A Californian technology firm with only a handful of workers in Dublin funnelled revenues of almost $1 billion (€762 million) into an Irish holding company which made more than a quarter of its profits.
SanDisk Manufacturing made a net profit of $105.96 million on revenues of $955 million in the eight months after its Irish unit started business in April 2005, according to new filings in the Companies Office.
The company had no direct staff but employed the resources of an Irish subsidiary which had an average of eight staff at that time. Its parent, SanDisk Corporation, made a net profit of $386.38 million in the same period on revenues of $2.06 billion.
SanDisk ranks among numerous US and other multinational groups that channel large amounts of their international revenues into Irish-registered companies for tax purposes.
By accounting for such revenues in Ireland, they take advantage of the 12.5 per cent rate of corporate taxation on their profits, a rate that compares favourably with other EU states and the US.
"It's no different from any other holding company," said Hugh Connolly of SanDisk. "Most international companies have that kind of holding company structure."
A seller of MP3 music players and memory cards for digital cameras, SanDisk outsources its manufacturing operations to factories in Asia. Mr Connolly said the cost of such manufacturing activity and the revenues from it were booked in the accounts of the Irish-registered holding company. This company was established in April 2005 and its operations were previously located in the Netherlands.
He said it was not the case that there was no substance to SanDisk Manufacturing, which employed an average of four staff but had no direct employees. The company made use of an Irish-subsidiary, SanDisk International, which had an average of eight direct staff in the period after it set up in April 2005. The business now employs 35 people in Ireland.
SanDisk indicated last year that the total cost of setting up its Irish operation was less than $500,000. It said then that tax "certainly was part of the consideration" when moving here but that tax "certainly was not the determining factor". Other factors included the availability of skilled multilingual sales, marketing and finance personnel.
Big US groups such as Microsoft and Google have come under close scrutiny in their home market for using their operations in Ireland to save tax. A large number of US groups here used a once-off tax incentive introduced by President Bush to repatriate billions of dollars to the US in 2004 and 2005 in the form of once-off dividend payments.
