CRH subsidiary in Luxembourg has €2.5bn and no staff

Building materials firm not in leaked PwC files but accounts show scale of funding in country

CRH, Ireland’s largest indigenous multinational, has a subsidiary in Luxembourg that has fixed assets
of €2.5 billion but no staff. The company appears to fit with the type of special purpose entities (SPE) that have featured in the leaked PricewaterhouseCoopers documents that have created controversy this week about Luxembourg’s tax policies.

CRH is not mentioned in the leaked PwC files published by the International Consortium of Investigative Journalists in Washington DC, but accounts filed in the Luxembourg companies registry record the scale of the funding travelling through CRH North America Luxembourg Sarl. The subsidiary is part of the building material group’s global tax and treasury structure and its accounts show huge sums being transferred within the group by way of Luxembourg.

Reduced tax bills

The so-called advanced tax agreements that make up much of the leaked PwC files feature a large number of SPEs that help multinationals to reduce their tax bills outside Luxembourg.

Usually a Luxembourg subsidiary borrows money interest-free from their parent and lends it to other group companies and charges them interest which they claim against tax.

The interest-income in Luxembourg remains largely free of tax. In most cases the agreements include small profits that will be subjected to Luxembourg’s 29 per cent corporation tax rate.

The accounts of CRH North America Luxembourg Sarl show it had shares in affiliated companies of €177.69 million and loans out to group companies of €2.32 billion at the end of 2012. It owed other CRH companies within the group €2.16 billion at the year’s end. The accounts show the company had no wage or social security costs during the year, or in the previous year. It made a profit of €55.8 million and paid tax of just €379,767.

It is not known whether the CRH company in Luxembourg has negotiated advanced tax agreements with the tax authorities there. A spokesman for CRH said the company would not comment on that.

In relation to CRH North America Luxembourg, he said the name “indicates its ownership and its purpose: to provide finance to CRH group companies, primarily those in North America”.

The accounts of the Luxembourg company were filed annually with the Registre de Commerce et des Sociétés in Luxembourg, he said. “When funding companies within the group to facilitate their operations, full consideration is given to the most efficient and cost-effective way of achieving this, while fully complying with all relevant laws and regulations.”

According to the accounts the function of CRH North America Luxembourg is to acquire, manage, enhance and dispose of “participations” in Luxembourg and abroad.

Source Irish Times