Medtronic Venture Pays $90 Million in Tax Dispute

Medtronic Venture, the Israeli subsidiary of U.S. medical device giant Medtronic, has paid approximately 450 million shekels (about $90 million) to the Israeli Tax Authority in July and August. This payment is part of an 810 million shekel tax demand stemming from a 2023 court ruling that found the company had transferred its intellectual property abroad without paying the required taxes. The company appealed this ruling.

During a Supreme Court hearing on the appeal, it was revealed that after these payments, a dispute remains between Medtronic Venture and the Tax Authority over an additional 360 million shekels, which includes linkage, interest, and penalties. Both parties have agreed to continue negotiations regarding the remaining debt.

Medtronic Venture, founded in 2004, is known for its aortic valve replacement product, which can be implanted without open-heart surgery. In 2009, the global Medtronic acquired its Israeli subsidiary for $325 million. Following the acquisition, Venture continued to operate in Israel as the parent company's R&D center until its closure in April 2012.

Even after closing its R&D operations, Venture continued to generate royalty income from its patents for several years. The court ruling in June 2023, by Judge Shmuel Bornstein of the Central District Court in Lod, determined that Venture had effectively transferred its assets, including intellectual property, to its parent company immediately after the share acquisition without full tax payment on the IP, beyond the share purchase itself.