Apple is the well-documented poster child of Ireland’s immaterial tech trade, formally exporting over $150 billion worth of devices and software through its main Irish subsidiary while only a handful of high-spec Macbooks are still manufactured at its Cork campus. 

The iPhone maker’s new video streaming service, Apple TV+, will also show a TV series adaptation of Isaac Asimov’s Foundation sci-fi novels currently being filmed by production company Skydance Television at the ever-expanding Troy Studios on the edge of the University of Limerick’s campus. 

In the same building just over ten years ago, the last workers were leaving what was then a 350,000sq ft factory floor.

“In the early days of 2009 the city of Limerick in the mid-west region of Ireland was dealt a massive blow by the PC manufacturer Dell. After months, if not years of speculation, the company had finally decided to move all its European manufacturing from Limerick to Lodz in Poland.”

So begins the account of the closure of the Texas-based computer giant’s Irish factory in a paper published in 2011 by Patrick Collins and Seamus Grimes in the journal European Urban and Regional Studies. The two NUI Galway academics noted that the 1,900 redundancies were part of a wider pattern, as competition from lower-cost manufacturing hubs in Asia and Eastern Europe increased against the backdrop of the global financial crisis. “One simple statistic signifies the complexity of the picture: in a six-month time period the Irish technology sector lost nearly 10,000 jobs, over 8,000 of which were offshored to different territories,” they wrote.

Dell is back – just not with factories

By halving its Irish workforce at the time, Dell did by no means reduce its financial throughput in this country. Its main trading subsidiary here, Dell Products, had $14.3 billion in sales and made a $5.7 million loss in the year to January 30, 2009, immediately before the closure of the Limerick factory. A decade on, its latest published accounts show similar revenues of $13.7 billion, and $26 million in pre-tax profits. 

The company, which is owned through a holding structure in the Netherlands, continues to act as a central clearing house for sales of Dell products in Europe, and on a much smaller scale in the Middle East and Africa. It bought over $10 billion worth of computer equipment from Dell companies, and made $4.1 billion selling some of it on to other group companies. It also had $7.9 billion in direct sales to customers under a model in which other Dell subsidiaries collected around $1 billion in commissions from the Irish company.

This left Dell Products with a very small profit of its own and just $7 million in Irish corporation tax.

The picture is different for enterprise and cloud businesses added to the Dell group through acquisitions in recent years. EMC, VMware and Pivotal Software, which provide IT infrastructure and software to run large-scale computer systems, are all US-based corporations controlled by Dell. They have holding structures in Bermuda and Ireland typical of the double Irish scheme, with an Irish-registered company at the centre of each paying no income tax because it is domiciled in Bermuda. Their offices and support centres are clustered in a corridor between Ballincollig and Ovens, west of Cork city.

EMC Information Systems International, the trading arm of Dell’s servers division, had $5.3 billion in sales last year. While it was loss-making, its parent and then intellectual property owner, Bermuda tax resident EMC International Company, posted a $609 million profit.

Meanwhile, VMware International Unltd booked $4.5 billion in revenue in Ireland while its parent VMware Bermuda Unltd posted $1.3 billion in tax-free profit. Last year, VMware also completed the acquisition of its Silicon Valley competitor Pivotal Software, whose Irish-Bermuda company structure was loss-making at the time. Irish-based Pivotal Software International is the holding company for 14 subsidiaries around the world.

As reported last week, the Dell group has recently onshored the equivalent of €40 billion in intellectual property assets to Ireland as the double Irish comes to an end this year, with VMware accounting for the bulk of this.

We can expect more of the same following the acquisition of Pivotal. As Pivotal Software International became closer to the Dell group prior to its full acquisition last year, it reported: “The company has acquired rights from Pivotal Software International Holdings who acquired intellectual property rights from EMC International Company (EMC) and VMware International Ltd (VMware) to market, distribute, and provide ancillary services related to Pivotal products for sale or license in all territories outside of North American and Mexico for products purchased from EMC and all territories outside the United States for all products purchased from VMware.”

The group runs its own so-called Section 110 special purpose vehicle (SPVs) to securitise customer debt and sell it on to investors.

Dell also based its own bank in Ireland in 2013 to provide finance to its customers and resellers. At the end of 2018, Dell Bank International DAC had €1.5 billion worth of loans and advances to customers on its balance sheet, with most exposure in large European economies.

In addition, the group runs its own so-called Section 110 special purpose vehicle (SPVs) to securitise customer debt and sell it on to investors. Just like other SPVs, such as those used by Goldman Sachs to securitise Irish property debt, Dell Receivables Financing 2016 DAC is formally held by a charitable trust to benefit from Section 110 tax exemptions. It reported: “While the share capital is legally owned by Monument Trustees Ltd, the company was set up for the benefit of Dell Bank International DAC. Accordingly, under the requirements of IFRS 10, the company is consolidated and controlled by Dell Bank International DAC.”

Since its establishment in September 2016, Dell Receivables Financing 2016 DAC has built a €562 million portfolio of lease and loan receivables. Dell’s own bank provided credit enhancement to the SPV through a €95 million junior loan and the rest has been funded through a credit facility provided by a syndicate of external banks.

From 4,500 people in its manufacturing heyday, Dell’s Irish workforce has recovered from the 2009 closure to top 6,000 last year. Their average gross salary ranged from €71,000 for the 161 employees of Dell Bank International DAC to €140,000 for the 525 working at EMC Information Systems Management Ltd.

The difference with the factory workers of the noughties is that they no longer ship computers around the world.

IBM’s multi-billion Irish cash cushion

Dell’s rival IBM has had a long presence in Ireland since opening its first office here in 1956, when its main Irish trading arm IBM Ireland Ltd was incorporated. It is one of 21 companies located at IBM House – including three listed as property developers, forming a dense corporate maze along with their multiple Dutch holding structures.

At its centre, IBM PDL Investments I Ltd was registered in Ireland in 2017 (though managed from Amsterdam) to consolidate most of IBM’s Irish operations. It is also a holding company for dozens of subsidiaries across Europe, the Middle East and Asia. Of 57 companies owned by IBM PDL Investments I Ltd at the end of 2018, 16 were incorporated in Ireland.

Their accounts are published in consolidated form only, and it is not possible to isolate figures for IBM’s Irish-based activity. While IBM PDL Investments I Ltd reported a consolidated workforce of over 34,000 that year, IDA figures at the time put the number of IBM’s employees in Ireland at 3,200.

Out of nearly $20 billion dollars in revenue in 2018, IBM PDL Investments I Ltd and its subsidiaries around the world generated $4 billion in pre-tax profit – a healthy net margin of 20 per cent. They paid $303 million in tax, including $37 million in Ireland.

The company had total equity of $82.8 billion, which means only Microsoft and Google have based more balance sheet value in Ireland. Of this, $5.2 billion was in cash – a cushion second only to Facebook’s on the Irish multinational tech scene.

IBM has also incorporated several companies in Ireland to provide finance and manage treasury operations for the wider group. The most significant are:

• IBM GF International Treasury Company DAC, which has built up a portfolio of $18.7 billion in receivables from related companies since its registration in 2016. The treasury company reduced its capital by $13 billion in February 2019, freeing up $9.3 billion in cash for distribution as dividends to its Dutch parent over the following months.
• IBM International Treasury Services Unltd, which has been consolidated into its new UK parent since the end of 2017. Although it no longer publishes separate accounts, it accounts for most of the activity of the UK holding, which held €18.8 billion in loans and advances to group companies and €3.6 billion in cash at the end of 2018.

Just before Christmas, lawyers at A&L Goodbody registered two new Irish companies on behalf of IBM, with names suggesting potential for a reorganisation in the group’s affairs here. IBM Technology Corporation Unltd has a US parent and will be a holding company, while IBM Investments Ltd is owned by a Dutch holding and will engage in software consultancy and supply. 

When a few dozen employees make €1 billion in sales

Two other IT infrastructure and equipment suppliers each reported over $1 billion in revenue in 2018. One was the payment terminals manufacturer NCR, whose subsidiary NCR Global Solutions Ltd in Swords, Co Dublin has the rights to sell the group’s products worldwide outside the US. With just 40 employees on an average gross salary of €100,000, the company was not shipping cash registers or ATMs out of its Airside Business Park offices,, but rather routing their ownership from production sites to customer-facing entities around the world. 

It is owned by NCR Global Holdings Ltd, an Irish entity with 17 subsidiaries around the world. While NCR Global Solutions’s $1.2 billion in sales generated $22 million in pre-tax profit in 2018, this was diluted to $11 million at the holding’s level. The two companies paid a total of $8 million in Irish corporation tax. NCR Global Holdings Ltd is directly owned by the group’s US parent and does not report intermediary entities in low-tax jurisdictions.

By contrast, networking equipment manufacturer Netgear used an Irish-registered company domiciled in Bermuda until the end of 2018. Netgear Holdings Ltd, therefore, paid no tax. Meanwhile, its trading subsidiary in Ireland, Netgear International Ltd, had $1.2 billion in sales – again a paper exercise as the company had only 55 staff in Cork, where the average gross salary was just under €64,000. 

To complete the computer makers’ picture, the figures reported by Hewlett Packard Enterprise Ltd in Ireland reflect the ground the company has lost to its global competitors Dell and IBM, with shrinking revenues of $157 million and a $16 million pre-tax loss in 2018.

The group’s former personal computer and printer division, spun out as HP, is consolidated into a Dutch holding company and does not publish accounts for its Irish entities. The same applies to Xerox, which has launched a hostile takeover bid for HP at the global level.

“Intel Ireland Ltd. is not required to file a financial statement and we don’t communicate details of our tax bill by country.”

Intel spokeswoman

Aside from fully-formed computers and IT solutions, the world’s largest chip and data storage manufacturers, too, channel much of their business flows through Ireland. The largest of these is certainly Intel, which employs over 5,000 staff and contractors here. A company spokeswoman told The Currency: “There are approximately 3,500 people who are employed directly by Intel in Leixlip. There are approximately 250 people employed in Shannon and Cork. There are approximately a further 1,500 people who are in long-term contract roles at the Intel Leixlip campus.”

Of these, nearly 600 were employed by Intel Research & Development Ireland Ltd, a subsidiary with $145 million in revenue and $33 million in pre-tax profit in 2018. 

Accounts published by Intel in the US show that the group had $3.9 billion worth of property, plant and equipment in Ireland on its balance sheet – its fourth largest stock of such assets after those in the US, Israel and China. Intel also reported: “We derive the effective tax rate benefit attributed to non-U.S. income taxed at different rates primarily from our operations in China, Hong Kong, Ireland, and Israel.”

This is the extent of the data available on Intel’s business in Ireland. Its main operation in Leixlip is a local branch of Intel Ireland Ltd, a company incorporated in the Cayman Islands which does not file accounts. “Intel Ireland Ltd. is not required to file a financial statement and we don’t communicate details of our tax bill by country,” the spokeswoman said.

Analog erases $17.5 billion IP debt

Another major component supplier with manufacturing in Ireland, Analog Devices specialises in sensors that convert signals from the real world into digital information. As the company puts it, “Analog Devices is where data is born.” Its Irish subsidiary Analog Devices International Unltd employed 1,232 staff at its Limerick and Cork campuses in 2018 on an average salary of €82,000. The US-based group owns its Irish unit through a holding company in Bermuda.

Analog Devices International Unltd had $4 billion in revenue in 2018, returning a pre-tax profit of $347 million, and it had a $15.2 million corporate tax charge. As detailed last week, it recently moved over $20 billion worth of intellectual property to Ireland. While this was mostly financed through an interest-bearing intercompany loan, the Irish subsidiary reported that it erased most of that debt through the issue of $17.5 billion worth of preference shares to its Bermuda parent in December 2018.

Two more US-headquartered large suppliers of integrated circuits use Ireland as a financial base, but unlike Analog Devices, they don’t manufacture here. 

Microchip Technology Ireland booked over $3 billion in international sales for the Microchip group in 2018 and returned a pre-tax profit of $340 million, resulting in a $15.1 million tax charge. With just 21 staff in Ireland, the company simply records sales here. 

Maxim Integrated Products, too, had significant sales of $2.2 billion routed through its Irish unit Maxim Integrated Products International Ltd, which employs 71 staff. The group used a complex double Irish structure where a company incorporated in the Cayman Islands collected royalties on its intellectual property rights and paid dividends to an Irish-registered, Cayman-resident holding entity called Maxim Integrated Products (Ireland) Holdings Ltd. This allowed Maxim’s Irish trading company to report a taxable profit of just $32 million, while the holding company booked a $1.2 billion tax-free profit.

Seagate files $11.2 billion in revenue from a serviced office suite

Data storage manufacturers have been using similar corporate structures. Following a short-lived manufacturing stint in Clonmel in the 1990s (the company continues to invest in a plant in Springtown, Co Derry in Northern Ireland), disk drive maker Seagate came back to the Republic in 2010. This time, the Nasdaq-listed company was looking for a new corporate HQ. The message from chairman Stephen Luzco, who was also CEO at the time, was very clear: “While our tenure in the Cayman Islands has served us and our shareholders well, there are compelling reasons that support a move to Ireland at this time,” he wrote. “Among other reasons, we’re making this change now because legislative and regulatory bodies in various jurisdictions, including the US, have actively considered proposals and/or introduced legislation that, if enacted, could increase our tax burden if we remained incorporated in the Cayman Islands.”

Within months, the company’s formal head office had moved to Dublin and re-registered as an Irish plc. Today, it is located in one of the serviced office suites managed by Pembroke Hall on Fitzwilliam Square, its only operation in the Republic. From the elegant Georgian building, it reported revenues of $11.2 billion in 2018 and $10.4 billion in 2019, and a steady pre-tax profit of $1.4 billion for each of these years. Yet its tax charge dropped from $236 million in 2018 to a $640 million benefit last year, thanks to “the release of valuation allowance on deferred tax assets driven by improvements in our profitability outlook in the US”.

Separately, an Irish branch of Cayman-based Seagate Technology reported a $2 billion tax-free profit in 2018.

An Irish-registered company controlled out of Bermuda, Sandisk Manufacturing, reported no tax on $712 million in profit. 

Ubiquitous memory cards and USB sticks makers Sandisk and Kingston, too, have formed Irish companies recording billions in annual sales and profits. 

Sandisk International Ltd, which is the group’s only employer with 34 staff in Ireland in 2018, booked $6.5 billion in sales to Europe, the Middle East and Africa that year. It returned a $176 million pre-tax profit and had a $24.5 million tax charge. Its parent Sandisk Manufacturing Unltd, meanwhile, had $9.5 billion in revenue, though it was unclear how much of Sandisk International’s was consolidated in this. An Irish-registered company controlled out of Bermuda, Sandisk Manufacturing, reported no tax on $712 million in profit. 

Kingston’s US-owned Irish unit Kingston Digital Holdings Limited had sales of $7.4 billion, and made $117 million in profit, resulting in a tax charge of $5.1 million. Nearly all its revenue and income came from its Irish trading subsidiary Kingston Technology International Ltd, which had sales in Ireland, the US, Europe and Asia and employed 292 people. 

A similar structure named Kingston Digital reported another $1.6 billion in sales, but was loss-making to the tune of $163 million. Its Irish trading company Kingston Digital International employed 155 people.