Hi Phil, I did a fair bit of research on it this year and it's all quite confusing, even for accountants. It's much more of a law question involving the complexity of several countries. Where it probably gets tricky is that the U.S. tax and case law alone has become so complicated (70k+ pages) that it's open to interpretation by you, your lawyers, your accountants, the courts and the staff of the IRS. Call the IRS for guidance and you will usually have to call back about five times before you get any two agents to agree on how to handle your matter ... that's a 40% chance you'll pass an audit even if you take their advice. To add to the complexity, even if you pay a fancy law firm to work out complex structures and agreements that they say is legal doesn't actually make it legal, it just gives you that firm's opinion on its legality. But it's commonplace and accepted.
At the end of the day, from what I understand, it's mostly about tax treaties and getting a third party opinion on transfer pricing between the entities. The U.S. has tax treaties with Australia and Ireland amongst others. So the Australian entity pays it's own taxes to Australia. Then for the U.S. entity (parent Delaware company I would guess?) it just checks a box on its tax return that the subsidiary paid appropriate taxes in its own country and is exempt. Ireland taxes at a low rate of 12.5%, but only on the income derived in Ireland. Combine that with the U.S. tax treaty and it makes sense for it to be a favorable place for IP to be held. Ireland changed their laws to allow royalty payments to be sent to the islands directly for holding , even non-treaty islands like Cayman and such, without paying royalty withholding. That seems to allow the avoidance of the 'double dutch sandwich' scheme that was otherwise needed. The transfer pricing agreements supposedly have to be done by a third party to be valid ... maybe try to find firms that do those and ask who they recommend for tax lawyers. As far as repatriating profits, that's what the fortune 500 companies are not allowed to do. They have been lobbying Congress to have a tax holiday so they can repatriate funds in a one time deal at some point. So from an accounting perspective, it would seem to make sense that the income would have to just go through as income and be taxable to the extent the U.S. entity is profitable. Maybe try Grant Thornton on the U.S. side. They are quite big and international but are not in the big four. If you have any questions, feel free to send me an email. Cheers, Edwin On Friday, May 2, 2014 8:19:59 AM UTC+10, Phil Evans wrote: > > Hi all. > > We've outgrown our accountants. We have an AU-based accounting firm and a > SF-based accounting firm (coincidentally, where our offices are located). > We're currently spending about $20k/year across both. > > Both reckon they know about tax and doing business in the other country, > and supposedly have clients doing what we're doing, but they don't agree on > how we transfer money between countries, repatriate funds, where to hold > funds, etc, etc. > > It's time to step up to one firm that can guide us through this. > > We are still HQ'd in AU but our US presence is expanding. > > I am interested in the kinds of accounting firms that advise companies > like Atlassian to house their IP in Ireland and can set up structures to > support that (not saying we need to do that ourselves). We have had > discussions with some of the big 4 (as per Elias' comments in 2009) but we > aren't getting the level of engagement we'd like - I suspect our numbers > aren't big enough (yet). I suspect we need to find a tier-2 firm (happy to > be told I'm wrong). > > There are more tech companies keeping their HQ in AU while they expand > overseas these days and we plan to do that. Which are the best firms, and > people within those firms, to speak to? > > Any pointers would be greatly appreciated. > > Phil. > > -- -- You received this message because you are subscribed to the Silicon Beach Australia mailing list. Vist http://siliconbeachaustralia.org for more Forum rules 1) No lurkers! It is expected that you introduce yourself. 2) No jobs postings. You can use http://siliconbeachaustralia.org/jobs To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en --- You received this message because you are subscribed to the Google Groups "Silicon Beach Australia" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/d/optout.
