Court ruling gives boost to Xilinx Q4 results

XILINX, THE semiconductor company which employs over 200 at its Europe, Middle East and Africa headquarters in Dublin, has reported…

XILINX, THE semiconductor company which employs over 200 at its Europe, Middle East and Africa headquarters in Dublin, has reported better-than-expected fourth-quarter results thanks in part to a $23.2 million tax benefit related to its Irish operations.

Xilinx appealed a ruling in favour of the US tax authorities relating to the way it shares costs and transfers technology to its Irish subsidiary.

In January, the US Court of Appeals for the Ninth Circuit withdrew an opinion it issued in 2009, which had found in favour of the US tax authority, the Internal Revenue Service (IRS).

The withdrawal of the opinion means that Xilinx was not liable for additional taxes and penalties arising from the relationship between the parent company and its Irish subsidiary.

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The case had been rumbling on since 2005 when a US court had found in favour of Xilinx.

The case relates to transfer pricing. This is a mechanism by which overseas companies recognise as much of their profits in Ireland as possible to avail of our 12.5 per cent corporation tax rate which is significantly lower than that of the US.

As a result, the case has been keenly watched by other multinationals based here.

The news came as Xilinx reported revenues of $1.83 billion for 2010, essentially flat with sales from the previous year, but significantly ahead of Wall Street expectations.

Net income decreased 1 per cent to $357.5 million, or $1.29 per diluted share, versus 2009 net income of $361.7 million, or $1.31 per diluted share.

In addition to its European headquarters, Xilinx operates a research, development, engineering and IT centre in Dublin.

Last year, Xilinx implemented 130 redundancies at its Dublin operations as its customers reined in their spending.

However, on the back of the strong results and an upbeat outlook for technology investments, the company is once again hiring new staff in Dublin.