Stories
On June 30, NortonLifeLock Global gave its immediate parent NortonLifeLock Ireland just under $2.4 billion. On the same day, directors agreed the latest in a series of corporate reorganisations left the two companies as the only Irish subsidiaries of the Arizona-headquartered cybersecurity multinational.
Over the past four years, lawyers at Matheson have taken the old Symantec group’s Irish operations through a maze of mergers, de-mergers and asset transfers. During the period, the global firm both sold off its enterprise security division to Broadcom and cemented its Irish presence to handle the non-American portion of its business as it re-focused on consumer products.
As previously reported, the group first onshored its international intellectual property to Ireland in 2018 in a $7.2 billion transaction making use of the so-called green jersey tax structure and dismantled its obsolete double Irish tax structure.
In 2020, it then centralised international business flows through Ireland. Group companies from Israel to Singapore became subsidiaries of NortonLifeLock Ireland and customers as far away as Japan were notified that their contracts were now with an office located in Dublin’s Ballycoolin business park.
As intermediary holding companies previously used to offset Irish trading profits against payments for intellectual property located in zero-tax Jersey became redundant, NortonLifeLock gradually collapsed its corporate structure, with its Irish trading company becoming increasingly central to the group’s operations outside America.
The ultimate move in that series of mergers took place on July 3 at 9.30am, when NortonLifeLock Ireland absorbed its immediate parent, NortonLifelock Ireland Holdings. Documents filed in recent days show that the holding company had $6 billion in assets and $2.4 billion in liabilities when it was swallowed by its subsidiary, which itself had €5.4 billion in assets and €431.3 million in liabilities. NortonLifeLock Ireland declared that its balance sheet would remain virtually unchanged after absorbing its immediate parent.
Global sales and intellectual property
This latest move results in the Ballycoolin trading company becoming directly held from the US through the group’s holding structure in Delaware. It employed 203 people last year and declared its principal activities as “the provision of consumer cyber safety solutions” and “investment and intellectual property holding”.
NortonLifeLock Ireland booked just over half a billion euro in sales in the year ended on April 2, 2021, the first since its separation from Symantec’s enterprise security business. Its single largest expense was a €150 million intellectual property amortisation charge from the assets moved in 2018. It ended the year with a €61 million operating profit and booked an €8.1 million tax charge for the year. It paid a €258 million dividend last year, largely fuelled by gains on the sale of the B2B business.
The group’s other surviving Irish company, NortonLifeLock Global, has ended up as a subsidiary of NortonLifeLock Ireland following successive changes in its holding structure. It is a “treasury company, providing financial support services to group companies and acting as an investment holding company”. It has no employees of its own, with tasks performed by staff of NortonLifeLock Ireland.
NortonLifeLock Global inherited the remainder of the intercompany debt owed for the transfer of intellectual property to Ireland initiated in 2018. In April 2021, this was worth $2.6 billion on its books. The funds were owed by NortonLifeLock Ireland and the liability ended with its subsidy NortonLifeLock Global, which had capitalised further debt previously extended by other group companies into its own equity.
At the end of last month, NortonLifeLock Global announced “a distribution in favour of its sold shareholder, NortonLifeLick Ireland Limited, to be satisfied by the issuance of a promissory note in the amount of USD 2,351,217,187”. While the full impact of this transaction on each company’s balance sheet has yet to be reported, the closely matching amounts suggest that the residual intercompany debt associated with the group’s intellectual property onshoring to Ireland has now been entirely offset.
This doesn’t mean that NortonLifeLock Global’s job as a treasury company is over: Its latest accounts showed that it had embarked on a new task, lending money out of Ireland to the group’s headquarters in the US – starting with a $182 million loan at 4.34 per cent as of April 2021.
If overseas sales booked in Ireland remain profitable in the future, using this Irish company to lend money to the wider group would allow efficient use of the cash accumulated here while having a portion of the resulting profits taxed at Ireland’s favourable rate.
Google Payments’ four-fold revenue increase
Another (unrelated) Irish subsidiary of a Delaware holding company for a US tech multinational, Dublin-based Google Payments Ltd processes payments from customers of the Alphabet group in the EU, Norway, Iceland and Liechtenstein. These are credit card transactions when people buy services such as apps on the Google Play store, music or films on the group’s platforms including YouTube, or small businesses advertising on the Adwords network.
The company is the EU-regulated payments processor for those captive Google group companies only and its revenue is made up of service fees. To calculate these, “a margin is charged based on the amount of expenses incurred”, the Irish company reports in new accounts filed to the end of December 2021. In that sense, its turnover is a proxy for the undisclosed amount of payments collected by Google platforms in Europe.
Last year, that figure increased more than four-fold from just under €8 million to €35.6 million. “Fees under service agreements with group undertakings have increased as a result of an increase in credit card fees due to a higher number of transactions being processed during the year.”
By contrast, costs increased in much smaller proportions. The cost of sales, which consists in credit card fees, rose by just €4.5 million, while staff costs topped €1 million for the first time. The company also incurred €1.3 million in bank interest.
Its €2 million pre-tax profit contributed to bringing cash reserves to €175 million. Nearly all is allocated to a cash pooling programme making the funds available to other Google companies under short-term borrowing arrangements.
