Like any deep love affair, the thing we've always loved most about Etsy is the thing that drives us craziest about Etsy.
During the curation of its artisanal IPO, the Brooklyn-based online flea market refused to be anything but a force of altruistic global goodness that was helping people as it worked with Goldman Sachs on getting the best price-per-share at its first opening bell.
Etsy wanted to be everything at once. It so wanted to be a mom n' pop with a ticker symbol that it did things like constantly publicize its standing as a B Corporation. That certification of social responsibility bestowed a halo of goodness that Etsy seemed to think would help shield it from any allegations of rapacious capitalism.
But being a big, public company with shareholders that demand results can be complicated, and Etsy had to walk a very fine line. Like most growing American companies, that walk led to Ireland.
In August, Bloomberg found Etsy on the Emerald Isle running what looked a lot like the ol' "Double Irish."
Artisan goods marketplace Etsy Inc., which promised to be a beacon for transparency as a public company, recently implemented a strategy that shrouds its offshore tax-cutting arrangements in secrecy.
Because of a change in how its Irish subsidiary is registered, Etsy no longer needs to publicly disclose basic financial information about that unit. The classification designates the business in Ireland as an unlimited liability company -- a move that’s been used by corporations such as Google Inc. and LinkedIn Corp., enabling them to conceal how profits are shifted to zero-tax locales such as Bermuda or Isle of Man.
While Etsy is hardly the first company to try it, Etsy might be the first company to deal with allegations of bald hypocrisy for doing so. And it might also be losing that sweet, sweet B Corp designation over it's Double Irish dreams.
Americans for Tax Fairness wrote to B Lab, the nonprofit organization that determines the B Corporation certification for socially responsible companies, arguing that Etsy’s tax arrangement should disqualify it for the designation.
That's the kind of bad press that really puts a pin - or maybe even a sewing needle - in a company's do-gooder reputation.
But Etsy - which cannot seem to keep its stock price from swinging in wild value parabolas - is not taking these tax-dodge allegations lying down.
Etsy CEO Chad Dickerson took to his corporate blog to defend everything he and his company have done, refuting any claims that Etsy had gone full Double Irish or tried to obfuscate while doing so. Etsy, Dickerson claimed, was still the good guy and had been straight up about why it was taking advantage of Ireland's lax tax situation.
As a global company, it is smart business practice for us to have an efficient tax structure. To put it simply, we want our taxation to reflect our actual business. So, we are now paying taxes for our international operations (those outside of the Americas) in Ireland, where our international headquarters is located, as well as the other countries in which we operate. We incorporated in Ireland in 2011 because, with lots of talented people, easy transportation, and, yes, an attractive tax rate, Ireland happens to be a great place to do business. As our international business grows, so has our headcount based in Dublin and we now have a team of almost 40 there, spanning engineering, seller development, finance, payment, recruitment, HR, and legal.
Irish people are smart and charming, the weather is great and yeah, sure, they don't take too much money off the top.
But why are we even talking about this?
Doing business through an Irish shell company is a very smart and (still) legal way to save a ton of money. For a company that has yet to turn a profit, that ain't nothin.' But the fact that Etsy's CEO feels the need to explain why his company is doing it, and couch it with references to things like "easy transportation" is the real problem for Etsy.
Using corporate machinations to save on taxes while becoming an international and publicly-traded company is just how the game is played. Maybe Etsy should just start playing that one game and finally stop castigating itself for trying to be two things at once.
After all, before Etsy saves the world it needs to save its own share price.