Stanley Black & Decker, another of the US companies identified in the latest batch of leaked documents, has a number of Irish subsidiaries or branch operations with connections to Luxembourg.
Irish company Black & Decker International Finance 3 Ltd received dividend income of $521 million in 2012 but paid no tax on the resulting profits. Its place of management moved to Luxembourg in 2009, according to company filings in the Irish Companies Registration Office.
Although Luxembourg has a corporation tax rate of 29 per cent, dividend payments can be tax exempt.
The $521 million dividend came from Black & Decker Ltd Sarl, a Luxembourg company that has a branch office in Cork. The immediate parent of Black & Decker International Finance 3 is a Cayman Islands partnership.
Black & Decker International Finance 3 Ltd has registered offices in Ballymount and Luxembourg.
The company had investments in other group companies at the end of that year worth $3.4 billion. The other companies were almost all involved in group lending activities.
Companies that run treasury operations using Luxembourg sometimes move assets to branches outside Luxembourg, in order to avoid the duchy’s 0.5 per cent net wealth tax on company assets.
A group company based in Luxembourg but with an Irish branch in Cork, Black & Decker International Holdings BV, had total assets in 2012 of $1.75 billion, a profit of $115.7 million and paid tax of $20,676. The Dutch company moved to Luxembourg in 1998. It’s Irish branch gave a loan of $521 million to Black & Decker International Finance 3 last year.
One of the ways multinationals reduce their global tax bills is to run treasury operations out of Luxembourg that loan money at interest to group companies in other jurisdictions. Request for a comment from Stanley Black & Decker received no response.
Leaked documents show that in February 2003 the group negotiated an advanced tax agreement with the Luxembourg authorities when Black & Decker LLC, a then US company, was to move to Luxembourg. The letter setting out the structure said the company had a shared services centre branch in Cork which carried on bookkeeping, administrative and treasury activities and had about 60 employees.
The branch was taxed on a cost plus 10 per cent basis, the letter said. The branch incurred expenses of €20 million in 2001, the letter said.
The Stanley group merged with Black & Decker in 2010.
