Sisk family members routed money through Luxembourg

Structure involved eight members giving interest-free loans totalling €14.4m

Eight members of the Sisk family routed money through Luxembourg in 2010 as they were preparing to invest an additional €14.5 million in their Dublin-based business.

A letter from PwC in Luxembourg to the tax authorities there, which has been seen by The Irish Times, outlines the local tax consequences of the transactions.

The structure involved eight members of the family giving interest-free loans totalling €14.4 million to a new Luxembourg company, Trefoil Luxembourg, as well as investing €100,000 in shares or equity.

The money was then used to fund a new Sisk company back in Ireland, which in turn put money into Sisk group companies, with the circular routing of the money creating tax savings in Ireland.

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Trefoil Luxembourg has its registered address at 5 Rue Guillaume Kroll in Luxembourg, the address of a corporate administration services company called Alter Domus. This is the same address as Luxembourg companies used by the Irish food group, Glanbia. Company filings show it has no staff.

One of its two managers has Rue Guillaume Kroll as his address, while the second is Gerard Penny, whose address is c/o Sicon Ltd, the Naas Road, Dublin. Sisk is part of the Sicon group.

In a letter dated March 10th, 2010, PwC partner Catherine Dupont said the Trefoil investment in the Irish company would be treated as an equity investment for Luxembourg tax purposes, but have the “characteristics” of a debt from an Irish tax perspective.

“Participation exemption”

The effect of this was to make the interest paid by the Irish company to Trefoil tax deductible in Ireland, but tax free in Luxembourg where the income was considered to be dividends that qualified as being free from tax under the duchy’s “participation exemption regime”.

For Irish tax purposes, according to Ms Dupont, the investment from Luxembourg would have “a debt characterisation” in the Irish company’s accounts, meaning that “the yield payable to the Luxembourg company will be tax deductible in Ireland”.

In her letter, which referred to a meeting with tax official Marius Kohl held on January 28th, 2010, Ms Dupont said the Sisk Group was one of Ireland’s largest family-owned businesses and had a turnover in 2008 of in excess of €1.5 billion.

It employed 2,800 people that year, she said, and was involved in construction, specialist stone, architectural glazing, distribution and healthcare in Ireland, the UK and Belgium.

“The Sisk family members are considering investing additional funds in the group. A portion of the funds will ultimately be used to refinance the acquisition of a UK incorporated company, Eschmann Ltd, while the remainder of the funds invested will be used to finance the ongoing operations of the group.”

An organisational chart accompanying the letter shows the Sisk family owning the Luxembourg company which receives an interest-free loan of €14.4 million.

The Luxembourg company has a share in a new Irish company, a so-called section 110 company, which receives an investment from Luxembourg by way of a financial instrument, with the Irish company then giving an interest-bearing loan to a company in the Sisk group.

“Onshore investment”

According to PwC Ireland’s website, Irish section 110 companies or special purpose companies are an increasingly attractive “onshore investment platform” in an environment where there is a growing international focus on offshore tax havens.

In her letter Ms Dupont said the following members of the Sisk family were making investments (the list includes a holding company): George Sisk (€4m); Anne Sisk (€4m); Henry Sisk (€3.5m); Roseberth Holdings (€2m); Owen Sisk (€250k); Maria Louisa Sisk (€250k); Aoife Sisk (€250k); John Patrick Sisk (€250k).

On March 24th, 2010, Mr Kohl responded to Ms Dupont saying he considered the contents of her letter to be in compliance “with current tax legislation and administrative practice”.

Accounts for 2010 for the Irish section 110 company, Ventris Ltd, a Sicon company based on the Naas Road, Dublin, show that it received a €14.4 million “loan” during the year “from a company owned by certain of the shareholders of Sicon Ltd, the ultimate parent. The loan bears interest at a commercial interest rate.”

The accounts show that the company, which “provides financing to other group companies”, received interest of €688,430 during the year, and paid interest of €656,214, making for a pre-tax profit of €10,000.

The accounts, which are audited by PwC Dublin, say the directors of the company during the year were Liam Nagle, chief executive of the Sisk group, and Mr Penny, a director of the Sisk group.

The accounts suggest that the company has no employees. Trefoil holds one of the company’s 1,000 issued shares.

Isle of Man

More recent accounts for Trefoil show it has shares in the Irish company Sisk Healthcare Group, while public documents in Luxembourg show that in February this year Trefoil was moved to the Isle of Man, and its place of management was moved to Ireland.

A spokesman for the Sisk family said they had no comment.

Colm Keena

Colm Keena

Colm Keena is an Irish Times journalist. He was previously legal-affairs correspondent and public-affairs correspondent