THE REPUBLIC’S favourable corporate tax rate was not the determining factor in the decision of Aviva, the world’s fifth largest insurance group, to consolidate its euro-zone operations in Dublin, according to group chief executive of Hibernian Aviva, Stuart Purdy.
“Tax is a factor, but it is not the decisive factor,” he said. “Aviva has a long heritage in Ireland and as the Irish regulator has a lot of experience in a sophisticated multi-national insurance regulatory environment, this gives Aviva a lot to leverage from.”
In a statement released yesterday, Aviva announced plans to centralise its 12 continental European operations in Ireland.
The move has been engineered to build a pan-European product distribution network, to simplify its structure and to shorten the time required to launch new products to customers.
Subject to regulatory approval, Aviva plans to establish a single European holding company in Ireland, to be named Aviva Europe General Insurance.
Mr Purdy said the decision was taken on the basis of streamlining and improving the services available to European customers.
He said Aviva believed that it was unlikely to generate ill sentiment in European countries that may potentially lose out on tax income should the planned integration take place.
“I think people understand that a multinational corporation nowadays has to maximise efficiencies and that maintaining good operating services to customers in countries such as France and Italy is key to satisfaction, rather than basing a company there,” Mr Purdy added.
Aviva’s Europe chief executive Andrea Moneta stressed that the targeted efficiency gains did not rely on tax reductions.
“The programme is going to deliver a set of improvements in terms of revenues and costs and there is also room for improvement in terms of the blended tax rate we have,” Mr Moneta said. “Our plan has very minimal reliance on tax advantages.”
The announcement by Aviva was broadly welcomed by IDA Ireland, with a spokesman saying the move was of great significance.
“We welcome the decision by Aviva, a company which already holds significant business interests in Ireland, to develop a new management team here around 12 consolidated continental businesses,” he said.
“They have taken a strategic decision to use Ireland to drive efficiencies in a new pan-European company, which is a good news story for the country, particularly given the difficult financial environment we are experiencing,” the spokesman added.
Multinational movers
AVIVA'S DECISION to consolidate its European interests under a single Irish holding company is by no means unique, and follows moves taken by several multinational corporations to relocate to Ireland in the wake of proposed tax reforms in the US.
Last May, US president Barack Obama declared his intention to clamp down on the channelling of US company profits through registered offices overseas and to dampen corporate enthusiasm for outsourcing jobs to foreign countries.
Since then, a number of notable firms have moved their place of incorporation from countries identified by the US as tax havens, such as Bermuda, to Ireland.
These include renowned consultancy firm Accenture, insurance brokerage giant Willis Group Holdings, international shipping outfit TBS International, manufacturing specialist Ingersoll Rand, electrical products manufacturer Cooper Industries, and medical device supplier Covidien.
Warner Chilcott plc, a pharmaceutical company employing 1,115 people worldwide, is currently seeking court orders to facilitate its relocation to Ireland for tax reasons.
WPP, one of the world's largest advertising and marketing groups, moved to Dublin from London in September 2008, following their loud criticism of changes in the British corporate tax environment by the UK treasury.
Accenture and TBS have hailed Ireland's "sophisticated" and "well developed" legal and regulatory environment as key factors in their decision to relocate business here.
