The IRS is suing Facebook for $9bn over unpaid taxes, reports Reuters, targeting its licensing of “intellectual property” to its own Irish subsidiary to shift profits to that lower-taxed jurisdiction.
Under the arrangement, Facebook’s subsidiaries pay royalties to the U.S.-based parent for access to its trademark, users and platform technologies. From 2010 to 2016, Facebook Ireland paid Facebook U.S. more than $14 billion in royalties and cost-sharing payments, according to the court filing.
The company said the low valuation reflected the risks associated with Facebook’s international expansion, which took place in 2010 before its IPO and the development of its most lucrative digital advertising products.
The practice used to be called Double Irish but has become more elaborate in recent years with changes to the law; Ireland remains the hot place to store profits.