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I mean they definitely can (and do) enter in to legal agreements with “themselves”. Many companies do, especially when it comes to licensing (even Subway does i
by joshspankit 4y ago
I mean they definitely can (and do) enter in to legal agreements with “themselves”. Many companies do, especially when it comes to licensing (even Subway does it).
It’s one of the most common methods for shifting income to other countries where the taxes are lower.
- jhugo 4y agoNo, that's two separate (but related) legal entities entering into agreements with each other.
- joshspankit 4y agoOn the surface, yes. That’s exactly why it’s legal. However, from another perspective it’s the same company. Let’s take the Apple example: Apple created Apple Sales International and Apple Operations Europe as companies that own the intellectual property that Apple uses to create it’s products. They did this because when they make 1B profit on 10B sales (let’s pretend for the sake of easy math), they would normally have to pay tax on that 1B but instead they can say “Our agreement with Apple Sales International and Apple Operations Europe state that we must pay “them” 1B in licensing fees for these sales. As you can see, we have no more money left to tax.”. Since Apple Sales International and Apple Operations Europe are subject to different tax laws they can pay little to no tax at all. Now: Are those separate legal companies? Yes. But when it comes down to it, are they all the company we think of when we say Apple? I would say yes.
- prepend 4y agoThose are with separate legal entities like subsidiaries and franchises.