Business Irish

Wednesday 19 December 2018

Analog vows to fight Irish back-tax bill of €43m

Analog Devices’ HQ in the US
Analog Devices’ HQ in the US

Dara Doyle and Peter Flanagan

Analog Devices is battling a tax demand from Irish authorities, in a case that the US chip maker says could materially hurt its earnings.

Analog is one of the biggest multinational employers in Munster, with about 1,200 staff at its main hub in Limerick, in addition to a design facility in Cork.

Irish officials told the company, an Apple supplier, that its Irish tax-resident unit owed about €43m relating to inter-company transfers stretching back to 2013, Analog said in filings last month. This assessment excludes any penalties and interest, it said.

The company's shares dropped as much as 3.4pc on Wednesday.

Massachusetts-based Analog said it will "vigorously defend" its position and is appealing the decision.

It warned that if it were to lose the case "such assessment and any potential impact related to years subsequent to 2013 could have a material unfavourable impact".

Revenue here said it would not comment on individual cases.

An Analog spokeswoman confirmed the case is ongoing, and said the company wouldn't comment beyond that. Analog is taking the case to the Tax Appeals Commission.

International tax authorities are keen to limit transactions among corporate subsidiaries, which are sometimes seen as ways to shift income to low-tax jurisdictions.

The Irish corporate tax rate is 12.5pc, while in the US, President Donald Trump's administration has cut the federal rate to 21pc.

Meanwhile, Apple is fighting a European Commission order to pay €13bn in tax arrears to Ireland. The Irish Government is also seeking to have that bill cancelled

Analog specialises in data converters and chips that translate real world things - such as a button press or sound - into electronic signals. Last month, it said its effective tax rate was below its blended US federal statutory rate of 23.4pc.

"This is primarily due to lower statutory tax rates applicable to our operations in the foreign jurisdictions in which we earn income," it said.

Analog Devices has been in Ireland since 1977. It recently announced a multi-year multimillion-euro strategic partnership with the Tyndall National Institute at University College Cork, a high tech research laboratory.

Bloomberg

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business