Ireland’s largest meat producer, ABP Foods Group, avoided paying tax on millions of euros in profits by taking advantage of Dutch and Luxembourg tax rules, according to an investigation by the Guardian and website Follow The Money.
The company’s predecessor, Irish Food Processors Ltd, set up an investment vehicle, Trojaan Investering, in Amsterdam-Zuidoost in 2002. Trojaan then lent money back to ABP’s UK entity at a notional interest rate of 4% above Euribor, the base rate for loans between European banks.
Under the Dutch tax regime Trojaan could deduct the interest due from its corporation tax bill. The company’s accounts showed no actual interest was paid, enabling it to cut its tax liabilities by a huge margin, FTM said.
Dutch and Luxembourg tax rules are designed to stimulate inward investment by allowing companies to deduct the cost of cross-border lending from their corporation tax liabilities, regardless of whether the money is taxed in the jurisdiction where the loan is taken out.
Follow The Money said Trojaan Investering held around €420 million in assets in 2020 but had no employees, according to company records.
The company is formally owned by Luxembourg-based Kilbroney Investments, which owns around €800 million in assets and is linked to a Jersey-based investment firm, Williamstown, whose directors include Larry Goodman, the owner of ABP Food Group.
Goodman has an estimated personal wealth of €1 billion, according to Forbes, while the company received €2.8 million in European Union subsidies in the past eight years. ABP has been implicated in numerous scandals over the years, including the discovery in 2013 that its beefburgers contained up to 80% horsemeat.
In 2017 Trojaan declared profits of around €1 million while paying out €25 million in dividends, after it received interest on loans from companies belonging to APB Food Group of €24 million. Its total tax bill that year was just €263,000, while the year before it paid €36,000 while receiving the same amount.
‘We come across this structure more and more these days,’ Arnold Merkies, co-ordinator of the Dutch branch of the Tax Justice Network, told FTM. ‘According to the Dutch government the fiscal rules are intended to determine where profits should be taxed.
‘In practice these rules mean companies aren’t taxed anywhere. In the Netherlands it’s deductible income, but in the other country there is no tax liability.’
The Guardian and investigative website Lighthouse Reports estimated that ABP and a Brazilian-owned company, Pilgrim’s Pride Corporation, avoided tax on around £160 million (€180 million) by routing capital through the Netherlands and Luxembourg.
Reuven Avi-Yonah, a professor of law at the University of Michigan Law School and former consultant to the Organisation for Economic Co-operation and Development, told the newspaper there was ‘no question that this is aggressive tax avoidance’.
‘These companies get financed by 0% loans and they pay very little tax because they’re holding companies and Luxembourg and the Netherlands apply special taxing rules to holding companies in order to attract business,’ he said.
A spokesperson for ABP told the Guardian: ‘We have been and remain tax compliant in all jurisdictions in which we operate. We have no further comment to make.’
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