What is the practice of relocating a company's corporate headquarters to a lower-tax country while retaining its material resources in the higher-tax country of origin called?
Tax inversion, also known as corporate inversion, is the relocation of a company’s corporate headquarters to a different country with lower taxes. While the headquarters is relocated, the majority of the company’s operations typically remain in the higher-tax country of origin. U.S. corporations are more likely to relocate due to high U.S. income taxes. This relocation can also been seen as an act of tax avoidance.
More than 50 U.S. companies have reincorporated in low-tax countries since 1982, including more than 20 since 2012. A lot of drug companies are doing it, and low-tax Ireland is a popular corporate home. They’re doing it despite a 2004 law that legislators had promised would end the practice.
This might be interesting: Today, most companies achieve inversion by acquiring a foreign company at least 25 percent their size. That’s how Medtronic, the medical device giant founded in a Minneapolis garage in 1949, turned Irish and how Burger King, the Miami fast-food chain, became Canadian.