06 January 2019

Mommy, what's a "double Irish, Dutch sandwich"?

"The double Irish with a Dutch sandwich is a tax avoidance technique employed by certain large corporations, involving the use of a combination of Irish and Dutch subsidiary companies to shift profits to low or no tax jurisdictions. The scheme involves sending profits first through one Irish company, then to a Dutch company, and finally to a second Irish company headquartered in a tax haven. This technique has made it possible for certain corporations to reduce their overall corporate tax rates dramatically."
Example provided by Reuters:
AMSTERDAM (Reuters) - Google moved 19.9 billion euros ($22.7 billion) through a Dutch shell company to Bermuda in 2017, as part of an arrangement that allows it to reduce its foreign tax bill, according to documents filed at the Dutch Chamber of Commerce...

The subsidiary in the Netherlands is used to shift revenue from royalties earned outside the United States to Google Ireland Holdings, an affiliate based in Bermuda, where companies pay no income tax.

The tax strategy, known as the “Double Irish, Dutch Sandwich”, is legal and allows Google to avoid triggering U.S. income taxes or European withholding taxes on the funds, which represent the bulk of its overseas profits. 
Google responds that they comply with tax laws.  True.


  1. This should be banned.

    I don't mind paying taxes. In fact, I am happy to pay my fair share. I deeply value the stuff my tax money goes to: public education, health care, infrastructure, local safety and national defense. I just want to see others pay as well.

    Google would not exist without public education for their employees. Google would not exist without public investment in internet access. Google would not exist without the ability for others to put stuff on the web, so they can make it searchable.

    Google needs to pay its share.

  2. The problem isn't (just) that Google does it, the problem is that all the major corporations do it.
    Do business in the US, pay taxes on that income. Just like the little guys.

  3. Hmm... a couple of notes on this. First, this was a strategy not to avoid paying taxes to a country the money had been spent in (or earned in) but to avoid paying taxes on the transfer of funds from one country to another. Let's take for example, Acme company that sells cell phones. They register their main European country in Ireland (corp tax rate 12.5%), but sell phones all over Europe, including say France (corp tax rate 34.5%). Acme France pays taxes in France. If they transfer their profits to Acme Ireland, they also pay 12.5% in taxes on the "earnings" to Acme Ireland. If the funds are desired to go to Acme UK which is investing into a server farm and infrastructure in the UK, this mechanism would allow them to transfer the funds to Acme UK without paying that 12.5% in intermediate taxes, on top of the taxes in the country it was generated in.

    As it is, the Irish finance minister, in the 2015 budget, passed measures to close the loopholes and effectively end the use of the double Irish with a Dutch sandwich for new tax plans. Business deals already in work have this year and part of next year to wind them down, but the loophole here has been closed.


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