2 days ago
J&J's Irish eyecare unit takes €1.06bn hit on accord between Irish and US tax authorities
A Limerick unit of US healthcare giant,
Johnson & Johnson
(J&J) has incurred an exceptional €1.06 billion expense arising from it a new pricing agreement with Irish and US tax authorities.
Johnson & Johnson Vision Care Ireland UC employs 1,692 people at its base at the National Technology Park in Limerick where it produces eye care products.
Across Ireland, J&J employs more than 6,000 across 10 sites in five counties – Cork, Dublin, Limerick, Galway and Mayo.
In the recently-filed accounts, the directors state that, in December 2024, 'the company reached an agreement with the Irish and US tax authorities on a reasonable attribution of profit between the company and its US affiliate relating to the manufacture and sale of contact lens-related products'.
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The agreement comprised a mutual agreement procedure and an advanced pricing agreement negotiated between the US and Irish tax authorities.
A mutual agreement procedure is a dispute resolution mechanism primarily used in international taxation to resolve issues related to double taxation.
The directors state that the new pricing arrangement resulted in the company incurring an exceptional one off expense of €1.06 billion.
The said the expense was financed by a company subsidiary, Vision Care Finance UC, transferring $1.176 billion in cash to Johnson & Johnson Vision Care Ireland UC on February 13th this year.
'The funds were then used by the company to settle the intercompany payable position with its US affiliate as a result of the updated pricing arrangement,' the directors said.
They said 'the APA [advanced pricing agreement] negotiated and agreed with the authorities is positive as it provides the company with more certainty going forward'.
An advanced pricing agreement between two tax jurisdictions sets down how prices are set for transactions between related companies, such as entities in the same group.
'Under the new methodology the company has continued to generate healthy profits and [this] is forecast to increase further given the planned production increase in future years,' the directors of Johnson & Johnson Vision Care Ireland say in their report.
The new accounts, which are for 2023, show that pretax profit fell by 4 per cent to €442.37 million on revenues that were 9 per cent higher at €1.35 billion.
Allowing for a corporation tax charges of €35.69 million, the company recorded profits of €406.68 million.
Staff costs in 2023 totalled €143.36 million. The profit takes account of non-cash depreciation charges of €83 million, R&D costs of €19 million and R&D tax credits of €4.8 million. Profits were hit by a €48.7 million non-cash impairment of fixed assets.
The company had accumulated profits of €3.3 billion at the end of 2023.
