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Facebook To Shut Its Tax Avoiding Company In Ireland

Facebook will now wind up its main controversial tax avoidance company. The company had channeled most of the funds through the Ireland-based holding company to bypass the tax authorities of various countries.

As the British newspaper The Guardian reports, the closure of the subsidiary Facebook International Holdings I Unlimited Company is a done deal. Accordingly, the company is to be shut down and the non-material property rights stored with it are to be transferred to the parent company in the USA. In doing so, the company is reacting to the increasing pressure exerted from various quarters in the tax area.

The tax trick that was practiced through society was basically pretty simple. The Irish company had various intellectual property rights. The various national branches of the group licensed these from the holding company and paid corresponding license fees. This enabled these payments to be claimed as business expenses in countries with high taxes on profits.

Collection basin for profits

The balance sheets of the state branches then basically showed that only minimal profits were made – if at all. The Irish holding company, on the other hand, made profits and hardly had to pay taxes on it. The internal cash flows for license fees reached enormous proportions. In 2018, of $ 56 billion in consolidated sales, the Irish company accounted for $ 30 billion. Of these, $ 15 billion in profit fell, for which just $ 101 million in taxes was paid.

The US tax authorities filed a lawsuit against Facebook some time ago and want to clarify whether the apparently lawful method is ultimately an illegal tax avoidance practice. In addition, legislative changes are pending in various states that are intended to make such methods more difficult. These are likely the reasons why Facebook will shut down the Irish holdings company.