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Irish Independent
an hour ago
- Irish Independent
Irish staff data ruling ‘may open door' to more US tax probes, experts warn
Last month, an American judge told Dublin-headquartered Eaton, a power systems multinational, to ignore GDPR rules and hand over controversial employee-performance evaluations to the IRS following a long-running legal dispute. The IRS hopes to use the evaluations to judge how much work Irish-based staff were doing on some of its intellectual property (IP), potentially showing whether Eaton was being taxed correctly or not. Reacting to the judgment, Brendan Murphy, tax lead and partner at Baker Tilly Ireland, said some multinationals will worry that the ruling could 'open the door' for more IRS investigations into the work of Irish staff. 'Where does it stop then if the US takes that aggressive route? When does the EU step in to try and support companies by saying that we don't agree with this aggressive approach by the US, that these companies do have their transfer pricing work done and these profits do deserve to remain in that country. 'You could end up in a tax authority versus tax authority argument.' Murphy warned that US tax authorities could focus on companies that moved IP to Ireland between 2014 and 2020. He added the judgment appeared to weaken the protections provided by GDPR. 'I'm surprised that the US court was allowed to be so flippant in overruling it [GDPR] and say that they hold authority, as such. It'll be interesting to see if the EU courts have something else to hit back with on it.' With the judgment now calling on Eaton to hand over the employee- performance files, Murphy is hopeful they will bolster the argument that its Irish staff were properly supporting the IP functions and that no transfer pricing adjustment would be required. However, if the US courts find otherwise, it could lead to more US 'attacks' on transfer pricing studies. In that case, Murphy said it would be important for Ireland to defend itself. Jo Joyce, a partner at Taylor Wessing Ireland and lead on technology, IP and information, said the US judgment could create an expectation that the IRS's demands outweigh 'legitimate EU privacy concerns'. 'This case is quite specific on its facts but could be used as a wedge to open the door for broader claims and requests, giving less weight to GDPR than has historically been the case,' she said. 'US courts are aware of the controversy around sharing data with the US and have not historically been keen to disregard European privacy law in such a frustrated way as this judge seems to have done. 'There is a risk of a precedent being set and this being the first chink in the armour that leads to further and broader requests.' The case stems from an IRS audit of Eaton's 2017-2019 tax returns, which focused on whether the company improperly shifted IP to Ireland, where corporate tax rates are lower.
Irish Times
a day ago
- Irish Times
The Irish firms seen as safe from Trump's planned ‘revenge tax'
Ireland's largest public companies, CRH , Flutter Entertainment and Smurfit Westrock , are on track to be cocooned from the Trump administration's planned controversial 'revenge tax', as tax advisers warn of the potential impact on other Irish businesses and individuals invested in the US. A provision in Donald Trump 's One Big Beautiful Bill Act (OBBBA), known as section 899, would allow the US to impose higher taxes of as much as 20 per cent over time on foreign companies, individuals or investors connected to jurisdictions that impose 'unfair foreign taxes' on US individuals and companies. Specified 'unfair' taxes include the 15 per cent global minimum effective tax regime that Ireland and other EU countries implemented last year on foot of an agreement, reached in 2021, by members of the Organisation for Economic Co-operation and Development (OECD). Foreign companies operating in the US that are majority-owned by US investors would not be affected by the special tax, according to the Bill's wording. Dublin-based CRH, Flutter Entertainment and Smurfit Kappa, each of which has major US operations, are all majority-owned by US investors, according to spokespeople for the three. READ MORE Spokesmen for Kingspan and Kerry Group, the next two largest Irish plcs with significant US business, which are believed to be majority-owned by investors outside the US, declined to comment. Companies may dip in and out of scope over time as investor registers evolve. The US House of Representatives passed the OBBBA last month. A Senate Republican version of the Bill, published on Monday, also includes the revenge tax, even if it proposes that enforcement is delayed by a year until 2027. The Senate version is set to be voted on by July 4th. 'If the provisions are enacted and commenced, it will suddenly become more expensive for an Irish company to have a presence in the US,' said Cormac Kelleher, an international tax partner with Forvis Mazars Ireland. 'It could also cause Irish companies planning to set up a business in the US to think twice – and maybe to look at alternative markets. Still, others might just have to take the tax hit, if the US is a very important market strategically for them.' Section 899 would increase the rate of US tax imposed on companies and investors from what the Senate version calls 'offending foreign countries' by 5 percentage points per year, up to a maximum increase of 20 points above the statutory rate. The surcharges would apply to areas including withholding taxes on dividends, royalties and interest as well as income tax on US business. While the Senate version specifies interest on US bonds would be exempt – providing relief for overseas investors in the country's $36.2 trillion (€31.4 trillion) government debt market – European investors in dividend-distributing US companies stand to be affected. Capital gains on investments are not included in this new tax plan. 'It is likely too early at this point for individuals to be able to get a clear picture of how the rules might affect Irish individuals that have US investments,' said Harry Harrison, a tax partner with PwC Ireland. 'Individuals holding investments in US stocks should talk to their tax advisers about the potential impacts, but bear in mind it will take time for the companies they have invested in to figure out to what extent they will be affected, and to make this information available to the market.' The Global Business Alliance lobby group estimates that Section 899 could cost the US 700,000 jobs over time, reduce gross domestic product by $100 billion annually, and negatively impact the value of US assets.
Irish Independent
a day ago
- Irish Independent
Coinbase becomes second major crypto firm to move regulatory hub out of Ireland in 2025
The company has obtained its Markets In Crypto Assets (Mica) licence, a foundational legal instrument for trading across the EU 27 countries, in Luxembourg. In 2023, Coinbase had said that Ireland was chosen from 27 EU countries to be its regulatory and operational hub for Europe, citing a 'stable political environment for technology innovation', 'respected regulators' and being 'a jurisdiction that is familiar and comfortable with both financial services and technology.' Since then, the Irish Central Bank has consistently denigrated crypto as a sector, with Governor Gabriel Makhlouf publicly branding virtual currencies as 'Ponzi schemes'. Coinbase CEO, Brian Armstrong, said in an interview with CNBC that the company has moved to Luxembourg for regulatory reasons. 'Luxembourg is leading the way with its pro-business climate and thoughtful approach to regulation,' he said. Earlier this year, another prominent crypto company also switched its regulatory hub away from Ireland, where it had initially established its European base. Gemini, the cryptocurrency exchange founded by the US billionaire Winklevoss twins, switched its headquarters from Ireland to Malta, citing a better environment for 'innovation among fintech and digital assets'. Senior figures in the Irish cryptocurrency and blockchain industry have expressed concern that a lack of Irish interest in cryptocurrency regulation is driving companies and jobs away. Earlier this year, the Central Bank tendered for consultants to advise it on crypto regulation, after the EU's main Mica rules had already come into force, prompting accusations of being a party-time regulator from prominent Irish crypto figures. In a move to reassure Irish staff of Coinbase's future here, the company's vice president and regional managing director, Daniel Seifert, said that it would soon hire more people for its Dublin office. ADVERTISEMENT "Regarding Ireland, we are happy to announce that Coinbase is doubling down on its commitment to the country and we are imminently adding around 50 jobs to our office,' he said. Coinbase is understood to employ over 100 people at present, having shed almost half of its staff during the tech industry's post-Covid layoffs. 'Our e-money licence through which we service customers across the EU is held in Ireland,' said Mr Seifert. 'I have relocated to Ireland, as CEO of the Irish entity, demonstrating our commitment to scaling international operations and deepening our presence in Europe, one of the most strategic and rapidly evolving crypto markets globally."
