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> Google Ireland charges Google USA a license fee of 100% of the revenue they made. This can be solved by placing a duty on large cross border IP fee transacti

> Google Ireland charges Google USA a license fee of 100% of the revenue they made. This can be solved by placing a duty on large cross border IP fee transactions. US is the country that's opposed to putting tariff on IP

542458 5y ago
There are lots of legitimate high-value cross border IP transfers, and since the US creates a lot of valuable IP it makes perfect sense that they’d oppose this.
- bonzini 5y ago
  But why do intra-company IP transfers have to be treated as actually moving money?
  - 542458 5y ago
    Two reasons: they’re not always actually intra company. Apple and Apple Ireland are different companies - and while intuitively it feels like you can just lump them together, it’s often much more complicated than that. Second, because it is actually moving money. If I’m a Canadian software company that does most of its sales in the US through an American subsidiary (not uncommon), the way it works is the American subsidiary pays the Canadian company back for the sales of the Canadian company’s IP. Otherwise the money would never get back to Canada and the developers wouldn’t get paid! Furthermore, would be silly and tax-suboptimal to ignore the IP-money-flow and treat the Canadian company as nearly pure loss while treating the American one as nearly pure profit.
    - bonzini 5y ago
      One is a wholly owned subsidiaries of the other. It's not of course a sufficient condition, but I m sure it's possible to distinguish the relationship between Apple and Apple Ireland from that between say Dell and EMC, or IBM and Red Hat, or the daughter companies of conglomerates like Berkshire Hathaway. > Otherwise the money would never get back to Canada and I wouldn’t be able to pay my developers! It doesn't have to be paid for the right to sell the IP. You can just move all revenue back into headquarters' coffers, and use it to finance the various cost centers. Just write the law so that it cannot be called a sale.
      - kgwgk 5y ago
        > You can just move all revenue back into headquarters' coffers So it's actually moving money! And you need a reason to move money from one company (in the US) to another (in Canada). Call it sale, call it IP licensing...
        bonzini 5y ago
        The difference is that "IP" production occurs where the R&D departments exist and salaries have to be paid, rather than where the corporate taxes are lowest.
        kgwgk 5y ago
        The difference with what? The context was "If I’m a Canadian software company that does most of its sales in the US through an American subsidiary (not uncommon), the way it works is the American subsidiary pays the Canadian company back for the sales of the Canadian company’s IP." The IP production occurs in Canada where the R&D departments exist and salaries have to be paid and the US subsidiary company pays to the Canadian parent company. They cannot just "move all revenue back into headquarters' coffers."
        bonzini 5y ago
        The difference between moving money in your situation and in Apple's, where there's no correspondence between where engineers are located and where IP is licensed from. By forcing all revenue to go through a single point (the headquarters) it's much harder to establish fake licensing like Apple Ireland's.
        kgwgk 5y ago
        Ok, I was commenting on the US subsidiary of Canadian firm example (which you didn't seem to agree on). But I don't think that the meaning of "forcing all revenue to go through a single point" is clear at all. From the point of view of most countries sending money out to Cupertino wouldn't be an improvement over sending it to Cork if that still means that they don't get to tax it.
- dlhavema 5y ago
  Isn't there a way to block internal up transfers and actual IP sales? Is that the issue? Like we want to block google to Google transfers, but not company a to "actually unrelated" company b?
- dalbasal 5y ago
  Technically, we (the irish) create all that IP which we sell to American companies. People like Seamus Jobs and Paddy Wozniak made OSX and stuff, which is why Apple US pays Apple Ireland 100s of $bns to license it. MSFT's IP is Bermudan. Innovative little island.
  - saddlerustle 5y ago
    That's not how it works at all. Apple Ireland is used to defer taxation on non-US sales, but those profits still needs to be eventually repatriated in order to pay out dividends and fund US R&D, which is the majority of its fixed costs. Profits from US sales stay in the US, and on net Apple Ireland pays Apple US 10's of billions a year. You can see their filings here: https://core.cro.ie/e-commerce/company/112189 https://core.cro.ie/e-commerce/company/112189
    - dalbasal 5y ago
      How does Apple's money get to Ireland in the first place? I haven't read those filings (not gonna either, I have drinking to do), but I was under the impression that it was IP licensing. Google Ireland takes payment directly. Unless they've changed recently, all non-US adwords invoices are paid to here. Repatriation to pay dividends is fairly moot, since they don't pay dividends. Maybe this is one of the reasons buybacks are preferred.
      - saddlerustle 5y ago
        Apple pays a regular dividend and does regular share repurchases. Since 2012 its paid out about a half trillion dollars to shareholders. These are equivalent from a corporate accounting point of view, share buybacks are paid out after US corporate taxes are paid. Buybacks are preferred recently just because of the better tax treatment from an investor point of view, it changes nothing for the company. As for how the money gets to Ireland, most of Apple's non-US operations are subsidiaries of Apple Ireland. For illustration, there's this (somewhat outdated) graph of the revenue flows on wikipedia: https://upload.wikimedia.org/wikipedia/commons/a/a5/Apple%27s_Offshore_Distribution_Structure_%282013_Senate_Report%29.png https://upload.wikimedia.org/wikipedia/commons/a/a5/Apple%27...

542458 5y ago

There are lots of legitimate high-value cross border IP transfers, and since the US creates a lot of valuable IP it makes perfect sense that they’d oppose this.

bonzini 5y ago
But why do intra-company IP transfers have to be treated as actually moving money?
- 542458 5y ago
  Two reasons: they’re not always actually intra company. Apple and Apple Ireland are different companies - and while intuitively it feels like you can just lump them together, it’s often much more complicated than that. Second, because it is actually moving money. If I’m a Canadian software company that does most of its sales in the US through an American subsidiary (not uncommon), the way it works is the American subsidiary pays the Canadian company back for the sales of the Canadian company’s IP. Otherwise the money would never get back to Canada and the developers wouldn’t get paid! Furthermore, would be silly and tax-suboptimal to ignore the IP-money-flow and treat the Canadian company as nearly pure loss while treating the American one as nearly pure profit.
  - bonzini 5y ago
    One is a wholly owned subsidiaries of the other. It's not of course a sufficient condition, but I m sure it's possible to distinguish the relationship between Apple and Apple Ireland from that between say Dell and EMC, or IBM and Red Hat, or the daughter companies of conglomerates like Berkshire Hathaway. > Otherwise the money would never get back to Canada and I wouldn’t be able to pay my developers! It doesn't have to be paid for the right to sell the IP. You can just move all revenue back into headquarters' coffers, and use it to finance the various cost centers. Just write the law so that it cannot be called a sale.
    - kgwgk 5y ago
      > You can just move all revenue back into headquarters' coffers So it's actually moving money! And you need a reason to move money from one company (in the US) to another (in Canada). Call it sale, call it IP licensing...
      - bonzini 5y ago
        The difference is that "IP" production occurs where the R&D departments exist and salaries have to be paid, rather than where the corporate taxes are lowest.
        kgwgk 5y ago
        The difference with what? The context was "If I’m a Canadian software company that does most of its sales in the US through an American subsidiary (not uncommon), the way it works is the American subsidiary pays the Canadian company back for the sales of the Canadian company’s IP." The IP production occurs in Canada where the R&D departments exist and salaries have to be paid and the US subsidiary company pays to the Canadian parent company. They cannot just "move all revenue back into headquarters' coffers."
        bonzini 5y ago
        The difference between moving money in your situation and in Apple's, where there's no correspondence between where engineers are located and where IP is licensed from. By forcing all revenue to go through a single point (the headquarters) it's much harder to establish fake licensing like Apple Ireland's.
        kgwgk 5y ago
        Ok, I was commenting on the US subsidiary of Canadian firm example (which you didn't seem to agree on). But I don't think that the meaning of "forcing all revenue to go through a single point" is clear at all. From the point of view of most countries sending money out to Cupertino wouldn't be an improvement over sending it to Cork if that still means that they don't get to tax it.
dlhavema 5y ago
Isn't there a way to block internal up transfers and actual IP sales? Is that the issue? Like we want to block google to Google transfers, but not company a to "actually unrelated" company b?
dalbasal 5y ago
Technically, we (the irish) create all that IP which we sell to American companies. People like Seamus Jobs and Paddy Wozniak made OSX and stuff, which is why Apple US pays Apple Ireland 100s of $bns to license it. MSFT's IP is Bermudan. Innovative little island.
- saddlerustle 5y ago
  That's not how it works at all. Apple Ireland is used to defer taxation on non-US sales, but those profits still needs to be eventually repatriated in order to pay out dividends and fund US R&D, which is the majority of its fixed costs. Profits from US sales stay in the US, and on net Apple Ireland pays Apple US 10's of billions a year. You can see their filings here: https://core.cro.ie/e-commerce/company/112189 https://core.cro.ie/e-commerce/company/112189
  - dalbasal 5y ago
    How does Apple's money get to Ireland in the first place? I haven't read those filings (not gonna either, I have drinking to do), but I was under the impression that it was IP licensing. Google Ireland takes payment directly. Unless they've changed recently, all non-US adwords invoices are paid to here. Repatriation to pay dividends is fairly moot, since they don't pay dividends. Maybe this is one of the reasons buybacks are preferred.
    - saddlerustle 5y ago
      Apple pays a regular dividend and does regular share repurchases. Since 2012 its paid out about a half trillion dollars to shareholders. These are equivalent from a corporate accounting point of view, share buybacks are paid out after US corporate taxes are paid. Buybacks are preferred recently just because of the better tax treatment from an investor point of view, it changes nothing for the company. As for how the money gets to Ireland, most of Apple's non-US operations are subsidiaries of Apple Ireland. For illustration, there's this (somewhat outdated) graph of the revenue flows on wikipedia: https://upload.wikimedia.org/wikipedia/commons/a/a5/Apple%27s_Offshore_Distribution_Structure_%282013_Senate_Report%29.png https://upload.wikimedia.org/wikipedia/commons/a/a5/Apple%27...