ABOUT 20 multinational companies have relocated their corporate headquarters to Ireland over the past year because they are able to pay “little or no tax” here, according to the Revenue Commissioners.
The firms, which are mostly US- and UK-owned, have been moving their main holding companies away from places like Bermuda and the Cayman Islands because of plans by a number of governments to clamp down on tax havens.
Internal briefing material drawn up by Revenue officials shows there has been a significant rise in firms transferring the residence of their main holding companies to Ireland or considering doing so. The very limited amount of tax paid by some of these firms indicates they do not have any meaningful presence here in terms of investment or jobs.
The benefits for firms who relocate their headquarters to Ireland – a practice known as corporate inversion – are significant. In addition to low corporation tax rates, they can benefit from the fact capital gains from the disposal of subsidiaries are not taxed. Unlike most other countries, Ireland taxes the dividends of a multinational firm’s holding company only, not its global profits.
They also have the opportunity to write off the cost of acquiring intellectual property assets against taxable profits for 15 years. Plans by the US government to clamp down on the use of tax havens by US firms, as well as uncertainty over the issue in the UK, have led to a rise in the popularity of Ireland as a corporate base.
The Revenue documents state US holding companies previously resident in tax havens such as Bermuda or the Caymans are tending to relocate to either Ireland or Switzerland because they have tax treaty networks. Similarly, it says, there has been in increase in UK firms relocating here.
“These holding companies pay little or no tax in Ireland,” the Revenue documentation states.
“However, the MNEs (multi-national enterprises) in some cases have distribution, services and/or production operations here. Furthermore, the location of the holding company in Ireland brings the country and its economic attractions to the attention of the directors, ” it says.
Some of firms that announced they were relocating their corporate headquarters to Ireland for tax reasons over the past year include Lloyd’s of London insurer Beazley; the Willis Group insurance company; industrial technology firm Ingersoll-Rand; and medical giant Covidien.