Personally I would see the company you describe as being a Luxemburg company, and subject to their tax rates.
But when you have English customers buying product in English shops from your English staff in your English branches - well, that sounds like an English business. To then have a Luxemburg company that sells very expensive coffee beans to those English coffee shops, thus making those shops operate at a loss but making the coffee roasting Luxemburg business very wealthy - that's just a scam and it needs to be shut down. How to shut it down when you're coordinating the tax raising laws of many different countries is going to take some time.
If the Luxembourg company opens up a sales office in Sweden, but it has only 4 employees and there are 500 in Luxembourg, does that suddenly mean all those companies sales to Sweden get taxed twice? If so why would they ever open up an office there? Why not just insist customers fly to Luxembourg and visit their office instead?
Governments are whipping up a mob over this issue and aren't thinking it through. Does Google really need an office in London? No. One exists there because, in the absence of other factors, it makes sense to hire internationally so you can access good employees who might not want to live in America (or vice versa). But if the first Google employee who started work in the UK suddenly meant ALL money coming from UK based customers got taxed twice, that first employee would never make financial sense. Companies just wouldn't do it. They'd insist the employees moved to them instead of them moving to the employees.
This outcome makes no sense, but in their desperate quest to squeeze ever more blood out of the stone, maybe that's where governments are going to take us ...
If I'm an English business buying ads from an English sales team in an English office and there's an artificial final step in that process (someone in an Irish office stamps a form) then that feels like tax avoidance.
No one is asking for companies to be taxed twice.
But there is a strong concept in England of "not taking the piss" - people don't mind reducing your tax burden. That's expected behaviour. Reducing your burden from 50% to 38% is probably fine with most people. Reducing your burden from 40% to 3% is not fine with most people.
> but in their desperate quest to squeeze ever more blood out of the stone,
These are huge, very profitable, businesses that avoid tax in most jurisdictions. Governments are not squeezing blood from stones; they just want a few drips of blood from the very juicy blood-soaked sponge.
How is your English business buying ads from an English sales team in an English office any different from my Luxembourg/Sweden example? It seems identical to me.
I'm from south of Manchester, for what it's worth. And I think British politicians need to drop this issue as it's way beyond taking the piss by now. Tax avoidance isn't even a thing. It means whatever the speaker wants it to mean. Tax evasion is a thing, that's pretty well spelled out by law, but avoidance just means someone legally paying less tax than the speaker would like them to. Your assertion that 50% to 38% is "probably fine with most people" is in the same area: it's an entirely arbitrary set of numbers. I'm sure there are plenty of people who wouldn't think that's fine, however, it doesn't matter because there's no moral obligation to pay more tax than necessary. Governments are not charities, the British government especially so!
Many of these tax behaviours are almost certainly illegal. Some are currently being investigated, like Apple's "sweetheart" deal with the Irish government. The Google closing deals in Ireland deal is probably illegal too. The EU has opened a new investigation[1], and there may well be prosecutions. This is not just some "its obviously legal to pay no tax" kind of arrangement.
But when you have English customers buying product in English shops from your English staff in your English branches - well, that sounds like an English business. To then have a Luxemburg company that sells very expensive coffee beans to those English coffee shops, thus making those shops operate at a loss but making the coffee roasting Luxemburg business very wealthy - that's just a scam and it needs to be shut down. How to shut it down when you're coordinating the tax raising laws of many different countries is going to take some time.