On 9 May last Ireland's Companies Registration Office (CRO) got an urgent request from a Dublin law firm to establish a company for the Brazilian group that is the world's biggest meat processor. On 11 May the JBS Group announced in São Paulo a global restructuring with the new Irish JBS Foods International, a brass-plate operation with an address at the Dublin offices of A&L Goodbody in the international financial services centre (IFSC), set to list on the New York Stock Exchange.


In recent years Brazil has been investigating extensive corruption at the state oil company and the president is facing an impeachment trial. In early July police raided the home of Joesley Batista, chairman of JBS and chief executive officer of J&F Investimentos, the holding company. He is the son of José Batista Sobrinho, the founder of the business.

The Wall Street Journal reported in July that the authorities believe that Eldorado Brasil, a pulp-making unit of J&F, paid bribes to politicians to obtain low-cost financing from a federal infrastructure fund. The Financial Times reported that the family’s companies were among the biggest political donors to all parties in the 2014 elections. It said "JBS has grown rapidly over the past 10 years through ambitious overseas acquisitions, accumulating operations in the US, Australia and Europe. The company counts BNDES, Brazil’s development bank, as a major shareholder."

A&L Goodbody told the CRO on 9 May that JBS was "inverting into Ireland" but this wasn't a typical tax inversion as defined by the White House here. See Finfacts July 2014 article here

Finally as discussed with your colleagues, our client has made a special request that the application be processed as soon as possible. The client is a large South American entity which is inverting into Ireland and for genuine commercial reasons, require incorporation of the Irish entity by Wednesday 11 May. Any assistance you can offer in this regard would be very much appreciated by the client and A&L Goodbody.

The soon to be named JBS Foods International plc "will be the ultimate parent company of the JBS Group" according to a recent filing with the US Securities and Exchange Commission and the SEC was also advised that the Irish company would operate as an offshore/ shell entity, similar to the Irish companies used by Apple to facilitate massive tax avoidance.

Last year JBS paid $1.5bn (€1.35bn) for Northern Ireland poultry company Moy Park and while Ireland provides a tax haven holding vehicle to JBS that is subject to Irish law, control and management will officially be in the UK and in reality in Brazil.

This week the Journal reported that a spokesperson for Ireland's Department of Finance has reacted negatively to the announcement that JBS may move its parent company and €30bn in assets to Ireland. The spokesperson told the international news agency AFP, that “Ireland does not encourage such transactions.”

No corporation tax is paid by most of these brass-plate operations and in the case of King Digital Entertainment, the maker of the Candy Crush Saga smartphone game, while it did have a headquarters in Ireland similar to tax inversion operations, it did not have any employee and its address was at William Fry, a law firm — King founded in Sweden in 2003, had its main operations in London  and was acquired in the US in 2015 for $5.9bn. This did impact Ireland's national accounts in contrast with the forthcoming JBS transaction.

Ireland  used to encourage these type of  transaction, which mainly benefited big professional firms as few or no local jobs followed, and while the UK abolished non-resident company status in 1988, the Irish government in 1999 gave in to demands from American companies in Ireland to retain these useful vehicles for tax avoidance. 

Ireland, Brazil meats, tax havenMichael Noonan, finance minister, in 2013 made it very clear that the authorities haven't a clue how many of these Irish shell companies exist; there is no breakdown by country and there is no track on what they are used for:

I am informed by the Revenue Commissioners that Irish registered non-resident companies which do not carry on a trade in Ireland have no liability to Irish corporation tax and have no obligation to file an Irish corporation tax return...There is no requirement in Irish tax law for a company to claim or obtain authorisation of non-resident status from Revenue and statistics on the number of Irish registered non-resident companies are not separately compiled. As a result, Revenue does not have an estimate of the number of such companies, the numbers of such companies by country of residence or the number of such companies that have not declared a country of residence.

In the Finance Act 2013 there was a response to Apple's claims that income routed through its Irish shell companies was "stateless" for tax purposes but what is required is the abolition of these shell companies.

While the JBS Irish shell company will not compound distortions that resulted in Ireland reporting farcical GDP growth of more than 26% in 2015, Ireland should not be providing tax haven entities which are subject to Irish law but not subject to regulation anywhere.