CRH subsidiary pays €440,000 tax on €117m profit

CRH North America Luxembourg Sarl has assets of €2.6bn but employs no staff

  CRH North America Luxembourg  is part of the group’s global tax and treasury structure and provides  finance to its US business using loans raised from affiliated companies.  Photograph: Brenda Fitzsimons/The Irish Times

CRH North America Luxembourg is part of the group’s global tax and treasury structure and provides finance to its US business using loans raised from affiliated companies. Photograph: Brenda Fitzsimons/The Irish Times

 

The Luxembourg subsidiary of building materials group CRH earned profits of almost $125 million (€117 million) and paid tax of $470,000 (about €440,000) last year, according to figures just released.

CRH North America Luxembourg Sarl has assets of just under $2.8 billion (about €2.6 billion) but employs no staff.

The company is part of the group’s global tax and treasury structure and provides finance to its US business using loans raised from affiliated companies.

Accounts just lodged by the Luxembourg-based business show that it earned profits in 2014 of $124.7 million.

It paid $469,367 in tax, the financial statements show.

The profit for the year was 32 per cent ahead of the $86 million it earned in 2013 while its tax bill rose by about 8.5 per cent, from $414,640.

Its balance sheet shows that it had assets of $2.77 billion at the end of 2014, more or less in line with its position 12 months earlier.

The figures show other CRH group companies owed it $2.39 billion on December 31st last, down marginally on the $2.43 billion due to it a year earlier.

At the same time, it owed $2.36 billion to the parent group, which was also a slight reduction on the $2.42 billion it owed at the end of 2013.

Large numbers of multinationals have structures where they use special-purpose companies based in Luxembourg to borrow money interest free from their parent group and then loan it to other subsidiaries.

They charge interest on the loans to the subsidiaries. The income from that is largely tax-free in Luxembourg.

Series of loans

Notes to CRH North America Luxembourg’s 2014 accounts show that it made a series of loans to the group’s US and North American operations, which are responsible for about half of its €19 billion a year turnover.

The figures show it earned $20.2 million in interest during the year from a Can$451.7 million (€317.6 million) loan to CRH America Inc.

The loan is repayable in March 2020.

The accounts state that the company incurred a $34.7 million foreign exchange loss on the debt.

However, it borrowed Can$451.7 million from another subsidiary, CRH Canada Finance Ltd, which made a $34.7 million foreign exchange gain at the same time.

The Luxembourg company generated a further $25.3 million from another $500 million loan to the same subsidiary, that must be repaid in October 2022.

It also earned $2.4 million from a credit facility worth up to $1 billion given to CRH North America.

The subsidiary had only drawn down $250 million of the total by the end of last year.

Interest from a $1.5 billion loan to Oldcastle Finance Inc, part of its Americas Materials division, came to $76 million in 2014. That debt is also due to be repaid in October 2022.

The Luxembourg company loaned the money to the group subsidiaries in 2013.

All four are matched by debts raised from other businesses within the CRH organisation.

Along with the Canada Finance liability, it owed $2.995 billion to CRH Luxembourg finance in two loans, a promissory note – a corporate IOU – of $1.995 billion and an interest-free facility of $1 billion which the company says “mirrors” the $1 billion that it loaned to CRH North America.

Structures similar to those used by CRH in Luxembourg featured in the so-called “Lux-leaks” documents released by the Washington-based International Consortium of Investigative Journalists last year.

However, the Irish group was not named on the list.