In November 2020, The Currency was first to reveal that Facebook had pulled the trigger on the liquidation of its decade-old, multi-billion-dollar double Irish tax structure. As illustrated in the map below, three companies registered in Ireland but resident in the Cayman Islands faced the axe, weeks before a deadline to stop exploiting such structures to shift profits to jurisdictions where little or no corporation tax applied.

Cayman-based liquidator Kris Beighton of KPMG was appointed to wind up Facebook International Holdings I Unltd, its subsidiary, Facebook International Holdings II Unltd and its own subsidiary, Facebook Ireland Holdings Unltd.

There was very little work involved: The three intermediary holding entities had been hollowed out and their balance sheets reduced to zero before the liquidation process began. Their last reported transaction was the trickling up of a $14 billion dividend to the US in 2019. Their role was internal to the group and they were very unlikely to attract claims from other business creditors.

Yet KPMG chose a senior expert for the job. Beighton was a partner in KPMG’s advisory practice in the Cayman Islands for over 20 years, specialising in restructuring and liquidating companies in Caribbean offshore structures for multinationals. He had worked on high-profile international insolvencies including Enron and Bear Stearns.

When Teneo acquired KPMG’s Cayman Islands restructuring business earlier this year, Beighton became chairman of its offshore financial advisory division. He is now Teneo’s co-chair of international financial centres.

Within a few months, Beighton’s task was complete for two companies. On April 2, 2021, a formal wind-up meeting cleared Facebook International Holdings I and II for dissolution. They no longer exist.

Facebook Ireland Holdings, however, remained in limbo until the liquidator filed his first update on winding-up proceedings a few days ago. The document, covering the first year of liquidation until the end of September 2021, indicates that the process will “probably be completed” within 12 months.

In a note, Beighton indicated “the causes which delay the termination of the winding up: tax matters”.

The Currency queried spokespeople for Meta, Facebook’s parent, in Ireland and at its global headquarters on Thursday morning, asking what was the nature of the tax matters delaying the liquidation of its double Irish holding company and whether they had arisen in Ireland, in the US or elsewhere. They had not replied at the time of publication.

There are, however, clues in the past role of Facebook Ireland Holdings and in current legal developments in the US.

An “internet platform IP holder”

Not only was the Cayman-resident Irish company the immediate parent of Facebook’s fully Irish operations subsidiary, handling the social network’s non-American advertising sales – Facebook Ireland Holdings was also the only company listed in group filings as “internet platform IP holder”. 

This means it owned the multi-billion-dollar intellectual property rights for the “platform,” which is Facebook’s core social networking technology. Charges for access to this IP were used to channel profits to the zero-tax jursidiction for a decade. 

The 2010 valuation of this IP is at the centre of a dispute between Facebook and the US tax authority because of the knock-on effect it would have on the firm’s American tax bills for the intervening years. Meta has set aside a $9 billion provision in case it loses the trial, which has just resumed this month before the US Tax Court after a two-year delay caused by the pandemic.

Before it triggered the liquidation of its double Irish companies in 2020, the group moved its intellectual property assets back to the US and no longer locates the associated portion of profits in Irish-registered companies.

As long as Facebook Ireland Holdings remain in existence, however – albeit in liquidation – there will be a door to knock on where its accounting records were officially kept on Dublin’s Grand Canal Square for tax authorities interested in probing the legacy arrangements of the past decade.