an early stage, it is difficult to measure the potential financial outcome".

Uber faces similar legal challenges in many overseas jurisdictions, as it has long argued that it is a technology business, not a transport company.

But, earlier this year, the UK Supreme Court made a ruling forcing Uber to categorise UK drivers as workers, meaning they are entitled to minimum wage and holiday pay.

*All of Uber's Australian directors in 2020 were its own tax advisers*

Uber's accounts also show that the directors of Uber Australia Holdings for the 2020 year were actually its own tax advisers.

Francois Chadwick (who resigned from Uber Australia in May 2021) was the global head of tax and accounting at Uber in the United States. He resigned from that role in April this year.

Australian-based Nicholas Falzon is a partner with accounting firm PKF. His bio on the firm's website states that "Nicholas' background includes extensive experience in advising high net worth individuals in relation to their remuneration packages, tax strategies, investment structuring, estate and retirement planning."

It adds that, "Nicholas has worked with a number of foreign companies establishing subsidiaries in Australia and advised on all financial aspects of establishing the business."

Keir Gumbs is listed as another Australian director in 2020. He joined Uber Technologies in 2019 and was Uber's deputy general counsel in the United States. He left Uber in July.

*Dutch shell company 'leaves little taxable profits behind'*

Several submissions to Senate Select Committee on Job Security argued that Dutch shell companies are at the heart of Uber's global operations.

One submission from the Centre for International Corporate Tax Accountability and Research (CICTAR) revealed that, in 2019, Uber's top Dutch shell company, controlling more than 50 other Dutch subsidiaries, pulled in more than $US5.8 billion ($7.8 billion) in operating revenue from countries around the world, excluding the US and China.

"The direct transfer of revenue from around the world to the Netherlands leaves little, if any, taxable profits behind," the submission said.



> "With a series of global restructures in 2019, Uber created an $8 billion Dutch tax shelter that, if unchecked, may eliminate tax liability on profits shifted to the Netherlands for decades to come.”


"The $8 billion Dutch tax shelter was created in 2019 when Uber transferred its intellectual property rights from Bermuda to the Netherlands."
It said the sale was financed with a $16 billion loan from an Uber subsidiary in Singapore.

"The Singapore subsidiary is the immediate parent company of the Dutch shell company that controls Uber's global empire," the submission stated.
"Accrued interest on this loan will further reduce taxable income in the Netherlands by $1 billion a year for the next 20 years."

It also added that, "revenue generated from Uber's global ride-sharing and meal delivery services, excluding the US and China, accumulates in Dutch subsidiaries with limited financial reporting".

The submission called for domestic and global rules to be changed, so that more tax revenue can be collected from Uber and other multinationals.


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## Jack Malarkey (Jan 11, 2016)

The reference to a payroll tax liability of $81.5 million as imposed on Uber by Revenue NSW is of particular interest as it would have been raised on the basis that the drivers were employees receiving salary or wages.

This is the first time (as far as I aware) that a revenue agency in Australia has proceeded on this basis.


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## UberDriverAU (Nov 4, 2015)

Jack Malarkey said:


> The reference to a payroll tax liability of $81.5 million as imposed on Uber by Revenue NSW is of particular interest as it would have been raised on the basis that the drivers were employees receiving salary or wages.
> 
> This is the first time (as far as I aware) that a revenue agency in Australia has proceeded on this basis.


They might be deemed employees for the purposes of the act rather than common law employees in Revenue NSW's view. Section 33 and 34 of the act might be relevant.


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## Jack Malarkey (Jan 11, 2016)

UberDriverAU said:


> They might be deemed employees for the purposes of the act rather than common law employees in Revenue NSW's view. Section 33 and 34 of the act might be relevant.


Thanks. I’ll follow any litigation with interest.


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## Jack Malarkey (Jan 11, 2016)

UberDriverAU said:


> They might be deemed employees for the purposes of the act rather than common law employees in Revenue NSW's view. Section 33 and 34 of the act might be relevant.


Sections 33, 34 and 35 of the _Payroll Tax Act 2007_ (NSW):

PAYROLL TAX ACT 2007 - SECT 33

Persons taken to be employers

33 Persons taken to be employers

(1) For the purposes of this Act, a person--

(a) who during a financial year, under a relevant contract, supplies services to another person, or

(b) to whom during a financial year, under a relevant contract, the services of persons are supplied for or in relation to the performance of work, or

(c) who during a financial year, under a relevant contract, gives out goods to other persons,

is taken to be an employer in respect of that financial year.

(2) If a contract is a relevant contract under both section 32 (1) (a) and (b)--

(a) the person to whom, under the contract, the services of persons are supplied for or in relation to the performance of work is taken to be an employer, and

(b) despite subsection (1) (a), the person who under the contract supplies the services is taken not to be an employer.


PAYROLL TAX ACT 2007 - SECT 34

Persons taken to be employees
34 Persons taken to be employees

For the purposes of this Act, a person who during a financial year--

(a) performs work for or in relation to which services are supplied to another person under a relevant contract, or

(b) being a natural person, under a relevant contract, re-supplies goods to an employer,
is taken to be an employee in respect of that financial year.


PAYROLL TAX ACT 2007 - SECT 35

Amounts under relevant contracts taken to be wages

35 Amounts under relevant contracts taken to be wages

(1) For the purposes of this Act, amounts paid or payable by an employer during a financial year for or in relation to the performance of work relating to a relevant contract or the re-supply of goods by an employee under a relevant contract are taken to be wages paid or payable during that financial year.

(2) If an amount referred to in subsection (1) is included in a larger amount paid or payable by an employer under a relevant contract during a financial year, that part of the larger amount which is not attributable to the performance of work relating to the relevant contract or the re-supply of goods by an employee under the relevant contract is as determined by the Chief Commissioner.

(3) An amount paid or payable for or in relation to the performance of work under a relevant contract is taken to include--

(a) any payment made by a person who is taken to be an employer under a relevant contract in relation to a person who is taken to be an employee under the relevant contract that would be a superannuation contribution if made in relation to a person in the capacity of an employee, and

(b) the value of any share or option (not otherwise included as wages under this Act) provided or liable to be provided by a person who is taken to be an employer under a relevant contract in relation to a person who is taken to be an employee under the relevant contract that would be included as wages under Division 4 if provided to a person in the capacity of an employee.






PAYROLL TAX ACT 2007 - SECT 33 Persons taken to be employers







classic.austlii.edu.au










PAYROLL TAX ACT 2007 - SECT 34 Persons taken to be employees







classic.austlii.edu.au










PAYROLL TAX ACT 2007 - SECT 35 Amounts under relevant contracts taken to be wages







classic.austlii.edu.au


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## Sandhills (Feb 9, 2018)

An interesting article that follows on from an earlier article ...it's not unusual or necessarily unlawful to route funds offshore through another entity..the devil is in the detail ..one can have a offshore company with a permanent establishment here or vice versa with various cross links within the rules .. generally provided you pay the tax due in each jurisdiction your ok

But knowing uber lol who knows 

Also where is that cash pool being reported? Is it on the books of the listed company ? Or wholly owned by the Dutch company? If it doesn't appear on the listed company then are investors being dudded?.

Who knows well above my pay grade which at the moment is mostly tax free thanks to the kind taxpayers of NSW👍

Thoughts Jack?


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## Jack Malarkey (Jan 11, 2016)

Sandhills said:


> An interesting article that follows on from an earlier article ...it's not unusual or necessarily unlawful to route funds offshore through another entity..the devil is in the detail ..one can have a offshore company with a permanent establishment here or vice versa with various cross links within the rules .. generally provided you pay the tax due in each jurisdiction your ok
> 
> But knowing uber lol who knows
> 
> ...


That’s all above my pay grade too!


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## Sandhills (Feb 9, 2018)

I don't know about that Jack ..I am sure if you had the time would hold them to account ...hope to see you front a parliamentary committee one day on behalf of the drivers ...Canberra is a worry at the moment and Vic ...seems they cannot get in front of delta ..my wild theory is people are catching it at the vaccine centres ( which resemble spring break in Florida) but obviously wouldn't want that to get around and feed into the craziness...the upshot of delta is vaccination rates in Sydney are going nuts


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## UberDriverAU (Nov 4, 2015)

Jack Malarkey said:


> Sections 33, 34 and 35 of the _Payroll Tax Act 2007_ (NSW):
> 
> PAYROLL TAX ACT 2007 - SECT 33
> 
> ...


Those are the ones, thanks Jack. No doubt Uber will contend the assessments given the sums of money involved. Other states will be watching too, to see if they'll be able to slug Uber with similar assessments.


Sandhills said:


> An interesting article that follows on from an earlier article ...it's not unusual or necessarily unlawful to route funds offshore through another entity..the devil is in the detail ..one can have a offshore company with a permanent establishment here or vice versa with various cross links within the rules .. generally provided you pay the tax due in each jurisdiction your ok
> 
> But knowing uber lol who knows
> 
> ...


I wouldn't be surprised to see Uber involved in a Diverted Profits Tax case with the ATO in the future.


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