LinkedIn aims to cut its Irish taxation bill
Published 19/11/2011 | 05:00
LINKEDIN plans to reduce its tax bill in Ireland through a complex use of Irish tax law, it was revealed yesterday.
The social-networking site for professionals, which went public earlier this year, said it would utilise a widely-used tax measure to cut the amount that it pays here.
In a prospectus to potential shareholders, the firm said it would use deferred tax assets to reduce its tax exposure in the US and Ireland, where the company has its international headquarters.
In the prospectus, the company states: "Due to the history of losses the company has generated in the past, (LinkedIn) believes that it is more likely than not that all of the state and Ireland deferred tax assets can be realised as of December 31, 2010. Accordingly, the company has recorded a full valuation allowance on its state and Ireland deferred tax assets.
"The valuation allowance increased by $1,608,000 (€1.19m) during 2009 and decreased by $6,207,000 during 2010."
Deferred tax assets are used by companies to reduce their future tax bill. The method is usually used by companies that have been loss-making in the past but are now profitable.
The prospectus, which has just been filed to the US Securities and Exchange Commission, also specifically refers to Ireland as a risk for "political and economic instability".
LinkedIn, which employs around 100 people in Dublin, more than doubled in value when it went public in May.
Its stellar opening on the US market was taken by some as a sign of an internet bubble. However, unlike some of its peers, it is already profitable.