intercst
They pay taxes in the US on US sales.
They pay lower taxes in Europe on EU sales. Perhaps.
And you thought you were the only one who knew how to use the Tax code? LOL
I wonder if this is why Ireland has a higher per capita GDP than the U.S. ?
Wendy
No. I guess you didnât watch or perhaps didnât understand the video. This game is not new, itâs been going on for nearly two decades.
Take a company, for instance Apple. They create an Irish subsidiary and give it their IP rights. When they sell an iPhone, they assign a certain portion of the profit to the Irish subsidiary, and another portion to the US mother company. But they are free to decide âhow muchâ of each goes to each, so a fat piece goes to Ireland, where it is lightly taxed, and a small piece to the US.
Since they are free to decide how much the âlook and feelâ (i.e. operating system) is worth, they can overload those profits into a low tax country, and put the remainder in a high tax country, where they can subtract real costs like manufacturing, components, packaging, transportation, merchandising, etc.
This works especially well for tech companies which have no (or few) actual physical products, like Facebook and Google, where they freely assign whatever they like to whichever subsidiary they like and evade taxes almost entirely.
It also works well with Pharma, where the ingredients in the pills cost little, the big expenses are in the research and trials and shepherding a new drug past regulators and into doctorsâ hands. So they assign all the research costs to the US, making their profits here nil, and the profits go to Ireland, where they are lightly taxed, if at all.
And yes, thereâs another game afoot. The US tax code says so long as they keep the foreign profits âover thereâ, they will never be taxed at all until they are repatriated. So they are never repatriated. Instead, they are kept in investments, and used for collateral for loans, with which they can pay dividends, US salaries, or any other costs entirely free of taxation - because the âprofitsâ (this profit dollar here, not that loan dollar over there) stay in Ireland.
PS: The âBig Beutiful Billâ does almost nothing to correct this, even though Lutnick is parading around saying âWe will fix itâ. Baloney. Instead itâs being used as a cudgel to lower corporate taxes further, in an endless race to the bottom. Double baloney.
Triple, if I may say.
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Compare this to individuals. You have to report global income and pay taxes on that.
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The ip is worth more seems fair.
The IP should be taxed when it is transferred to the Irish company.
And that valuation basis used in the âhow muchâ portion of revenue goes to each.
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