Through complex offshore intellectual property deals, the US media group behind powerful entertainment franchises such as “CSI”, “Star Trek” and “Transformers” has paid nearly $ 4 billion in taxes on corporations in the United States and an additional $ 1.2 billion in the United States. States. . United Kingdom, according to A new report From a Dutch research center.
A study by the Research Center for Multinational Enterprises (SOMO), a non-profit center partially funded by the Dutch Ministry of Foreign Affairs, shows that ViacomCBS has been using subsidiaries in the Netherlands for almost two decades. ViacomCBS has six Dutch entities that oversee international licensing for films and TV shows – four of which, according to the report, have never employed any employees.
By analyzing the annual reports of these Dutch subsidiaries, SOMO researcher Martin Hetland established that the Dutch government has issued tax rulings in favor of ViacomCBS since 2002. liable to tax in the Netherlands.
The report identifies the growing prevalence of intangible assets – such as intellectual property rights – as a major catalyst for the types of tax avoidance structures that ViacomCBS prefers given their easy transfer to another country.
If the rights to a television show are owned and operated in the United States, the profits of that show will be taxed in the United States, even if the show is ultimately sold and broadcast in another country. But the company can transfer the rights of this offering to a tax haven and enjoy its profits free of corporate tax. For example, in its investigation of Paradise Papers, the International Consortium of Investigative Journalists revealed how lucrative music revenues can be hidden abroad, where the profits are exempt from tax.
A 2017 study by the International Consortium of Investigative Journalists showed how music rights holders use offshore tax havens to evade royalty taxes.
Until 2020, Dutch tax law allowed ‘hybrid mismatch’, whereby American companies could shift their foreign profits in the form of dividends or royalties to these partnerships – and avoid tax at home and abroad. . As Hetland says in the report, “international corporate tax rules are not suited to the economy of value creation through intangible assets”.
ViacomCBS pleasant The report is “deeply flawed and misleading” and says it has fulfilled all of its legal tax obligations around the world, in a statement cited by The New York Times.
Other multinational media and entertainment companies have set up similar structures in the Netherlands, prompting Sumo to investigate the country’s role in global tax evasion, Arnold Merkes, coordinator of the Dutch branch of Tax Justice Network and report contributor, said via email.
The report recommends that the US government enact legislation to prevent US multinationals from transferring intellectual property rights to foreign affiliates and that the Dutch tax authorities stop making positive decisions that make the Netherlands a frequent channel of escape fiscal.
But Hetland also stressed in the report that “there is an urgent need for countries around the world to work together and coordinate” so that no country is filling its fiscal loopholes simply by funneling irregularities to a new location – like Viacom. and CBS did. therefore from 2005 to 2019, according to the report for the report. The report cites the Lux Leaks survey conducted in 2014 by the International Consortium of Investigative Journalists as a potential catalyst for CBS and several other companies moving their activities out of Luxembourg. The recommendations come this year during international negotiations on tax reform aimed at ending corporate profit transfers between tax havens.
As Merkies put it by email, “Tax advisers for multinational companies are always on the lookout for new structures and loopholes.”