Microsoft Ireland slashes US dividend as profits rise
Friday May 02 2008
The main Irish subsidiary of software giant Microsoft slashed the dividend paid to its US parent to €1.48bn last year despite turnover at the Dublin-based European headquarters climbing 12.5pc to €10.65bn.
The dividend payment is roughly half the almost €3bn the Irish subsidiary remitted to the US headquarters in the financial year ended June 2006.
Microsoft Ireland Operations recorded an operating profit of €2.27bn last year compared to €1.93bn in 2006. The Irish arm employs about 1,200 people here.
The latest accounts for the business also show that Microsoft paid €234m in tax in Ireland last year, compared to almost €218m the previous year. It availed of over €57.6m in manufacturing relief in 2007, up from €48.7m in 2006.
Just over €2bn of the Irish subsidiary's revenues were generated in the UK, with Ireland accounting for just €90m. Other European turnover amounted to €7.3bn, with revenue from other areas it covers topped €1.2bn.
The company did not elaborate on the performance of the Irish subsidiary, which is headed by Paul Rellis, except to say that it had performed strongly during the year and that wage inflation remains a concern.
Its Irish payroll costs were €112.4m in the last financial year, up from €101.5m. Directors' remuneration rose slightly to just over €1m. It also incurred a €6.3m charge related to share awards granted during the financial year.
Microsoft saves a significant amount of money by using Ireland as a tax base for its European, Middle East and Africa operations.
Another Ireland-based subsidiary, Microsoft Ireland Research, paid dividends of $1.9bn (€1.23bn) to its parent last year, less than half the $4.5bn that was paid in 2006.
The attractiveness of Ireland as a corporate tax base was highlighted in the past number of days as the UK's third-biggest drug company, Shire Pharmaceuticals, and publishing firm United Business Media, said they will shift their tax bases to Ireland to escape what has been described as an overly complex and punitive system in the UK. Two other firms -- advertising group WPP and drug company AstraZeneca -- are also considering a move.
Last week, Microsoft said that its third-quarter earnings fell 11pc to $4.39bn from $4.93bn as sales of its Windows operating system tapered off.
Revenue was almost identical at $14.5bn, which met estimates, but higher demand was expected for personal computers.
Microsoft is still unsure whether to pursue its proposed $44bn takeover of Yahoo!, which has been rejected by the Yahoo! board. Microsoft could choose to mount a hostile bid.
- John Mulligan
