Sifting through the King Entertainment F-1 filing with the SEC for their IPO (Feb 18 2014) I noticed the following in their risk section:
The intended tax benefits of our corporate structure and intercompany arrangements may not be realized, which could result in an increase to our worldwide effective tax rate and cause us to change the way we operate our business. Our corporate structure and intercompany arrangements, including the manner in which we develop and use our intellectual property and the transfer pricing of our intercompany transactions, are intended to provide us worldwide tax efficiencies [ed: for this I read - significantly reduce our tax-rate by moving our profits to low-tax jurisdictions ...]. The application of the tax laws of various jurisdictions to our international business activities is subject to interpretation and also depends on our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements. The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements, including our transfer pricing, or determine that the manner in which we operate our business does not achieve the intended tax consequences, which could increase our worldwide effective tax rate and adversely affect our financial position and results of operations.
It is also interesting how they have set up their corporate structure going “offshore” first to Malta and then to Ireland (from the “Our Corporate Information and Structure” section):
We were originally incorporated as Midasplayer.com Limited in September 2002, a company organized under the laws of England and Wales. In December 2006, we established Midasplayer International Holding Company Limited, a limited liability company organized under the laws of Malta, which became the holding company of Midasplayer.com Limited and our other wholly-owned subsidiaries. The status of Midasplayer International Holding Company Limited changed to a public limited liability company in November 2013 and its name changed to Midasplayer International Holding Company p.l.c. Prior to completion of this offering, King Digital Entertainment plc, a company incorporated under the laws of Ireland and created for the purpose of facilitating the public offering contemplated hereby, will become our current holding company by way of a share-for-share exchange in which the existing shareholders of Midasplayer International Holding Company p.l.c. will exchange their shares in Midasplayer International Holding Company p.l.c. for shares having substantially the same rights in King Digital Entertainment plc. See “Corporate Structure.”
Here’s their corporate structure diagram from the “Corporate Structure” section (unfortunately barely readable in the original as well …). As I count it there are 19 different entities with a chain of length 6 or 7 from base entities to primary holding company.