“How Etsy Crafted a Tax Strategy in Ireland” is a Wall Street Journal article about the arts and crafts marketplace working to escape U.S., New York State, and New York City tax rates on its $200 million/year in revenue:
In Etsy’s case, it set up a subsidiary in Ireland, the location of its European headquarters, then lent the unit money to be used to buy intellectual property from the U.S. company, according to a person familiar with the situation. The details of how Etsy set up the Irish subsidiary and how it plans to use it to reduce taxes hadn’t previously been known.
Etsy’s U.S. tax bill will increase initially, because the U.S. company made money on the sale of the intellectual property. But the structure is expected to eventually reduce Etsy’s U.S. tax bill because the income associated with the intellectual property held in Dublin will be taxed at the Irish rate of 12.5%, much lower than the U.S. rate.
It turns out that the company is going to pay at least $15 million in additional taxes in the short term, but these could have been avoided if the Irish subsidiary had been set up earlier and the intellectual property transferred when it wasn’t worth so much.
Related:
- What if you are already Irish and want to escape taxes there? Move everything to the Netherlands: 2007 posting on the U2 band’s tax avoidance
Basically Patents are being used to avoid taxes.
It is more lucrative that way.
All the profit from other countries are funneled thru
Ireland because they are paying licensing cost which makes
it like they are not making any money.
Apple has been doing this since the 80s.
EU is trying to eliminate this tax dodge.
Singapore and other money centers are doing this for long time.
Helping hide money of the rich and avoid taxes.