TaxWatch: Activision Blizzard has dodged taxes on billions

August 12th, 2019, 21:26 Posted By: wraggster

Investigative think tank TaxWatch UK has taken an interest in the gaming market lately. After releasing a report on Rockstar Games' lack of tax payments last month, the outfit has released a similar report on Activision Blizzard.
As with Rockstar Games, much of TaxWatch's criticism of the Call of Duty and World of Warcraft company focuses on where and how it declares its profit. While both Activision and Blizzard are headquartered in California, they have technically sold their IP rights to a company in Bermuda (ATVI C.V.) and one in Barbados (ATVI International SRL). Those companies then license that IP to a fourth part of the organization, Netherlands-based Activision Blizzard International B.V., which manages Activision and Blizzard distribution and rights outside of the US.
Activision Blizzard International B.V. is profitable, but not impressively so because so much of what it brings in is paid out in royalties to the Activision Blizzard outfits in tax havens, like ATVI C.V. The Bermuda-based outfit has no employees, but received €5 billion ($5.59 billion) in royalty payments between 2013 and 2017. In 2017, ATVI C.V. sold some of its intellectual property to the Barbados-based ATVI International SRL, information for which is not publicly available. TaxWatch notes that the UK government is rolling out a new tax on royalties derived from the UK that are paid out to tax havens; that tax will apply to royalties transferred to Bermuda, but not to Barbados as that country has a tax treaty with the UK.
In 2017, Activision Blizzard International BV reported pre-tax profits of €55.6 million ($62.18 million) compared to €1.3 billion ($1.45 billion) in royalty payments. As a result, it paid out just €7.2 million ($8.05 million) in taxes.
TaxWatch also looked at Activision Blizzard's subsidiary King, know for the Candy Crush series of mobile games. While it appears to be functionally headquartered in London, the British companies in the King corporate structure are only making money by charging management fees to the rest of the King companies. When players pay for in-game boosts, they are actually sending the money to a King business in Malta (for most of the world) or Delaware (for customers within the US).

https://www.gamesindustry.biz/articl...es-on-billions

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