Irish-registered subsidiary of Microsoft records $314bn profit

An Irish-registered subsidiary of global technology giant Microsoft recorded a profit of $314 billion last year and paid a dividend to its parent company of $55 billion, according to its latest set of statutory accounts.

These huge sums were recorded by an entity called Microsoft Round Island One, a holding company that is registered in Ireland but tax domiciled in Bermuda.

The company made the headlines a decade ago when it came under the spotlight of a US senate committee that was looking into Microsoft’s global tax arrangements.

Accounts for the year ended June 30th, 2020, show that Microsoft Round Island One posted turnover of $13.6 billion, up from $9.8 billion a year earlier. This related to income from investments in other group companies.

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According to the accounts, the profits were the result of surpluses and assets received from two subsidiaries that were liquidated during the year. These were Microsoft Luxembourg USA Mobile Sarl and MACS Holdings Ltd. The net impact of the corporate reorganisation was the receipt of assets worth $301.l billion.

Shareholder’s equity increased by $290.2 billion in line with the increase in profits during the year. It is understood that this non-cash gain was exempt from tax as it is driven by a group reorganisation.

Dividend

The company paid a dividend during the financial year of $24.6 billion while another $30.5 billion dividend was paid after the year end.

The accounts note that the company is tax resident in Bermuda, and “no tax is chargeable on income”. The Irish entity had no employees, other than its three directors (all US based) and their remuneration was borne by a related group company. Fees of $63,000 were paid to auditors Deloitte during the year.

When asked to comment on the accounts of the Irish entity, a Microsoft spokeswoman said: “Microsoft has been operating and investing in Ireland for over 35 years and is a long-time taxpayer, employer and contributor to the economy. Our organisational and tax structure reflects our complex global business. We are fully compliant with all local laws and regulations in the countries where we operate.”

Microsoft’s main operating entity here is Microsoft Ireland Operations Ltd, which is involved in the marketing, selling and distribution of hardware and software products and services for Europe, the Middle East and Africa, and the Asia Pacific region.

Its revenues increased by 24 per cent to $46.7 billion in the year to the end of June 30th, 2020, while its profit rose by 34 per cent to just under $2.3 billion. The company paid corporation tax of $342 million and employed 1,871 people, according to its financial statements.