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This is called transfer pricing. VW can make cars in the US, but barely make any profit, thus minimizing taxes paid to the US. The subscription payments however
by slt2021 1y ago
This is called transfer pricing.
VW can make cars in the US, but barely make any profit, thus minimizing taxes paid to the US.
The subscription payments however can flow freely to the Switzerland directly, where royalty payments are taxed at the lowest possible rate.
This is how pharma works: pharma entities in the US dont make any profit, because they send royalty to the IP holder entity in Switzerland, where these royalty payments are taxes at the lowest rate possible and profits are sheltered that way from the US and EU taxation
https://www.investigate-europe.eu/posts/deadly-prices-pharma-firms-stash-profits-in-europes-tax-havens-as-patients-struggle-with-drug-prices https://www.investigate-europe.eu/posts/deadly-prices-pharma...
- m_mueller 1y agoWhy would it flow to Switzerland? I believe VW headquarters are still in Germany.
- ExoticPearTree 1y agoHypotethetically speaking, there could be a design office in Switzerland for these features that charges a crazy amount in IP rights for every car sold by VW anywhere in the world.
- simonh 1y agoThis is also how US companies operate in Europe, e.g. Starbucks in Europe paying enormous royalty fees to the US for the name.
- ciupicri 1y agoThough Starbucks is a francise, so it's expected.
- simonh 1y agoThis isn't the profits of the franchisees, it's the profits of Starbucks.
- slt2021 1y agoUS companies (big tech and others) use Ireland[1], Netherlands[2], and other tax havens[3] for that 1. https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement 2. https://en.wikipedia.org/wiki/Dutch_Sandwich https://en.wikipedia.org/wiki/Dutch_Sandwich 3. https://en.wikipedia.org/wiki/Bermuda_Black_Hole https://en.wikipedia.org/wiki/Bermuda_Black_Hole