Trend Micro revenues fall by €64m, with tax changes blamed

Revenues at the Cork-based arm of anti-virus software firm Trend Micro plummeted by €64.4m last year. Changes in the global tax environment contributed to the decline.

ew accounts lodged by Trend Micro EMEA Ltd show that revenues at the company declined by 24.5pc, from €261.96m to €197.52m, in the 12 months to the end of last December.  

During the same period, pre-tax profits increased by 154pc from €2.83m to €7.2m at the Japanese-headquartered company.

Directors for the company’s EMEA (Europe, Middle East and Africa) business explained: “Given the changes in the global tax environment, Trend Micro has reviewed its European operating structure and, from January 1, 2021, moved to a limited risk distributor (LRD) model from the previous commissionaire structure.”

The directors say that up to January 1, 2021, Trend Micro EMEA operated as principal for the European region.

They add that it transacted with related party commissionaire entities for the sale and distribution of internet security products within most material territories in Europe.

Under the new structure, Trend Micro EMEA remains a principal for its branch entities and acts as the master LRD within Europe.

However, the directors state: “It no longer acts as principal for the most material territories in Europe – Germany, France, the UK and Italy – and the Trend Micro legal entities within these countries now also operate as LRDs under the new structure.

“There is a desire to ensure consistency across the group in relation to remuneration for subsidies and branches where they have undertaken similar activities.”

They added: “The major focus is to reduce risk in operating in Europe with this new model and to align with global tax strategy.”

The directors state that revenues decreased due to the change in operating structures, while profits increased by 154pc due to the change in operating structure and other operating factors.

The number of people employed in the business last year increased from 442 to 448 and staff costs increased from €45.79m to €49.34m.

A breakdown of employment figures show that 175 were employed in sales and marketing, 261 in ‘other’ and 12 in human resources.

The staff costs included share-based payments of €714,000.

Pay to directors last year totalled €1.38m. This was made up of emoluments of €1.01m; €208,000 under long-term incentive schemes; €120,000 in termination payments and €36,000 in pension contributions. 

The company’s after-tax profits last year totalled €5.3m after paying corporation tax of €1.89m.

The corporation tax bill was more than twice as high as it had been in 2020, when Trend Micro paid out €864,000.

The chief factor for this was €903,000 paid out under the heading of ‘foreign tax’, compared to €504,000 paid out in foreign tax in 2020.

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