Ireland: CRH subsidiary has €2.5bn in assets and no staff
11 November 2014
Posted by: Authors: Colm Keena and Suzanne Lynch
Authors: Colm Keena and Suzanne Lynch (The Irish Times)
Subsidiary funds companies within Irish multinational, says spokesman
Ireland’s largest indigenous multinational, building materials group CRH, has a subsidiary in Luxembourg with €2.5 billion in assets and no employees.
The company is similar to the Luxembourg subsidiaries in the leaked files that have created global controversy this week about Luxembourg’s role in multinational tax planning.
The leaked PricewaterhouseCoopers files showed advanced tax agreements which the accountancy firm negotiated with Luxembourg’s tax authorities on behalf of hundreds of multinationals.
Among the companies that featured in the files, now published by the US International Consortium of Investigative Journalists, were Pepsi, Amazon, Ikea, Deutsche Bank and the Irish food group Glanbia.
In many cases the tax advantage arose from having companies funnel huge sums through Luxembourg companies called special purpose entities (SPEs) that often have few or no employees, creating tax deductible interest charges outside Luxembourg that were not mirrored by taxable income within the tiny EU member state.
In 2011, $1,987 billion was channelled through such SPEs in Luxembourg, with $1,945 billion coming back out again.
CRH did not feature in the leaked files, but accounts for one of its Luxembourg subsidiaries show it had multibillion-euro intra-group loans going in and out of the state.
A spokesman said the Luxembourg subsidiary was involved in funding companies within CRH. "Full consideration is given to the most efficient and cost-effective way of achieving this, while fully complying with all relevant laws and regulations.”
As the EU faced renewed pressure to adopt a co-ordinated approach to corporate tax avoidance in the wake of the Luxembourg leaks scandal, Minister for Finance Michael Noonan defended Ireland’s tax regime, saying he expected the European Commission investigation into Ireland’s tax deal with Apple would be dropped.
Asked whether the Luxleaks scandal might increase the pressure on Ireland, Mr Noonan said "it’s more likely that [the Apple probe] will be dropped”.
This article first appeared on irishtimes.com.