Nest Labs – tax benefits and the internet of things? #IPv6
Google has bought Nest Labs for $3.2Bn. Nest Labs is into smart home devices and the internet of things. This we all know because it’s splattered all over the tech pages this morning.
I’d never heard of Nest Labs. I suspect it’s a by product of living in sleepy old Lincoln, somewhere in the deepest sticks of Engerlund and not in Silicon Valley. I live with it every day and I love it.
Ok it is interesting news and it focusses the mind on the growth of the internet, the further pervasion of technology into our every day lives and yes, IPv6 even. Google knows its stuff when it comes to IPv6.
A few things particularly spring to my mind re this acquisition. One is that Nest Labs was founded with over $80m of VC money. If you want to sell your business for $3.2Bn you have to think big and place big bets. Nest Labs will have spent its cash on an expensive team of people able to deliver.
I saw somewhere recently that startup had offered a Google employee $500k to move jobs. Unfortunately that Google developer was already earning $3m! I wonder whether there is the environment in the UK for this kind of activity. It needs both investors and entrepreneurs to be fully embedded in emerging technology cultures.
Secondly if this market is going to be as big as the size of the bet suggests then it has to be the demesne of huge businesses. Global businesses. This is somewhat dispiriting. There must still be room for small entrepreneurial organisation who can make things happen quickly.
Finally one presumes that Google has a huge cash pile. You hear about it occasionally, usually when MPs whinge about the ways large multi-national corporations are able to avoid paying tax in particular countries. All perfectly legal.
A quick “Google” shows that US Corporation Tax is 40% whilst Capital Gains Tax is anything between zero and 15% or 20%. One of the investors in Nest Labs is Google Ventures, fair play. Now I’m not an accountant but might there be huge tax benefits for Google in only paying Capital Gains tax rather than Corporation Tax on the $3.2Bn? Don’t get me wrong. Nothing improper going on I’m sure. Perhaps it all comes out in the wash so to speak.
It would be interesting though if someone out there was able to drill into the taxation specifics of such a transaction. I’m sure it wouldn’t affect the Google business case for the Nest Labs acquisition but an interesting by product nevertheless?
Answers on a postcard or via the comments section.
See ya, buddy…
PS Internet of things. IPv6. Very exciting.