Irish restructuring frees up €815m tax free for Yahoo

A restructuring of Yahoo's entities in Ireland on the eve of its $4.5 billion takeover by Verizon freed up €815 million, which was then sent tax-free from a Dublin company to Yahoo in the Netherlands, company documents reveal.

Overture Search Holdco (Ireland) was, until June, an important cog in Yahoo’s global tax planning, and was paid royalties from other group entities for the use of Yahoo intellectual property in Europe, Africa and parts of Asia.

On May 31st, it paid €229 million to a Mauritius company to acquire further Yahoo intellectual property rights linked to other Asian markets .

On the same day, Overture transferred these newly-acquired rights, along with all its existing rights to markets including Japan and China, to another Dublin company, Yahoo! Emea, which is the tech group’s main Dublin entity.

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As a result of the “estimated gain” on this inter-company transfer, a sum of €815 million was assembled by Overture for a dividend to the US group parent on June 9th, days before the Verizon takeover closed.

The US company, however, directed that the payment be sent to Yahoo in the Netherlands.

Company documents reveal that Overture, which is registered to Yahoo's address at Point Village on North Wall quay in Dublin, is actually tax resident in the Caribbean haven, the Cayman Islands.

Corporation tax

Overture has never paid any corporation tax in Ireland, despite conducting hundreds of millions of euro worth of transactions annually from Dublin, due to its Caymans tax domicile.

Accounts just filed for 2016 for Overture reveal it had revenues of €188 million last year, and declared net income of €41.5 million. It also received dividends from Yahoo in Japan last year of €250 million.

Overture is now expected to be wound up, following the transfer of all of its assets to Dublin entity Yahoo! Emea, which is now the pre-eminent cog in Yahoo’s global structure outside of the US.

As well as its newly-acquired intellectual property rights, Yahoo! Emea also holds all the search engine rights for Europe and Africa.

Last year, sales of €436 million were routed through this entity, up 13 per cent on the previous year. Due mainly to royalties due to other group entities, however, it only generated taxable profits of €5.7 million, a profit margin of just 1.3 per cent. Yahoo! Emea employs about 190 staff at Point Village, its accounts say.

Yahoo has been contacted for comment by The Irish Times for this article.