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joseph Neu

Associate Editor

Special treasury vehicles

Still Time to
Consider Dublin
Time is running out for companies to consider
establishing low-tax finance or treasury operations in Dublin, Ireland. Companies have until
December 31 of this year to get approval from
the Irish Ministry of Finance to set up shop in
the International Financial Services Center at
the Dublin Docks.

"It is unlikely that the date will be extended,"
says Terry Levin, manager and advisor for the
the Industrial Development Authority (IDA) of
Ireland, which overseas the application
process . However, companies that are
approved for even a single activity, says Mr.
Levin, will likely have the opportunity to
expand their activities and extend the benefits
of the International Financial Services Center
(IFSC), including the a 10% basic income tax
rate, after that date. The option to start with a
small-scale operation and build gradually
therefore still exists.

The IFSC company
Those unfamiliar with the JFSC, or Dublin
Docks Companies (the location of the Center)

Corporate IFSC Companies
Corporates that have located at the IFSC include :
ABB (insurance) • Alcan (agency treasury) •
Black & Decker (corporate treasury management) • BMW (insurance) • Ericsson (insurance,
asset financing, corporate treasury management)
• GE Capital (asset financing) • Grand
Metropolitan (corporate treasury management) •
IBM (corporate treasury management) • Pfizer
(international banking) • Porsche (factoring) •
Volkswagen (corporate treasury management) •
Volvo (corporate treasury management) .

Agency Treasury Managers
Companies specializing in agency treasury management include: Anglo Irish Bank • Bank of
Ireland • Bayerische Vereinsbank• British Land
Pic • Chase Manhattan Bank • Citibank •
Dresdner Bank • Finance and Treasury
Intern ational • ITCM Ltd . • ITI International
Finance • NatWest.

Source: IDA Ireland

should know that they have the full support of
the Irish authorities as well as the European
Union (EU). A 10% income tax incentive on
financial services profits has been guaranteed
by EU authorities until 2005. Other benefits
include: exemption from local taxes for 10
years, double deductions for lease payments
or immediate depreciation for owner capital
expenditures, 0% withholding tax on interest
and dividends, and a good tax treaty network
with 22 countries.
Applicants should contact the IDA Ireland
(353-1-6602244) which acts as a facilitator to
gain approval from the Ministry of Finance
and the Central Bank of Ireland . Application
proposals should include the background
information on the company , the proposed
activities, a business plan, facility accommodations (all operations need to be eventually
housed in several building at the Dublin
Docks), capitalization details, and the employment contribution to the Irish economy.
Employment is the reason for the incentives .
For a stand-alone facility, companies must
agree to reach a staff size of 6-8 over the
course of three years . Employees may be expatriate or local , but local hires are obviously
encouraged. The facility must also be sufficiently capitalized to support the type of the
activities to be conducted .
Companies that merely wish to have an
option to use the IFSC in the future should
consider the possibility of an agency facility
operated by a third-party bank or financial service company. Companies can outsource the
execution and/or management of certain
financial activities, which will then be eligible
for the center's benefits. Should the need arise,
approval may be given for the company to
upgrade to a stand-alone facility after the
deadline, without forfeiting eligibility for the
IFSC benefits.

Future developments
While the IFSC continues to grow, there are
some tax concerns . The Netherlands experienced difficulties with the US during the renegotiation of its tax treaty . Low tax finance
structures were the primary cause . With
Luxembourg next on the list of countries to be
similarly targeted by the US, both Belgian
Coordination Centers, and IFSC companies
risk similar US scrutiny. Companies flowing
funds through Dublin, therefore, should not be
too aggressive with their tax planning.

Do nald Dunn

Professional Contributors
Robert H erz

Associate National Director of
Accountin g and SEC Services
Coopers & Lybrand
Peter Con nors
Director, Tax Services
International Capital Markets
Ernst & You ng
jeff rey Wallace
Managing Director
Greenwich Treasury Adv isors

David Veres
Rogers & We ll s

Michae l O'Donnell
V ice Pres idenl
G loba l Cash Management

Advisory Board
Da v id Rusate
Assistant Treas urer
General Electric
Arvind Sodh ani
V ice President and Treasurer
Intel Corp.
A. Jo hn Kea rney
Ass istant Treasurer
Merck & Co.
Jean-Pierre Bo urtin
Assistant Treasurer,
Ca nada & Emerging Markets

Lee Remmers
Donald Lessa rd
Institute of Technology
Ri c hard Lev ic h
Professo r
Stern School o f Business
New Yo rk University

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Internatio nal Treasu re r/ May 30, 1994