Ok, I know nothing about international taxes.
But I'm not pleased about how tech/internet companies avoid paying taxes in the countries where they actually make the profit so when this was a hot topic a few years back I read a lot of articles about how so many companies somehow makes all their profits in countries with the lowest taxes. Like all European profits ending up in Ireland or Luxembourg where almost none of the profit originates.
...
I'm pretty sure, actually I am sure, that Tesla has people that knows taxes better than me. But they probably don't have time to explain this to me so can anyone else tell me what's different in Teslas situation?
And yes, I see how pathetic I am wanting Tesla to do what I don't like other companies to do.
There are several here including
@The Accountant who have spent years in international business, including tax management. ADAIK, we do not have explicitly an international tax accountant here. That is an arcane and weirdly complex world. FWIW, for a few years I personally had >30 annual tax returns to file. Tax accountants did it all, I signed but never really understood the numbers. My employer during those years had hundreds of such returns.
The preceding paragraph is NOT evidence of my competence nor knowledge, just copious exposure. That said, it is never quite so simple as locating domicile of intellectual property in a low tax area, although that plays a part. There are highly complex decisions regarding domicile of employment, operating costs and minimization of unhedged foreign exchange risk. The last point is one reason why companies such as Apple, Tesla and many others have debt to balance some foreign investments, even take debt in the home currency to pay dividends (egg, AAPL) rather than repatriate FX that would yield higher cost and higher ta consequences, not to mention transaction costs.
There is an accounting concept called "coterminous funding" :.https://www.investopedia.com/terms/c/coterminous.asp
The explanation is domestic US, but applies to large capital projects in FX as well. A similar process is often used to stabilize foreign sales effects on the P&L. Apple, famously (among seriously nerdy accounting and international business types, anyway) hedged expected revenues in many currencies that have large revenues and lower expenses (e.g. Brazilian Real, Israeli Shekel, and dozens of others), All those are dwarfed by two RMB ("The peoples currency") and the Euro. That is true for both Tesla and Apple BTW.
So, why Ireland? The ill-informed and probably jealous other Euro countries and the US, tend to want there to be some nefarious motive for that. There is not, it's explained easily within the structure of the Euro itself.
If anybody cares to know the details just search for IBAN, Euro and SWIFT. Once IBAN, (a standard international single code that identifies receiving bank and account number) was invented in 1997 to implement the Euro in 1999, suddenly any Eurozone account to transfer funds to any other Eurozone account instantly and mostly free. Ireland is a Euro member, but has very low corporate taxes, so the Euro businesses stormed to ireland, where they remain. Ireland has thrived ever since. Nothing nefarious.
Why? Because the Eurozone members could not agree their tax policies but did accept entirely free transfers. Thus quite rapidly after 1997 companies prepared, and in 2000 there was a mad rush to Ireland, including even huge aircraft leasing companies. Tesla is a beneficiary of all this.
There is major political question in the EU about the appropriateness of Ireland doing so well, at the expense of Germany and France mostly. Of course it hit the UK peripherally but they were never in the Euro so they began losing momentum in the post-Euro world.
This all is very much on-topic because it explains in a superficial way how and why Tesla is optimizing its FX risks.
(note: anybody who really wants to know more can PM me. This is quite arcane, but is fundamental to global economies smooth functioning. Be careful with internet research on the subject; there is enormous FUD on the subject (hint: if you see "US control" or anything similar you know it's untrue)
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