MDT Medtronic PLC

By Jeanne Whalen 

In a sign of how Medtronic PLC is benefiting from moving its headquarters to Ireland from the U.S., the medical-device company said it is paying $500 million in U.S. income tax on $9.8 billion of cash and investments that it has transferred to the U.S. from its overseas subsidiaries.

That amounts to a 5% U.S. tax rate on the money. For U.S.-based companies, profits earned overseas are subject to the 35% U.S. corporate tax rate when repatriated to the U.S.

Medtronic said it is transferring the money after completing an "internal restructuring" in the wake of its acquisition of Dublin-based Covidien PLC earlier this year. That acquisition allowed Medtronic to move its headquarters from Minneapolis to Dublin, a so-called tax inversion move aimed at lowering the company's tax burden.

U.S. Treasury officials didn't immediately respond to a request for comment.

In a securities filing after the U.S. market's close, Medtronic said it moved the $9.8 billion out of its overseas subsidiaries. Medtronic spokesman Fernando Vivanco said the company moved the money to the U.S.

Medtronic said it would take a $500 million charge in the second quarter of the company's current fiscal year in relation to the move, primarily to cover U.S. income tax. "We're paying about $500 million in taxes to the U.S. Treasury to allow us to use these dollars in the U.S.," Mr. Vivanco said.

In its filing, Medtronic said it plans to use the cash to meet its financial goals, including pursuing "financially disciplined" mergers and acquisitions, reducing its debt to Ebitda ratio, and returning free cash flow to shareholders through dividends and share buybacks.

Write to Jeanne Whalen at jeanne.whalen@wsj.com

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(END) Dow Jones Newswires

September 28, 2015 19:59 ET (23:59 GMT)

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