DUBLIN: Ireland Operations Ltd, the Dublin-based hub of the global technology group, has warned that audits being conducted in Europe could have a material effect on its financial results.
The company, which is part of a “double Irish” structure involving Microsoft companies that are tax resident in Bermuda, has three subsidiaries, one each in Ireland, Luxembourg and Netherlands, the three EU member states that have been the focus of European Commission attention in relation to multinational tax issues.
Pretax profit
The accounts show that Microsoft Ireland Operations had a turnover of $22.2 billion (€19.8 billion) in the year to the end of June 2014 ($19.3 billion – €17.2 billion in 2013), and a profit before tax of $1.4 billion (€1.25 billion). It paid $203 million (€181 million) in Irish corporation tax.
The company’s cost of sales for the year was $2.8 billion (€2.5 billion) while “administrative expenses” were $17.9 billion (€16 billion). These are most likely royalty and other IP payments made to other Microsoft companies not tax resident in Ireland. There is no explanatory note about the expenses in the accounts, and a request for a comment on the matter had not been responded to at the time of going to press.
