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Case 1:15-cv-10181-DJC Document 1-5 Filed 01/23/15 Page 1 of 3

Case 1:15-cv-10181-DJC Document 1-5 Filed 01/23/15 Page 2 of 3

From: Gianluca Martino

Subject: Re: [Team] July report

Date: August 15, 2009 at 2:37 AM

To: David A. Mellis
Cc: [email protected]

Tom Igoe

Hi guys,

today is THE holiday! Italians went crazy on 15th August ("ferragosto").

BTW, some replies in the middles, and a couple of notes.
1) I'm not for not paying taxes, I'd like only to avoid to waste money
2) a question: if at the end of the year Arduino LLC will close with eg
2A) will they be taxed?
2B) what we will use that money for?
2C) will we split a part of that? If yes, let's work on this to avoid the double taxation on this part

USD of pro?t,

But please let's wait we all come back from holiday, let us check again with our business accountants and let's discuss
this on the 2nd planned skype meeting (the ?rst is at the end of August, business accountants are closed)

At 02.40 15/08/2009, David A. Mellis wrote:

Hi,

There's no inherent reason that the current setup needs to involve
double taxation. The dif?culties arise because of the apparent
complications in the Italian tax system.

real

Massimo and Gianluca, can you provide an explanation of what you can
and can't do under the Italian tax system? For example, can you be a
partner in a foreign partnership?

yes, but better if not earning money

Can you be a stockholder of a
foreign corporation?

yes, but if earning money as pro?t, they will be double taxed.
eg: Arduino LLC have a 100 pro?t, that means 70 after taxes. our quota is 14 each. receiving 14 I will pay 4 of Italian taxes and the net is 10.
Making an invoice of 20 to Arduino directly, we will pay 6 of Italian taxes and the net is 14.

Can you pay royalties to a foreign partnership
or corporation?

yes if they are 2% or less (a strange regulation) if they are higher than that you have to demonstrate the royalties you pay are for a
technological advantage the other entity is giving you (technology, know-how, patents), that's why I asked for different indication on the
invoices

Can you be pay invoices to a foreign person, company,
or partnership?

yes

This will help us understand what's possible and
what's not. I'd like to think we can ?nd a solution that allows the
Arduino company to function while avoiding causing you any problems
with the tax authorities.

Here's one idea. Arduino, LLC continues to invoice Gianluca for the
royalties each month. Each month, we subtract an estimate of
Gianluca's share of the royalties. This enables Gianluca to get
(back) his share of the Arduino royalties without it appearing as
income from a foreign company.

Case 1:15-cv-10181-DJC Document 1-5 Filed 01/23/15 Page 3 of 3

income from a foreign company.

quite confusing. For me is better to pay them in full and then make an invoice to have the quota assigned to me back

On the other hand, the Arduino, LLC
can still report the proper total amount of royalties that it should
receive that month. Since this is a foreign partner's share of
foreign source income, we don't have to pay U.S. taxes on it. As
See More

On the other hand, the Arduino, LLC
can still report the proper total amount of royalties that it should
receive that month. Since this is a foreign partner's share of
foreign source income, we don't have to pay U.S. taxes on it. As
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