Vistaprint 2010 Annual Report Download - page 40

ordinary shares. Under our Dutch Advanced Tax Ruling, a repurchase of shares should not result in
any Dutch withholding tax if we hold the repurchased shares in treasury for the purpose of issuing
shares upon the exercise of certain stock awards and other potential uses. However, if the shares
cannot be used for these purposes, or the Dutch tax authorities challenge the use of the shares for
these purposes, such a repurchase of shares for the purposes of capital reduction may be treated as
a partial liquidation subject to the 15% Dutch withholding tax to be levied on the difference between
our recognized paid in capital for Dutch tax purposes and the redemption price.
We may be treated as a passive foreign investment company for United States tax
purposes, which may subject United States shareholders to adverse tax consequences.
If our passive income, or our assets that produce passive income, exceed levels provided by law
for any taxable year, we may be characterized as a passive foreign investment company, or a PFIC,
for United States federal income tax purposes. If we are treated as a PFIC, U.S. holders of our
ordinary shares would be subject to a disadvantageous United States federal income tax regime with
respect to the distributions they receive and the gain, if any, they derive from the sale or other
disposition of their ordinary shares.
We believe that we were not a PFIC for the tax year ended June 30, 2010 and we expect that
we will not become a PFIC in the foreseeable future. However, whether we are treated as a PFIC
depends on questions of fact as to our assets and revenues that can only be determined at the end of
each tax year. Accordingly, we cannot be certain that we will not be treated as a PFIC for our current
tax year or for any subsequent year.
If a United States shareholder acquires 10% or more of our ordinary shares, it may be subject
to increased United States taxation under the “controlled foreign corporation” rules.
Each “10% U.S. Shareholder” of a non-U.S. corporation that is a “controlled foreign corporation,” or
CFC, for an uninterrupted period of 30 days or more during a taxable year, and that owns shares in
the CFC directly or indirectly through non-U.S. entities on the last day of the CFC’s taxable year, must
include in its gross income for United States federal income tax purposes its pro rata share of the
CFC’s “subpart F income,” even if the subpart F income is not distributed. A non-U.S. corporation is
considered a CFC if one or more 10% U.S. Shareholders together own more than 50% of the total
combined voting power of all classes of voting shares of the non-U.S. corporation or more than 50%
of the total value of all shares of the corporation on any day during the taxable year of the
corporation. The rules defining ownership for these purposes are complicated and depend on the
particular facts relating to each investor. For taxable years in which we are a CFC for an uninterrupted
period of 30 days or more, each of our 10% U.S. Shareholders will be required to include in its gross
income for United States federal income tax purposes its pro rata share of our subpart F income,
even if the subpart F income is not distributed to enable such taxpayer to satisfy this tax liability.
Based upon our existing share ownership, we do not believe we are a CFC. However, whether we are
treated as a CFC depends on questions of fact as to our share ownership that can only be
determined at the end of each tax year. Accordingly, we cannot be certain that we will not be treated
as a CFC for our current tax year or for any subsequent year.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
We own real property associated with the three computer integrated manufacturing facilities we
have constructed for the production of our products. Our 512,000 square foot facility located near
Windsor, Ontario, Canada services the North American market, and our 195,800 square foot facility
located in Venlo, the Netherlands services markets outside of North America. In June 2010, we
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