In Austria, the average annual gross income in 2011 was something about 25.000 EUR. We all are at least a little bit aware of the tax system present in Austria. For the sake of simplicity, let’s just reduce that amount by roughly 20% for social security taxes and pension funds, that leaves us with 20.000 EUR. Now it’s time for the income tax, and as most of you will know there is a progressive tax system in place here. Again, keep it simple – the first 11.000 EUR are free of all taxes, so 9.000 EUR will be taxed with roughly 36%.

So, as an average Austrian citizen, you’d pay about 3.300 EUR of income taxes per annum. Now let’s just for one second imagine that you were a company. And that you make about the same profits (20.000 EUR), but this time you pay only 270 EUR in taxes. Per year, not per month. That’s about 0.3% of your annual income and the same tax rate that Facebook has paid for its non-US profits in 2011.

In numbers: Facebook has made $1.34 billion in profits and paid $4.64 million. All thanks to a weird setup where a holding company present on the Caymans owns a subsidiary in Ireland. While this is not really the latest stuff (Google, Amazon, Apple and many others play this game as well) it perfectly shows why corporations influence skyrocket while governments run out of money and thus influence quickly.

Source: http://www.businessinsider.com/surprise-facebook-avoids-its-european-taxes-2012-12