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Kerry shifts assets to Luxembourg to cut tax bill

Kerry Group, the Irish food ingredients supplier, is working on a radical intellectual property management plan to slash its tax bill by setting up a subsidiary in Luxembourg.

The firm has been advised by tax experts in Deloitte to set up the new subsidiary called Kerry Luxembourg Sarl in order to reduce its tax bill by millions annually.

Luxembourg has a range of special incentives available to multinationals to encourage them to set up shop there, according to publicly available documents from Deloitte for potential investors.

These include being able to "considerably reduce or eliminate withholding taxes borne on the royalties received"; an 80 per cent tax exemption on qualifying intellectual property which also covers capital gains among other incentives.

Kerry's new subsidiary is revealed for the first time in its recently published 2011 annual report. The subsidiary gives its address as 16 Avenue Pasteur in the business district of the city of Luxembourg.

It shares its address with 36 other global multinationals, some of which are already taking advantage of Luxembourg's favourable tax regime.

A company spokesperson for Kerry declined to comment on the purpose of its new Luxembourg subsidiary or by how much it hopes to reduce its global tax bill. "We are fully committed to Ireland," the company said. "We have subsidiary companies all around the world and we don't comment on specific ones."

Kerry, the firm added, was looking at a number of potential investments in Ireland in the coming year.

Meanwhile, there was significant shareholder opposition against Kerry's long-time director and chairman Denis Buckley and several other board members at its annual general meeting last week.

More than 30 per cent of the shareholder vote went against Mr Buckley's re-election and that of four others: Denis Carroll, Michael Dowling, Denis Wallis and Michael Teahan, all of whom are co-op nominees. Mr Buckley, chairman of One51 and an Aryzta director, has been Kerry Group chairman since 2003 and a director for 26 years. He earns an annual fee of €209,000.

A source said the likely rebel voters were non-domestic institutional investors, acting on corporate governance advice, adding that it represented an objection to Buckley's long-term presence along with the co-op's influence on the board.

The co-op is a 17 per cent stakeholder in the group and nominates seven directors, though this will fall to four by 2014.

"In our view these directors are deemed to be independent," Kerry Group company secretary Brian Duran said.

Sunday Indo Business