Facebook has moved one of its most important intellectual properties out of Ireland, ending a financial arrangement used to move billions in profits through the country largely untaxed, The Times reports. According to documents from the Irish Companies Registration Office seen by the British paper, Facebook is winding up several Irish holding companies used to hold its IP for international sales. The company has also shifted billions of euros in profits from its Irish holding company back to the US.
Facebook companies around the world pay the Irish holding company for the use of the IP. The cost helps lower their taxable revenue and allows Facebook to shift much of its global sales outside the US through Ireland, where it benefits from lower rates and tax breaks on IP.
In 2018, the most recent year for which accounts are available, Facebook’s main Irish holding company paid USD 101 million in tax on profits of more than USD 15 billion, the Guardian reports. Facebook International Holdings I Unlimited Company recorded revenue of USD 30 billion in 2018, more than half of Facebook’s total global turnover of USD 56 billion.
The change in structure comes as a transitional period ends in Ireland at the end of 2020 for phasing out certain tax loopholes. In addition, Facebook has faced investigations from the US tax service, the IRS into the valuation assigned to the IP assets moved to Ireland in 2010.
Facebook confirmed it was shutting down the Irish holding company as part of a wider restructuring and moving the assets back to the US. "We believe it is consistent with recent and upcoming tax law changes that policymakers are advocating for around the world," a spokesperson said.
