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Paddy Power Mulls Offshore Move

Thursday, March 4, 2010

Upon the publish of financial results for the year 2009, Paddy Power’s Chief Executive, Patrick Kennedy, warned that further increases in the tax burden on Irish bookmakers could force the company to locate some of its operations offshore - likely to Gibraltar - mirroring recent moves by UK rivals, Ladbrokes and William Hill.

Speaking to the Irish Independent on March 2, Kennedy explained that the government’s proposal to double tax on internet and telephone betting, to 2% of turnover, would put the company at a further disadvantage to rivals based offshore. While emphasizing the company’s “strong commitment” to remaining tax resident in Ireland, Kennedy said it may become a necessity to relocate in order to keep up with its competitors, should the tax burden continue to increase.

"This is a very competitive, cut-throat market,” Kennedy told the paper. “The gap between doing well and underperforming is very, very narrow - you can't take too many structural impediments to your cost base, [and this issue] could be the tipping point.”

Kennedy says that Paddy Power paid around EUR18m in taxes - namely VAT and corporate income tax - in 2008, via its online and telephone betting operations, and said that if the turnover tax was doubled, company profits would be reduced by a further EUR2.5m annually. Should the company choose to join the ‘exodus’ offshore, he explained, Paddy Power's tax liabilty could be halved.

In a statement accompanying the company’s 2009 results – which revealed a 15% drop in pre-tax profits to EUR67.2m, in what has been described as "a good year for punters" - Kennedy explained the company’s stance on the tax spat:

“In recent months we have engaged with the Irish government on the potential for taxation of telephone and online betting in Ireland. In our view, such a tax will raise only relatively modest revenue, will be costly to implement and will be problematic, if not impossible, to enforce; points we have made to the government with accompanying evidence.”

“We have nonetheless never had an objection to paying tax on the internet betting of Irish customers, assuming that any tax is enforceable on all internet bookmakers providing services to the Irish market, and not solely Irish bookmakers who provide valuable sustainable employment.”

In consultations with Irish bookmakers last year, the Irish government agreed to defer the introduction of the tax hike, and is reassessing its options.

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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