Irish staff data ruling ‘may open door' to more US tax probes, experts warn
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.
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Irish Times
3 hours ago
- Irish Times
Letters to the Editor, August 2nd: On Metro and St Stephen's Green, roads policing and Daniel O'Connell's stamp
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(' Parents face fee rise after Dublin childcare provider pulls out of 'deeply flawed' core funding model ,' July 30th). They must actively listen to the urgent concerns of both providers and parents on this critical issue. As a parent whose children happily attend a wonderful crèche with dedicated staff, I fully support my childcare provider's difficult decision to opt out of core funding. Why would childcare providers turn down substantial funding unless the current system is fundamentally flawed? Core funding imposes an immense administrative burden on providers and fails to adequately cover rising operational costs, particularly staffing. Furthermore, it offers no increased funding for crèches supporting children with additional needs or those that have made significant capital investments in their facilities. I urge the Minister to prioritise quality childcare and reform core funding without delay. – Yours, etc, DR MELISSA O'NEILL, Glounthaune, Co Cork. Garda roads policing Sir – The Garda Commissioner has given a forthright and honest response to the problem of uninterested gardaí, but I wonder whether other organisations share the problem of dedicated and committed staff having to carry their disengaged peers? (' Shocking: Some roads policing gardaí 'openly hostile' towards doing their jobs, review finds ,' July 31st). Have other taxpayer-funded organisations implemented effective performance management? It would be interesting to know. – Yours etc. SEAN RYAN, Mountshannon, Co Clare. Sir, – Over the past few years I've noticed more and more cars with 'non standard' and 'decorative' (ie illegal) registration plates. These are clearly designed to be unreadable by speed and toll cameras, and yet they proliferate, which surely wouldn't happen if we had effective roads policing. While the recent Crowe report on challenges within the roads department of An Garda Siochána is alarming, it should be a spur to positive action. 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Irish Examiner
3 hours ago
- Irish Examiner
Trump's global tariff agenda puts Ireland's pharmaceutical industry at serious risk
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After President of the European Commission Ursula von der Leyen and US President Donald Trump agreed the trade deal, the spin is that the pain of those tariffs is worth it in order to avoid a global trade war. Also, 15% is better than 30% or worse, is the thinking. Photo:The spin is that the pain of those tariffs is worth it in order to avoid a global trade war. Also, 15% is better than 30% or worse, is the thinking. Whether that represents capitulation in the face of bullyboy tactics, given that little or nothing has been asked of the US in return, is a separate conversation. Ireland's pharmaceutical industry Here in Ireland we have a bigger problem though, and that problem is the pharmaceutical industry. That industry contributes massively to the economy here via billions of euro in corporation tax contributions, with about 90 companies employing 50,000 people in highly-paid roles. A total 30,000 of those jobs are with American firms. Should foreign pharmaceutical concerns exit Ireland the impact on the country would be catastrophic. The industry globally had pleaded with Trump for it to be exempted from any tariff regime, ostensibly for altruistic reasons – that lifesaving medicines shouldn't be subject to capricious taxation. At an EU level, the industry asked that the bloc not apply reciprocal tariffs, one wish that has at least been granted. Pfizer is one of the massive American pharmaceutical companies holding bases in Ireland, in this case Cork. File picture: Dan Linehan Oddly enough, in Trump's world of permanent grievance where everyone has been making a sucker of the United States for decades, the outsize presence the US pharmaceutical industry holds in Ireland is one situation on which he indisputably has a legitimate point. Drug prices in the US can retail for as much as five times what an EU citizen would pay. 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The European Federation of Pharmaceutical Industries and Associations (EFPIA) notes that tariffs are 'a blunt instrument that will disrupt supply chains, impact on investment in research and development, and ultimately harm patient access to medicines on both sides of the Atlantic'. It added that if the goal is to rebalance trade and ensure a 'fairer distribution' of how pharmaceutical innovation is financed, then 'there are more effective means than tariffs that would help'. Impact on pharma in Ireland The IDA, the body with prime responsibility for attracting foreign investment to Irish shores, says of the pharma implications that it 'welcomes' the deal made between Europe and the US, arguing it provides 'much-needed certainty for Irish, European and American businesses who together represent the most integrated trading relationship in the world'. 'We are very much reliant (on the US market), there's no arguing with that,' says one industry insider. Last year a massive €44bn in pharmaceutical products were exported directly from Ireland to the US. 'But when you stand back €100bn was exported globally. So half went to America, but it's not like all business went there, though it is certainly the biggest partner,' says the source. That doesn't mean that those massive American companies holding bases here – MSD, Pfizer, ELI Lilly, Johnson and Johnson etc – are about to up sticks on the back of the new tariff regime. 'They are not going to leave today or tomorrow, no. But it could definitely impact future investment decisions,' the source says. One of the problems is that a great deal of uncertainty still surrounds the 15% tariff agreement, particularly with regard to pharma. One of the Eli Lilly production buildings at its state-of-the-art facility in Dunderrow, Kinsale, Co Cork. For starters, most people concerned thought that the pharmaceutical industry wasn't to be included in the deal. Then about two hours after the deal was agreed European Commission president Ursula von der Leyen said it would be included, a point Trump appeared to back up. The following day the White House produced a 'fact sheet' describing how the new regime would work, and affirming the 15% rate for pharma. Except that the same sheet stated that the European Union would pay the tariff – which isn't how tariffs work. Then there is the Section 232 investigation which the US Department of Commerce initiated into the pharma industry in April – aiming to establish if how the pharmaceutical system worldwide currently functions impacts negatively on the US from a national security standpoint. Should the answer arrived at be a 'yes', then additional tariffs on pharma may well follow (such investigations typically take a minimum of six months to conclude, so we'll probably get an answer sometime towards the end of the year). 'Pharma plans in the long-term,' says Aidan Meagher, tax partner specialising in life sciences with consultants EY, noting that most pharma manufacturers will have been planning for this scenario for months and will have frontloaded stock into the American market, thus negating immediate impacts in the near term. He says that companies will be likely looking at 'dual sourcing' initiatives, supplying the American market from within the US itself and using Irish operations for its trade around the rest of the globe. 'Ireland needs to up its game' But Meagher says that it would be 'remiss' of Ireland, and the pharma industry here, to take a 'wait and see' approach, perhaps with the supposition that Trump's policies will last for the remaining three-and-a-half years of his term, and no longer. 'It is all about the next investment. A lot of these drugs only have patent protection for a certain life or longevity. 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These countries have invested significantly and Ireland is the owner of a lot of valuable intellectual property.' But it's certainly not a time to be complacent, Meagher argues. 'We have dropped down the competitiveness radar, and our competitors now aren't in the EU – they're in Switzerland, Singapore and the US itself. We need to be a top competitor for inward investment, and R&D and infrastructure will be critical. That is where Ireland needs to up its game.'
The 42
5 hours ago
- The 42
Thurles racecourse announces closure with immediate effect
THURLES RACECOURSE HAS closed with immediate effect and fixtures which had been scheduled for later in the year will not go ahead. The first ever recorded race-meeting at Thurles took place in 1732 and it has been in the hands of the Molony family since the early 1900s. Riona Molony announced the closure in a statement this morning. She thanked the 'extended racecourse family', such as staff, sponsors, the racing community, local businesses, and racegoers for their support. 'It has been an honour and a privilege for our family to have run Thurles Racecourse, and I am officially announcing our retirement today,' said Riona Molony. She said she is 'very proud of the immense contribution our family has made to racing' and remarked that 'horse-racing is part of the fabric of our family'. Advertisement 'My family and I look forward to going racing with you again, as spectators,' she added. The parade ring at Thurles Racecourse Alamy Stock Photo Alamy Stock Photo Her late husband Pierce Molony, who died in 2015, took over the running of the Co Tipperary racecourse from his father Dr Paddy Molony in 1974. 'Since my beloved husband Pierce passed away, with the help of our four daughters Patricia, Helen, Ann Marie and Kate and our wonderful staff, we've managed to keep the show on the road and I know he would be very proud of us for that,' said Riona. She added: 'The girls all have their own families, careers and lives to live. 'Ever increasing industry demands and the cost of doing business has also been a major factor.' Thurles Racecourse is fully licenced to race until 31 December and has 11 prominent fixtures scheduled for the 2025/26 racing calendar. However, these meetings will not go ahead. Riona added: 'We're going to enjoy this time together and relax now the decision is made and the news is out before we consider our options.' 'Surprise to everyone in the industry' The CEO of Horse Racing Ireland, Suzanne Eade, described Thurles Racecourse as a 'cornerstone of the National Hunt programme in Ireland during the winter months'. She said today's announcement 'was a surprise to everyone in the industry'. However, she added that the announcement must have been a 'hugely difficult one' and that she 'respects their decision to take a step back from running racing at Thurles'. Eade remarked that Pierce Molony 'contributed significantly to the Irish racing industry for many years and the Molony family, led by Riona, certainly stepped up following his untimely passing' The Horse Racing Ireland CEO added that she will be seeking a meeting with the Molony family in the near future to discuss their position.
