Why Ireland ?

1. Why Ireland? Geoffrey Lewis Declan O’Luanaigh Niall O’Connor 22 October 2013

2. What Ireland offers today? Major European/EMEA/Global business hub Low tax rate that is here to stay Highly skilled and educated workforce Globally experienced senior management Only English speaking country in the Euro zone!

3. What Ireland offers today? Ranked number 1 as place to do business in Eurozone (Forbes 2012) 2nd globally (1st Europe) for business sophistication (Global Innovation Index 2012) 1st in Europe for ease of paying taxes (PwC 2012) 1st Europe for ease of starting business (Global Innovation Index 2012)

4. What Ireland offers today? Ranked 1st globally for education (Global Innovation Index 2012) 1st globally for availability of skilled labour(IMD World Competitiveness Yearbook 2012) 48% 25-34 year olds third level qualified (CSO 2012) 54% workforce under 35 (IDA Ireland 2012)

5. Proven track record of FDI 9 of the top 10 global Pharma companies 15 of the top 20 Medical Technology companies 8 of the top 10 Technology companies Top 10 “born on the internet” companies all here

6. Proven track record of FDI 3 of worlds top 5 gaming companies Top 5 exporter of software in the world Highest concentration of ICT activity in OECD 1st for hedge fund administration and listed investment funds

7. Proven track record of FDI 50%+ of the world’s banks 9 out of 10 global aircraft leasing companies 41% worlds alternative investment funds administered from Ireland U.S. investment in Ireland is greater than combined US investments in BRIC countries!

8. Ireland’s Changed Landscape Historically, manufacturing operations and used as a European gateway location Although manufacturing moves east, Ireland’s relevance to global tax strategies continues Smart Economy Strategy has successfully moved Ireland’s tax offering up the value chain

9. Irish Tax Policy Development Regional HQ Head Office /Management Export Sales Relief 10% Tax Rate 12.5% Tax Rate for all active business Manufacturing Abolition of capital duty Holding Co. CGT exemption Stamp Duty exemption for IP R&D Tax Credits / IP 12.5% Dividends Exports of Raw Material Rewards / Profits & Time Risk/ Functions & Tax Policy

10. What Ireland offers today? Focus is on portable profit drivers: IP & risk Headquarters & Holding Companies IP ownership & exploitation Supply Chain Management / Shared Services Finance & Treasury

11. Key tax advantages • Funds Flowing In • Extensive DTA Network / EU Directives • Policy of 0% WHT in DTAs • 12.5% CT - qualifying dividend income • Credit for foreign tax • Funds Flowing Out • No WHT on interest, dividends, royalties to EU / DTA typically • Tax in Ireland • Low tax policy – 12.5% • No Thin Capitalisation, No CFC • No Capital Duty • IP and R&D Tax Incentives Slide 11

12. Irish Business Taxes Trading income 12.5% Qualifying dividends 12.5% (0% with FTC) Passive income 25% R&D incentive 25% (37.5% relief) CGT participation 0% (other 33%)

13. Business Modeling & 12.5% rate Need to be “trading” to avail of 12.5% Attractive location for valuable supply chain elements Greater risks, assets and functions located in Ireland, the greater the profits which could be reported Also, limiting the risks assumed by foreign subsidiaries will reduce the amount of profits accruing to them

14. IP management R&D Shared servicecentre Suppliers IRIR (12.5%) Title raw materials Commissionaires Title Call centre Sales force finished goods Manufacturing Material flows finished goods Information flows Customers Legal title flows Irish Group Entrepreneur (Principal)

15. Irish Principal Centralised supply chain and strategic activities Either owns IP or has licensed in IP Purchases from suppliers & consigns to local toll manufacturer for routine processing Local commissionaires responsible for routine sales activities, remunerated with routine commission Residual profit attributed to the IRIR

16. Transfer Pricing Limited Transfer Pricing (TP) rules introduced 2011 Apply to “trading” transactions only not passive activities (royalty & interest free structures possible) Exemption for SMEs < 250 employees and either Turnover < €50m or Assets < €43m

17. Rulings / Ease of start up No requirement to obtain a ruling Revenue can give confirmation of tax treatment Such rulings are effective unless the underlying facts change or a change in Irish tax law – no time limit

18. Holding Company Benefits Tax exemption for domestic & foreign gains (EU & DTA) on sales of trading subsidiaries Tax exemption for Irish dividends with effective tax exemption for foreign dividends (FTCs) Extensive domestic withholding tax exemptions No thin capitalisation or CFC rules

19. IP Exploitation Benefits Amortisation for IP acquired for trade purposes (80% limit) No clawback on IP sale after 10 years Deduction for licensed-in IP rights Tax efficient IP structuring opportunities

20. R&D Benefits Refundable 25% tax credit (effective benefit 37.5%). Cash refunds possible – repaid over 3 years Credit converted to tax efficient bonuses R&D team Possible R&D grant aid also

21. Corporates - Tax Residency Irish registered (IR) companies automatically deemed to be Irish tax resident but can have IRNRs Irish DTAs - “effective management and control” tie breaker rule for dual resident companies Non Irish registered companies need to be managed and controlled here to be tax resident

22. Double Irish IRNR initially Irish tax resident and buys in group IP IRNR owns an Irish tax resident trading subsidiary (IRIR) to which it licences the IP (tax deduction) IRNR migrates its residence to haven after time No tax in IRNR on royalty income once migrated Typically can structure royalties so that no Irish WHT applies or route through the Netherlands to avoid

23. IRNR-IRIR (“Double Irish”) US MNC Buy-in license / cost sharing IP IRNR Contracts with customers Customers License Royalty payment IRIR (Opco) Commission Commission Sales & Mkt France Sales & Mkt UK Sales & Mkt Holland Sales & Mkt Sweden Sales & Mkt Germany Ireland IRNR will typically buy the economic right to exploit the IP outside of the US Slide 23

24. Shelbourne Systems Inc. US based Technology Company Traditionally US based sales but now rapid growth expected in non-US sales – focus on EMEA & Asian markets Senior personnel employed by sales subs in UK, France & Germany already

25. Shelbourne Systems Inc. Phase 1 - 2014 SS Inc. sets up 2 Irish subs IRNR (IP licensing co) and IRIR (operating co) IRNR enters into a cost sharing agreement with SS Inc. for non-US IP UK, French & Germany execs transfer to IRIR

26. Shelbourne Systems Inc. IRNR will license IP to IRIR who will sell / license to non-US customers. IRIR commences to trade, leases office space etc. After a period of time, IRNR’s tax residency is migrated to haven location.

27. Shelbourne Systems Inc. IRIRs financials (€’000) – 2014 Sales – non US 3,000 Costs (300) Royalty – IRNR (1,500) Taxable profits 1,200 Irish Corporation Tax 150 Effective tax rate 5.6%

28. Shelbourne Systems Inc. Phase 2 - 2015 Non-US sales / operations grow Given the success of the Irish operations, decision made to relocate an element of group R&D function from US to IRIR New R&D & sales hires also made in Ireland

29. Shelbourne Systems Inc. IRIRs financials (€’000) – 2015 Sales – non US 5,000 Costs – incls R&D 300k (800) Royalty – IRNR (2,500) Taxable profits 1,700 Irish Corporation Tax 137.5 Effective tax rate 3.3%

30. Shelbourne Systems Inc. Phase 3 - 2016 Given expected tax changes, decision is made to transfer non-US IP from IRNR to IRIR Value of IP is €40m – amortise over 10 years SL No Irish Stamp Duty applies to this transfer

31. Shelbourne Systems Inc. IRIRs financials (€’000) – 2016 Sales – non US 8,000 Costs (1,000) R&D costs ( 800) Profits 6,200 Capital allowances – IP (4,000) Taxable profits 2,200

32. Shelbourne Systems Inc. IRIRs financials (€’000) – 2016 Irish CT @ 12.5% 275 R&D Tax Credit (200) CT payable 75 Accounting Profits – non US 6.2m Effective Tax Rate 1.2%

33. Employee Taxation Irish tax resident – either 183 days in the tax (calendar) year or 280 days in aggregate this year and prior year. Ordinarily resident concept for 3 years “Split” year rules - not be taxable on earnings arising before the date of your arrival or after the date of your departure

34. Employer Withholding Payroll withholding tax - Pay As You Earn (PAYE) Stock option gains - Irish income tax may be due on the exercise of share options granted while resident outside Ireland by reference to the amount of time spent working in Ireland over the vesting period

35. Remittance Basis Foreign employment contract & non Irish duties Irish employer not required to operate PAYE where Employee DTA resident & not resident in Ireland Employee not paid by Irish resident employer Cost not borne by Irish PE foreign employer; and Duties performed in Ireland < 60 days in tax year

36. SARP Applies to qualifying individuals coming to Ireland to work for a period of at least one year Irish tax will apply to the greater of: Total employment earnings and benefits received in or remitted to Ireland; and The first €100,000 plus 50% of earnings and benefits in excess of €100,000.

37. Relocation Expenses Specific reimbursements of many expenses are generally exempt from tax Expenses include travel, moving personal and household effects, and temporary living expenses for a limited period (3 months)

38. R & D Bonuses Key R&D team members Spend 50% of their time on R&D activities Tax free remuneration - transfer R&D Tax Credit Cannot reduce effective tax rate below 25%

39. Foreign Earnings Deduction (FED) Incentive support Irish companies’ efforts to expand overseas(BRICs and other locations) Maximum deduction is €35,000 and maximum tax saving is €14,350. FED cannot be claimed where SARP is claimed or the employee R&D tax credit relief applies

40. Investor Tax - CGT Irish CGT charge applies to gains on disposals of Irish property irrespective of residence or domicile of investor – “specified asset” Irish CGT “7 year holiday” for property purchased up to 31 Dec 2013 i.e. sell after 10 years, 70% gain exempt etc.

41. Investor Tax - REITs REIT not liable to Irish tax on income and capital gains arising from its property rental. Non resident investors not be liable to Irish CGT Irish DWT at the rate of 20% on distributions to non residents - recover either as a credit against tax in home country and / or directly from Irish Revenue Transfer of shares in the REIT - 1% stamp duty

42. Investor Tax – Section 110s Securitisation vehicle - subject to Irish tax at 25% however structured so profits negligible Resident in Ireland, carry on a business of managing qualifying assets and the market value > €10m Eligible to take advantage of Irish treaty network which should eliminate or reduce WHT on cross border income flows into and from Ireland

43. Investor Tax – CAT exposure Gifts and Inheritances within charge to CAT (current rate 33%) if any of the following met: Disponer resident or ordinarily resident in Ireland at the date of the benefit Donee/successor is resident or ordinarily resident in Ireland at the date of the benefit; or Assets being gifted/inherited are situate in Ireland at the date of the benefit