Drugmaker Perrigo is considering shelving expansion plans in Ireland after tax authorities slapped the company with a €1.6 billion demand, a person familiar with the matter said.

While no final decision has been made, the issue has prompted the company to review plans to add jobs in Dublin, according to the person, who asked not to be named because the matter is private.

Perrigo’s operational base is in Michigan, and about 180 people are employed in Ireland.

The company last year leased new space for its corporate headquarters in Dublin’s city centre, which is in the final stages of construction, and was considering hiring more staff in the city. Murray Kessler, who became chief executive officer in October, said this week it was possible the company may move its headquarters back to the United States.

“It is hard to run a US customer-service organisation with probably the most complex product portfolio of any consumer goods company in America and do it from the other side of the ocean without the technology available to do it,” Kessler said at a JPMorgan Chase & Co Healthcare conference on Tuesday.

After buying Irish biotechnology firm Elan six years ago, Perrigo moved its base to Dublin to take advantage of lower federal tax rates.

The company said last month that Irish authorities hit the company with the assessment, the second-biggest in the State’s history, stemming from the 2013 sale to Biogen of intellectual property tied to Tysabri, a treatment for multiple sclerosis.

Perrigo shares plunged 29 per cent after the demand was disclosed.

Tax Disputes

US companies operating in Ireland have been entangled in a series of tax disputes. Analog Devices is battling an assessment that the chipmaker says could materially hurt earnings. Apple and Ireland are both fighting a European Union ruling that the company should pay €13 billion in back taxes to the State.

Perrigo treated payments from the asset sale as trading income, which is taxed at 12.5 per cent. Irish authorities say it should be treated as “chargeable gains” and taxed at 33 per cent.

The drugmaker is fighting the case, and it may take years to reach a final settlement.

The debacle is “the last thing the company needs, given it adds weight to already low sentiment that stems from growth struggles, an ill-timed spinoff of its prescription-drug unit and drug price-fixing probes,” Bloomberg Intelligence analysts Curt Wanek and Andrew Silverman said in a note earlier this month.

When Perrigo purchased Elan, it said that moving domicile to Ireland would result in more than $150 million of recurring after-tax annual operating expense and tax savings.

The company declined to comment on halting possible expansion plans in Dublin. – Bloomberg