Move to close Irish tax loophole won't stop Medtronic-Covidien deal
Ireland is closing a loophole that's made it a tax haven for multinational corporations. That policy move, however, won't affect plans by Twin Cities-based Medtronic to buy Irish medical device maker Covidien.
The tax break facing extinction, known as the double-Irish loophole, lets U.S. companies cut tax bills by shifting income from an operating firm in Ireland to an Irish-registered company in Bermuda or another tax haven. But the planned change has no implication for Medtronic's pending acquisition, a Medtronic spokesman said.
Medtronic's deal for Covidien isn't based on that accounting, said Jeff Windau, an analyst for the investment firm Edward Jones.
The Covidien acquisition would make Medtronic an Irish company for tax purposes. That would let Medtronic return foreign earnings to U.S. operations without taking a big tax hit from the IRS. The Obama administration has tried to block such deals.
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Medtronic in early October said it would change its purchase method for Covidien. The company said it would borrow $16 billion to finance the deal instead of using cash kept overseas. Had Medtronic used that cash, it would have brought a $3 to $4 billion tax bite under new U.S. Treasury Department rules intended to thwart such deals, known as tax inversions.
• October: Facing tax criticism, Medtronic shifts financing in Irish deal