Report: Facebook closed Irish subsidiary and moved billions in profits back to US following IRS suit; Irish subsidiary paid $101M in tax on $15B profit in 2018
Facebook Inc. has moved to wind down several Irish holding companies that had allowed it to shift billions of dollars in profit to the country … Source: The Times . Tweets: @cnada , @business , and @blmohr Source: Paul O'Donoghue / The Times : Facebook moves key assets out of Ireland Tweets: Marc Cote / @cnada : @Techmeme @abdroma Very very strange. No one has done this and the tax burden would be incredible of such a move. @business : Facebook moves to wind down several Irish holding companies that had allowed it to shift billions of dollars in profit to the country, where it was lightly taxed, the Times of London reports https://www.bloomberg.com/... @blmohr : “The move to wind down the units started after the IRS took Facebook to court, saying Facebook was shifting funds through Ireland to avoid U.S. taxes. Facebook also moved billions of euros in profits back to the U.S. from Ireland.” https://www.bloomberg.com/...
Context & Ripple Effects
This closes a decade-long arc. The IRS began examining Facebook's 2010 transfer of global assets to Ireland back in 2016, then escalated to a San Francisco lawsuit in February alleging more than $9B in back taxes from that profit shifting. The wind-down of the Irish holding companies reported here is the first visible sign of how Facebook is responding to that legal pressure.
The economics explain why the move stunned observers like @cnada: the Irish subsidiary paid just $101M in tax on $15B of profit in 2018, an effective rate under 1%. Facebook had already begun retreating from the structure earlier, when it stopped routing UK revenue through Ireland in 2016 — this extends that retreat to the core holding entities themselves.
First-order effects
- Facebook now faces a far larger US tax base: billions in profit booked back home at US rates instead of Ireland's, directly raising the stakes in the IRS case over the $9B-plus claim.
- The Irish holding companies that anchored the arrangement are being wound down, ending the specific structure the IRS sued over.
Second-order effects
- Ireland loses one of its highest-profile profit-shifting tenants, weakening the selling point its low-tax regime offered to other US multinationals weighing similar structures.
- A Facebook settlement or loss would hand the IRS a litigation template for pursuing comparable transfer-pricing cases against other tech companies that moved intangible assets offshore in the same era.
Third-order effects
- If the pattern holds, the double-Irish-style holding structure gives way to onshore profit booking for US tech firms — not because tax rules changed, but because enforcement through the courts made the old arbitrage too expensive to defend.
- Ireland's corporate-tax model faces a credibility test: if marquee tenants unwind their structures under US pressure, the country's pitch shifts from hosting shifted profits to competing on substance.
The trend: US tax authorities are using litigation to unwind the offshore profit-shifting structures Big Tech built in the 2010s, pushing profits back onshore company by company.