Vistaprint 2008 Annual Report Download - page 38

We are subject to payment-related risks.
We accept payments for our products and services on our websites by a variety of methods,
including credit card, debit card and bank check. As we offer new payment options to our customers,
we may be subject to additional regulations, compliance requirements, and fraud risk. For certain
payment methods, including credit and debit cards, we pay interchange and other fees, which may
increase over time and raise our operating costs and lower our profit margins or require that we charge
our customers more for our products. We are also subject to payment card association and similar
operating rules and requirements, which could change or be reinterpreted to make it difficult or
impossible for us to comply. If we fail to comply with these rules and requirements, we may be subject
to fines and higher transaction fees and lose our ability to accept credit and debit card payments from
our customers or facilitate other types of online payments, and our business and operating results
could be materially adversely affected.
We may be subject to product liability claims if people or property are harmed by the products
we sell.
Some of the products we sell may expose us to product liability claims relating to personal injury,
death, or property damage, and may require product recalls or other actions. Although we maintain
product liability insurance, we cannot be certain that our coverage will be adequate for liabilities
actually incurred or that insurance will continue to be available to us on reasonable terms, or at all.
Risks Related to Our Corporate Structure
Non-Bermuda tax authorities may tax some or all of VistaPrint Limited’s income, which would
increase our effective tax rate and adversely affect our earnings.
VistaPrint Limited is organized in Bermuda and conducts business through operations within
Bermuda. Bermuda does not currently impose income taxes on our operations. Management services
for VistaPrint Limited are provided to VistaPrint Limited by employees of our United States subsidiary,
who are all based in the United States. We have endeavored to structure our business so that all of our
non-Bermuda operations are carried out by our local subsidiaries and VistaPrint Limited’s business
income is, in general, not subject to tax in these non-Bermuda jurisdictions, such as Jamaica, the
United States, Canada, Spain, Switzerland or the Netherlands. VistaPrint Limited has filed tax returns
on the basis that it is not engaged in business in these non-Bermuda jurisdictions. Many countries’ tax
laws, including but not limited to United States tax law, do not clearly define activities that constitute
being engaged in a business in that country. The tax authorities in these countries could contend that
some or all of VistaPrint Limited’s income should be subject to income or other tax or subject to
withholding tax. If VistaPrint Limited’s income is taxed in jurisdictions other than Bermuda, such taxes
will increase our effective tax rate and adversely affect our results of operations.
United States corporations are subject to United States federal income tax on the basis of their
worldwide income. Non-U.S. corporations generally are subject to United States federal income tax
only on income that has a sufficient nexus to the United States. On October 22, 2004, the United
States enacted the American Jobs Creation Act of 2004, or the AJCA. Under the AJCA, non-U.S.
corporations that after March 4, 2003 complete the acquisition of substantially all of the properties of a
United States corporation and that meet certain ownership, operational and other tests are treated as
United States corporations for United States federal income tax purposes and, therefore, are subject to
United States federal income tax on their worldwide income. The amalgamation of our predecessor
U.S. corporation with VistaPrint Limited occurred in April 2002. The AJCA grants broad regulatory
authority to the Secretary of the Treasury to provide regulations as may be appropriate to determine
whether a non-U.S. corporation is treated as a United States corporation. We do not believe that the
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