US Outbound Investment

Transcription

1 US Outbound Investment

2 David Evans Managing Director Canyon CTS Denise Magyer Senior Vice President Allied Irish Bank

3 U.S.Outbound Investment US Outbound Investment = Foreign Direct Investment (FDI) U.S. Outbound Investment: Why Choose Ireland?

4 Evolution of FDI in Ireland Source: IDA Ireland Strategy, Horizon 2020 A range of services and incentives, including funding and grants, are available to those considering foreign direct investment in Ireland. These are offered by IDA Ireland, Ireland s inward investment promotion agency, to both new and existing clients. U.S. Outbound Investment Why Choose Ireland?

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6 Survey Results 86% of companies stated that access to Europe was critical or important REASONS FOR SETTING UP IN IRELAND See our Sector Report, "Why Choose Ireland?" at Source: Ipsos MRBI AIB Foreign Direct Investment Research February 2014 U.S. Outbound Investment: Why Choose Ireland?

7 Access to the European market ECONOMIC SIZE PER CAPITA WEALTH LARGE MARKET FOR US GOODS/SERVICES EU remains the largest economic entity in the world EU economy is 1.3x that of China and 3.5x that of India EU is among the wealthiest in the world EU was ¼ of the global personal consumption which is on par with the US This is 2/3 more than the BRIC countries. Ease of Doing Business

8 Export Propensity Access to the 500m people in Europe US affiliate sales of goods and services in Ireland totaled $282 billion in 2012 ($341 billion in 2013) > Greater than US affiliate sales in China ($170bn) and in Japan ($247bn). The reason: Export-Propensity. Ireland ranks the number one export platform in the world for U.S. affiliates underscoring the importance of Ireland in the global value chains Source: Bureau of Economic Analysis 2010 based on most recent data U.S. Outbound Investment: Why Choose Ireland?.

9 Ease of Doing Business 1 Source: Ipsos MRBI AIB Foreign Direct Investment Research February 2014

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11 Education = Talent in Ireland Young, well educated and productive workforce Youngest population in Europe. Currently 1m people in full time education. ICT skills strategy is driving significant increases in graduates with an increase of % by Multi-lingual capabilities. Source:: IDA Ireland is the only English speaking workforce in the Eurozone

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13 Tech Clusters: Dublin

14 Tech Clusters: Galway

15 Track Record

16 Time Zone

17 Tax Regime The key features of Ireland s Tax Regime Corporate tax rate of 12.5% for active business. 25% Research & Development (R&D) Tax Credit An Intellectual Property (IP) regime which provides a tax write-off for broadly defined IP acquisitions. Attractive relief for staff assigned from abroad, key staff working in R&D. The tax rate is settled policy. We are 100% committed to the 12.5% Corporation Tax Rate. This will not change Budget Speech 2014 Minister of Finance, Michael Noonan, TD

18 Why are Companies using Ireland? Supply Chain Management Headquarters & IP Management High Value Manufacturing Global Business Service Centers Research, Development & Innovation

19 Expansion into EMEA Markets Tax efficient supply chain management Arm s length pricing and transfer pricing Operational substance in Ireland Corporate restructuring and inversions into Ireland

20 Case Study: The existing business model had many issues and opportunities IP License IP Ownership USP Sales Physical flow & Title US Customers RM Purchases Italy Physical flow & Title Sales Italy Customers Suppliers France France Customers Spain Spain Customers Key to flows: Legal title Physical flow Services Full-fledged entrepreneurs: procurement, manufacturing, distribution, marketing, sales, backoffice support, etc.

21 Real Life Case Study: Centralized model Suppliers Cost-sharing for ROW IP rights RM Title IP Ownership USP IrishCo FG Sale - Mkt price less commission CM fee FG Sale - mkt price Finished good shipped Italy France Spain US Customers RM Physical flow FG Sale mkt price Key to flows: Legal title Physical flow ROW Customers Services

22 Intellectual Property Exploitation Why choose Ireland for IP? Legal framework for IP protection Taxation at 12.5% on trading profits of an active brand management trade Effective tax rate can be as low as 2.5% Amortization for tax purposes R&D credits: close to 40% on the dollar for qualifying R&D spend Ireland: A Platform for Expansion into Europe 22

23 Example: IP Exploitation Before After Profit Tax (40) (12.5) Retained Earnings Net Cash Tax Saving per annum 27.5

24 Ireland is NOT a Tax Haven. The OECD has identified four key indicators of a 1. No or nominal taxes Ireland s corporate tax rate is 12.5% 2 Lack of transparency Ireland s tax regime is fully transparent based on legislation 3. Unwilling to exchange Ireland exchanges information through Tax information tax haven Treaties, Information Exchange Agreements, EU Savings Tax Directive and (proposed) FATCA); 4 No substance requirement The 12.5% tax rate applies to trading activities only which require substance None of which apply to Ireland

25 BEPS AND IRELAND The OECD is involved with setting international tax standards. The Base Erosion and Profit Shifting (BEPS) project was initiated in 2013 to address perceived flaws in international tax rules. Purpose is to align substance and taxing rights and address double non-taxation/tax avoidance. OECD announced 15 actions points including country by country reporting Impact on Ireland: Ireland already requires substance and tax rate uneffected by BEPS In 2013, Ireland s finance bill change company residence rules to eliminate mis-matches that created state-less companies with respect to tax residence In 2015, the Irish government updated its international tax strategy and reiterated commitment to BEPS and the 12.5% tax rate. Introduced an OECD compliant patent box- the Knowledge Development Box CbCr adopted Jan. 2016

26 Some thoughts Be aware of OECD work in progress/areas of focus Choose a structure that best fits your company s risk profile. Hire the appropriate team of consultants and advisors

27 It s Important to Have a Vision for Your Business Initial expansion planning decisions can have long-term impacts Each business decision drives tax consequences and opportunities What are my financial & regulatory requirements How will I mange foreign currency issues What do I do with cash builtup off-shore What are my income/indirect tax obligations Treas Cash AP Risk Global Business Model AR Legal Mfg What location(s) should I be in Proc IT Sales Fin Acctg What should my legal structure be How do I exploit my Intellectual property How do I fund ongoing R&D How will I distribute finished goods How will I sell & conclude sales outside the US How/where will I bill and collect from clients If/where/how should I manufacture products Anticipating and planning for each decision may help avoid unfavorable default decisions which may negate benefits on an after-tax basis

28 Banking in Ireland Internet business banking SEPA compliant Standard documentation Quick account opening process

29 Questions

30 The Irish Advantage It is the combination of factors Highly skilled, knowledge based economy Flexibility, responsiveness & innovation Experience delivering Global Business Services Experienced & Innovative Leaders Excellent Research facilities & capabilities Stable political environment & Respected regulatory regime Irish Government partnering 12.5% CT & extensive tax treaty network The Irish Advantage Unique mix of components Source: IDA Ireland

31 Fun Facts FUN FACTS Ireland produces: % of the world s contact lenses %of ventilators used in acute hospitals worldwide % of the world s stents % of the world s Botox # of Jelly Beans daily % of the world s Tic Tacs 36 Tic Tacs are produced per second in the Cork factory 1 in burgers served in European McDonalds is made with Irish beef Driver vision systems technology is manufactured in Galway which can park your car without you being in it.

32 Contacts David Evans Managing Director Canyon CTS Denise Magyer Senior Vice President Allied Irish Bank 245 Park Avenue New York NY Avenue of the Americas 10 th Floor New York NY