Facebook’s $19 Billion Tax Planning Strategy

In this article, we’ll share the story of Facebook’s $19 billion tax planning strategy. The primary sources for this piece are ProPublica’s “Who’s Afraid of the IRS? Not Facebook” and the IRS court filings from 2016 and 2019. We’ve attempted to reconstruct the entire process based on available information. Please note that while we’ve done our best to ensure accuracy, there may be errors or omissions.

Facebook’s tax planning journey began in 2008, when its founder, Mark Zuckerberg, hired Sheryl Sandberg from Google to serve as the company’s Chief Operating Officer (COO). Shortly after joining Facebook, Sandberg exchanged emails with then-tax director Ted Price on April 10, 2008, expressing concerns about the high tax burden if Facebook didn’t establish a European tax hub. Price replied within an hour, suggesting they find a low-tax jurisdiction to house their profits. Sandberg quickly instructed Price to explore potential locations.

A few months later, Facebook followed Google’s lead and set up its European tax hub in Ireland. Internal emails reveal that Facebook debated between Dublin, Ireland, and Geneva, Switzerland, as potential locations. While the leaked emails don’t explicitly state why Ireland was chosen, it’s likely due to the lower labor costs.

Once the location was finalized, Facebook began implementing its tax planning strategy.