Matheson (law firm) explained

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Firm Name:Matheson
Headquarters:70 Sir John Rogerson's Quay, Grand Canal Dock, Dublin 2, D02 R296, Dublin, Ireland
Num Offices:6 offices in 3 countries (Dublin, Cork, London, New York, San Francisco, Palo Alto)
Num Lawyers:122 partners [1]
Num Employees:860 [2]
Practice Areas:Tax law
Key People:Michael Jackson
Revenue:€115 million
Date Founded:1825
Company Type:Limited liability partnership

Matheson (previously Matheson Ormsby Prentice), is an Irish law firm partnership based in the IFSC in Dublin, which specialises in multinational tax schemes (e.g. for clients in Ireland such as Microsoft, Google and Abbot[3]), and tax structuring of special purpose vehicles (e.g. Section 110 securitisation SPVs). Matheson is estimated to be Ireland's largest corporate law firm.[4] [5] Matheson state in the International Tax Review that their tax department is: "significantly the largest tax practice group amongst Irish law firms".[6]

History

While Matheson's website traces their history back to 1825 and notes that their offices were burnt in the Irish Easter Rising of 1916,[7] it wasn't until after the creation and initial development of Dublin's International Financial Services Centre (or IFSC) that Matheson emerged as a small but standalone law firm with 14 partners and over 50 solicitors (or lawyers) in 1991.[8]

In 1996, the firm moved to a dedicated office at 30 Herbert Street in Dublin. The property was developed by Treasury Holdings and designed by Arthur Gibney & Partners architects.[9] [10] [11]

It later moved to offices at 70 Sir John Rogerson's Quay in 2007,[12] and rebranded as "Matheson" in October 2012.[13]

While A&L Goodbody and Arthur Cox still lead Irish corporate law,[4] Matheson has grown with the rise in the IFSC to become one of Ireland's five largest corporate law firms along with McCannFitzgerald and Mason, Hayes and Curran.[5] Matheson focuses on the two legal areas most associated with the IFSC, namely tax structuring for U.S. multinationals, and creating IFSC–domiciled corporate tax structures and tax efficient vehicles for various asset management and asset financing activities (particularly securitisation special purpose vehicles, which the IFSC leads in the EU–28).[14] [15]

In 2013 Matheson founded the Irish Debt Securities Association (or IDSA), which acts as the industry lobby group for the Irish Section 110 Special Purpose Vehicle (SPV) (the IFSC's main securitisation structure).[16] [17] Like Feargal O'Rourke in PriceWaterhouseCoopers, Matheson has been an active lobbyist for expanding various Irish legal structures and amending taxation controls to help grow the IFSC, which can lead to conflict.[18] Matheson's leadership in IFSC tax structures (or IP–based BEPS tools, and Debt–based BEPS tools), makes them a noted industry commentator.[19]

Awards

Matheson's leadership in the area of U.S. multinational tax planning in Ireland, a jurisdiction which is ranked as one of the world's top corporate havens[20] has seen Matheson win major awards from the international corporate tax planning industry, including:

Criticism

U.S. multinational tax schemes

See also: Double Irish arrangement.

Matheson's leadership in the Irish tax strategies of U.S. multinationals, (or BEPS tools), has attracted attention from U.S. media over the years. In 2005, the Wall Street Journal ran a story on how Microsoft used an Irish subsidiary called "Round Ireland One" to avoid billions in U.S. taxes which was structured and registered in Matheson's offices (was then Matheson Ormsby Prentice, or MOP).[25] [26] In 2013 the Wall Street Journal ran another investigation showing that the scale of U.S. operations in Ireland, using Matheson registered tax structures, had dramatically increased from 2005.[27] These strategies has seen Ireland labelled as one of the world's largest corporate tax havens,[20] [28] and blacklisted by Brazil.[29] [30] [31] In 2019, it was reported that Abbott used Matheson to avoid billions in U.S. taxes.[3]

Like other tax law firms in the IFSC, Matheson has openly marketed IP–based BEPS tools with effective tax rates of under 3%.[32] [33]

Mainstream U.S. media channels have singled out Matheson in Dublin, as a significant centre for U.S. multinational tax strategies.[34]

In this regard, Matheson is akin to the situation of Irish PwC Managing Partner Feargal O'Rourke, whose development of the double Irish IP–based BEPS tool, has also made him the subject of investigative pieces by the U.S. financial media.[35] Bloomberg recognise that O'Rourke, while being at the vanguard of legitimate but aggressive U.S. multinational tax planning, is considered a "hero" in Ireland.[36]

Section 110 tax schemes and children's charities

In 2016, Matheson was criticised in the Irish media when it was revealed that U.S. distressed debt funds (known pejoratively as "vulture funds" in the Irish media),[37] had used the services of Irish IFSC securitisation law firms to avoid billions in Irish taxes,[38] [39] on Irish distressed assets by using Irish Section 110 SPVs.[40] [41] [42] [43] [44] These structures were created so IFSC law firms could administer global securitisation transactions.[45] [46] [47] Matheson featured as one of the most frequently used advisors by the U.S. distressed debt funds (with A&L Goodbody).[48] [49] [50]

The affair escalated into the "vulture fund tax avoidance" scandal,[51] when it was found Matheson used three in-house children's charities (Eurydice, Medb and Badb),[52] [53] [54] to make the Irish Section 110 SPV work in an Irish domestic setting (known as "orphaning").[55] [56] This was a purpose for which Finance Minister Michael Noonan acknowledged "the Section 110 legislation was not set up for". The affair became a major Irish scandal[57] [58] and was reported in the international media.[59] [60] The Irish State closed the loopholes,[61] [62] and prohibit Irish charities from being used in tax avoidance structures.[63] [64]

Panama Papers exposure

See also: Panama Papers and List of people named in the Panama Papers. It was revealed in the Irish section of the Panama Papers leak of 2016, that a senior partner in Matheson, Stanley Watson, had established an offshore tax structure with Mossack Fonseca's help in Cyprus, to reduce his tax bill on moving to London to set up the Matheson London office.[65] [66] A woman in the Matheson Dublin office was helping handle the correspondence to establish the structure.[65] The affair caused further embarrassment for Matheson when Stanley Watson's Isle of Man advisor was recorded as describing Matheson to Mossack Fonseca as "our biggest client".[65]

See also

External links

Notes and References

  1. https://www.matheson.com/about-us
  2. https://www.matheson.com/about-us
  3. News: How the IDA's top client used Ireland to siphon billions offshore tax-free. TheJournal.ie. Peter Bodkin. 19 March 2019. 19 March 2019. Meanwhile, through a myriad of subsidiaries and system of inter-company charges involving a variation on the infamous so-called ‘double Irish’ structure, its local operations have also legally shaved their tax bills with the Exchequer despite pulling in huge sales. The firm’s registered office is listed as the address of its Dublin law firm, Matheson..
  4. News: 'Big Seven' Irish law firms earned €720m last year. Irish Independent. 18 October 2017.
  5. News: Cantillon: Are there now only three law firms left in the 'big four'?. Irish Times. 30 May 2015.
  6. Our tax department is significantly the largest tax practice group amongst Irish law firms. Web site: Matheson Ireland Profile. International Tax Review 2017. 2017.
  7. Web site: Matheson history. Matheson . 2018.
  8. News: Matheson Ormsby Prentice wins award . Irish Times . 25 February 2002.
  9. Web site: Blackstone operations move to 30 Herbert Street . Independent.ie . 27 September 2023 . en . 9 April 2015.
  10. Web site: 30 Herbert Street . Ronan Group . 27 September 2023.
  11. News: Ronan gets €37m for office blocks . The Irish Times . 27 September 2023 . en.
  12. News: Legal firm's HQ on the market. Irish Times . 21 April 2007.
  13. Web site: Ireland's MOP drops Ormsby Prentice to become Matheson. The Lawyer . 25 October 2012.
  14. News: Ireland is top Eurozone jurisdiction for SPVs. Irish Independent. 19 August 2017.
  15. Web site: Ireland: The Leading European Jurisdiction for SPVs, Structured Finance and Securitised Structures. Irish Debt Securities Association. 2016.
  16. Web site: Matheson welcomes Irish Debt Securities Association. Matheson. 19 April 2013.
  17. News: Lobby group says tax loophole closure may dampen Nama sales. Irish Times. 8 September 2016.
  18. News: Vulture funds using 'shadow' lobbying system, Burton says. Irish Times. 2 February 2017.
  19. Also discussed was the need for Ireland to continually review and update the legal framework to reflect the speed of change and to cater for tangible assets so they are ‘fit for purpose’.Web site: Matheson identifies increasing onshoring of Intellectual Property tax structures to Ireland as Brexit benefit. Business & Finance. 27 March 2018.
  20. News: Ireland is the world's biggest corporate 'tax haven', say academics. Study claims State shelters more multinational profits than the entire Caribbean. Irish Times. 13 June 2018.
  21. Web site: Matheson wins transfer pricing firm of the year. Irish Legal News. 21 May 2018.
  22. Web site: Matheson and McCanns win at FT Innovative Lawyer Awards. Irish Legal News. 6 October 2017.
  23. Web site: European Financial Service Tax Deal of the Year 2017. International Tax Review. 11 July 2017.
  24. Web site: Matheson celebrates double win at European Tax Awards 2016. Irish Legal News. 30 May 2016.
  25. News: Irish Subsidiary Lets Microsoft Slash Taxes in U.S. and Europe. Wall Street Journal. 7 November 2005. Round Island's legal address is in the headquarters of a Dublin law firm, Matheson Ormsby Prentice, that advertises its expertise in helping multinational companies use Ireland to shelter income from taxes.. Glenn R. Simpson.
  26. Web site: TAX JUSTICE NETWORK: Irish Subsidiary Lets Microsoft Slash Taxes in U.S. and Europe. Tax Justice Network. 7 November 2005.
  27. News: Dublin Moves to Block Controversial Tax Gambit. At least 125 major U.S. companies have registered several hundred subsidiaries or investment funds at 70 Sir John Rogerson’s Quay, a seven–story building in Dublin’s docklands, according to a review of government and corporate records by The Wall Street Journal. The common thread is the building’s primary resident: Matheson, an Irish law firm that specializes in ways companies can use Irish tax law.. Wall Street Journal. 15 October 2013. 19 March 2019. Damian Paletta. Kate Linebaugh.
  28. News: Zucman:Corporations Push Profits Into Corporate Tax Havens as Countries Struggle in Pursuit, Gabrial Zucman Study Says. The new research draws on data from countries such as Ireland, Luxembourg and the Netherlands that hadn’t previously been collected.. Wall Street Journal. 10 June 2018.
  29. News: Blacklisted by Brazil, Dublin funds find new ways to invest. Reuters. 20 March 2017.
  30. News: Oregon Department of Revenue made a recommendation that Ireland be included as a 'listed jurisdiction' or tax haven. Irish Independent. 26 March 2017.
  31. Web site: Tax haven blacklisting in Latin America. Tax Justice Network. 6 April 2017.
  32. Web site: Ireland as a European gateway jurisdiction for China – outbound and inbound investments . The tax deduction can be used to achieve an effective tax rate of 2.5% on profits from the exploitation of the IP purchased. Provided the IP is held for five years, a subsequent disposal of the IP will not result in a clawback.. Matheson. March 2013.
  33. Web site: Maples and Calder Irish Intellectual Property Tax Regime - 2.5% Effective Tax. Structure 1: The profits of the Irish company will typically be subject to the corporation tax rate of 12.5% if the company has the requisite level of substance to be considered trading. The tax depreciation and interest expense can reduce the effective rate of tax to a minimum of 2.5%.. Maples and Calder. February 2018.
  34. Web site: Nine Little Places That Are Home For One Million Corporations. Buzzfeed. 30 October 2013.
  35. Web site: Man Making Ireland Tax Avoidance Hub Proves Local Hero . Bloomberg News. 28 October 2013.
  36. News: Controversial tax strategies brainchild of O'Rourke's son. Irish Independent. 3 November 2013.
  37. News: How to get vulture funds to pay tax. Irish Times. 1 August 2016.
  38. News: Tax avoidance could run to billions. Irish Independent. 24 July 2016.
  39. Web site: WHY LETTING SECTION 110 SPVS OPERATE IN THE IRISH DOMESTIC ECONOMY WILL DAMAGE OUR TAX BASE AND OUR REPUTATION AS A 'LOW-TAX' ECONOMY . Stephen Donnelly (Dail Submission). September 2016.
  40. News: Loophole lets firms earning millions pay €250 tax, Dáil told. Irish Times. 6 July 2016.
  41. Web site: Vulture funds pay just €8,000 in tax on €10 billion of assets. thejournal.ie. 8 January 2017.
  42. Web site: Revealed: How vulture funds paid €20k in tax on assets of €20bn. The Sunday Business Post. 8 January 2017.
  43. News: Dublin unit of US hedge fund with $8bn assets pays $125 tax. Irish Times. 15 August 2016.
  44. News: Cerberus paid €1,900 tax on €77m Project Eagle profits. Irish Times. 29 November 2016.
  45. News: How do vulture funds exploit tax loopholes?. Irish Times. 17 October 2016.
  46. Web site: Mason Hayes and Curran:Silver Linings from Ireland's Financial Clouds. Mason Hayes & Curran Law. May 2016.
  47. News: Only lawyers and accountants gain from Irish 'SPVs' - Central Bank. Irish Independent. 5 October 2016.
  48. News: 'Vultures' minimise their tax bills – as State now appears to have delivered the sale of the century. Irish Independent. 21 August 2016.
  49. Web site: Vulture funds rub salt into the carcass of this country. David McWilliams Sunday Business Post. 1 August 2016.
  50. Web site: How do vulture funds manage to pay practically no tax in Ireland?. Emma Clancy. 30 July 2016.
  51. News: State scrutinising Matheson's use of tax loopholes. Irish Times. 28 July 2016.
  52. News: Vulture funds using charities to avoid paying tax, says Donnelly. Irish Times. 14 July 2016.
  53. Web site: Why would a Vulture Fund own a Children's Charity. Dail Eireann. 24 November 2016.
  54. News: Barnardos deny receiving funding from owner of vulture fund, Matheson Foundation. Irish Independent. 24 November 2016.
  55. News: Wealthy firms 'using charitable status to avoid paying taxes'. Irish Examiner. 13 July 2016.
  56. News: Law firm defends use of charities to help hedge funds cut tax bills. Irish Times. 27 August 2015.
  57. News: How did the Government shaft mortgage holders and taxpayers in one fell swoop?. Irish Independent. 10 July 2016.
  58. News: Vulture funds are feasting tax–free on carcass of our property crash. Irish Independent. 30 August 2016.
  59. News: Forget Apple: Ireland's other taxing issue. BBC News. 6 September 2016.
  60. News: Ireland confronts another tax scandal closer to home. Financial Times. 11 September 2016.
  61. News: Loophole allowing Vulture Funds to pay almost no Irish profit tax shut. Irish Independent. 16 September 2016.
  62. Web site: Government moves to amend Section 110 to close tax loophole used by vulture funds. RTE News. 6 September 2016.
  63. News: Irish Charities Regulator rejects Matheson Charities in Section 110 SPVs. Irish Times. 28 April 2017.
  64. News: Matheson stops using charities to help clients avoid tax. Irish Times. 27 February 2018.
  65. News: Senior Matheson figure set up Cyprus firm to reduce tax bill. Irish Times. 4 April 2016.
  66. News: What the Panama Papers tell us about Ireland. Irish Times. 9 April 2016.

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