The next time you go to purchase your copy of Call of Duty or World of Warcraft you just might want to think just where your money is going. While nothing is official and technically this is all a rumor, according to BMF Business and quarterly accounts by SEC, 60% of Activision-Blizzard profits generated outside of North America from the sales of these games go directly into an offshore account in Bermuda.
Why would a company do this? Allegedly to pay less in taxes. By having the government think your company generated a lower profit, the less that company pays in taxes. For example, in 2012, Activision-Blizzard paid only $38 million of taxes outside the United States, only 4.8% of its profits, according to annual accounts.
This alleged feat is actually rather easy and doesn’t require much skill outside of knowing how finance works.
According to the BDA Sun, Activision-Blizzard has created at least seven subsidiaries in Bermuda and at least one in Delaware, which as everyone knows is an internal tax haven in the United States. In addition to these accounts, up until 2011, the publisher was allegedly still using another tax haven, Luxembourg.
But it doesn’t just stop there. Allegedly in addition to this tactic Activision-Blizzard also takes advantage of European very convenient taxation loopholes. Remember those subsidiaries I spoke about? Well, they are registered in the Netherlands, but in finance law, they are registered in Bermuda. This allows them not to pay tax on profits in the Netherlands or Bermuda or anywhere outside North America. Clever, huh?
Activision-Blizzard had no comment on the allegations and as of now they are not being investigated by neither the IRS nor the SEC.