Medtronic Ventor pays $150 million toward Israeli tax dispute
The payment is part of an $270 million demand over intellectual property transferred abroad following Medtronic’s acquisition of the Israeli company.
Medtronic Ventor, the wholly owned Israeli subsidiary of U.S. medical device giant Medtronic, has paid approximately NIS 450 million ($150M) to the state treasury during July and August as part of a major tax dispute over intellectual property transferred abroad.
The payment is part of the NIS 810 million ($270M) demanded by the Tax Authority following a 2023 Central District Court ruling that found Ventor had transferred its intellectual property out of Israel without paying the taxes due on it. The ruling also led to liens being imposed on the company.
The payment was disclosed during a Supreme Court hearing on Tuesday, where Medtronic Ventor is appealing the district court ruling.
According to the hearing transcript, the parties remain in dispute over approximately NIS 360 million ($120M) of the demand. The amount consists of indexation, interest and penalties, and the state and the company are expected to continue negotiations over the remaining debt.
The dispute dates back to Medtronic's acquisition of Ventor, an Israeli medical device company founded in 2004. Its flagship product was an aortic valve that could be implanted through the chest wall, eliminating the need for open-heart surgery.
Medtronic acquired the company in 2009 for $325 million. Ventor continued operating in Israel for several years after the acquisition as Medtronic's local R&D center, but in April 2012 the company decided to shut down the development center and end its R&D operations in Israel.
Ventor nevertheless continued to generate royalty income from its patents for several years after the closure. According to information presented at Tuesday's hearing, that income totaled at least NIS 360 million ($120M).
The tax dispute centers on what happened to Ventor's intellectual property following Medtronic's acquisition.
In a ruling issued in June 2023, Central District Court Judge Shmuel Bornstein determined that Ventor should be treated as having transferred all of its assets to its parent company immediately after the 2009 share acquisition. According to the ruling, Ventor did so without receiving full consideration for the intellectual property beyond the payment made for its shares.
