After a hectic period in which every biopharma seemed to be seeking to relocate its way to a lower tax rate, the furor over who pays what and where has died down a little in recent months. But the number crunchers are still working away in the background--and in the case of Cortendo they are on the cusp of engineering a move to Ireland.
|Cortendo CEO Matthew Pauls|
If the plan comes to fruition, the Swedish-American drugmaker will add Ireland to its list of locations by having a public limited company it has set up on the Emerald Isle acquire the rest of the business. The Ireland-based operation would then become the parent company, with the business as it stands today assuming the status of a subsidiary. Cortendo could still pull out of the geographic reshuffle, but it has done the sums and sees a move to Ireland as attractive for the same reason as every other multinational: taxes.
In a release to outline the plan, Cortendo refers to "tax-efficient allocations of capital," "tax-efficient returns of capital to shareholders" and the ability to operate "more flexibly and efficiently" as the motivations for the move. Over the past year, Ireland has attempted to dispel the impression that it is a tax haven--notably by committing to phasing out the "Double Irish" scheme--but it still wants to use its rates as a way to attract businesses. The phasing out of the Double Irish scheme coincided with a reaffirmation of Ireland's commitment to a 12.5% tax rate and outlining of a patent box plan.
Sweden has lowered its corporate tax rate in recent years, but it still stands at almost 10 percentage points more than the figure in Ireland, a difference that gives companies a strong incentive to relocate. Cortendo is already a fairly global biotech given its small stature. The company has moved its center of gravity from Sweden to the U.S. over the past year as it prepares to go public on Nasdaq and possibly bring a drug to market. Cortendo is working on a Phase III trial in patients with Cushing syndrome, an indication for which the U.S. is the biggest market.
- read the release