Leveraged M&A Including EMEA Hubs

Unlike many other EU members, Ireland continues to have a relatively benign tax regime that enables M&A acquisitions to be funded using a thinly capitalised Irish tax resident Bidco.

There are no formal thin capitalisation provisions, worldwide debt cap or transfer pricing applying to an Irish bid vehicle. Finance Act 2011 introduced some restrictions but these apply where groups seek to reorganise post-acquisition and inject debt. Accordingly, where an Irish Bidco or target is being considered, it is key that the ability to use tax deductible leverage is considered as part of the bid structure. This is particularly relevant to private equity funded bids.

Many US parented groups use Ireland as their EMEA hub. There are strong US tax reasons to use cash generated from real and substantive operations in Ireland to acquire non US shares and assets. Structuring such acquisitions using debt finance enables the effective Irish tax rate to be reduced significantly