Double Irish (Ireland)

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Double Irish 🇮🇪
Ireland map.png
Location: Ireland
Definition: A corporate tax optimisation strategy of shifting profits to the country with lower taxes by exploiting Ireland’s tax legislation allowing multinationals to register profits at the location of their headquarters
Keywords: Ireland Europe EU Borders Taxation Tax-avoidance Corporate informality Multinational corporation Tax haven Scheme
Author: Julia Schmalz
Affiliation: Alumna, School of Slavonic and East European Studies, University College London, UK
Website: Profile page at LinkedIn

By Julia Schmalz, Alumna, School of Slavonic and East European Studies, University College London, UK

The term double Irish refers to a tax strategy employed by multinational companies to reduce their tax liability by shifting profits to a country with a lower-tax legislation. To increase profits, companies, mostly in technology and pharmaceutical sectors, implement the double Irish to take advantage of the Irish system of territorial taxation and absence of transfer pricing. The double Irish strategy requires two Irish subsidiaries and draws on an exemption particular to Irish taxation law that allows companies registered in Ireland to be taxed where their management is located. The territorial taxation regime permits the Irish subsidiaries to incorporate in Ireland, declare their profits in tax havens, and remain in compliance with EU jurisdiction[1].

In a double Irish arrangement, the first Irish subsidiary will declare its tax residency in a tax haven such as the Cayman Islands. The subsidiary will hold the rights of the parent company’s intellectual property and license it to a second Irish subsidiary located in Ireland. The profits earned from the licensed rights would normally be taxed at the Irish tax rate of 12.5 per cent. However, the royalties paid to the Irish company in the tax haven are tax-deductible and reduce the profit subjected to taxation in Ireland to a minimum. The lax Irish policy on transfer pricing even exempts multinationals from paying fees on transferring their profits from Ireland to the tax haven. In addition, a shell company located in the Netherlands can be used to transfer profits directly to the Irish company in the tax haven, extending the scheme to a double Irish with a Dutch sandwich. As the profits of the Irish company in the Cayman Islands will be taxed according to the corporate taxation rate of this tax haven country, this strategy essentially erases the tax burden of the received royalties[1].

Although the strategy of double Irish is a legal practice within the global system of taxation, several substantial settlement payments have been made on ethical grounds. US companies using double Irish to increase their profits have come under special scrutiny of the European Union. In early 2016, Google’s parent company Alphabet Inc. settled with the UK on paying an additional £130 million in taxes[2][3]. In another prominent case, the EU Commissioner for Competition Margrethe Vestager accused Apple, a corporation registered in the US, of receiving anti-competitive state aid from the state of Ireland[4], as Apple’s main Irish operation had in 2014 paid a tax rate lower than 0.01 percent[5]. The Commission argued that Ireland had manipulated the market situation by offering Apple the possibility to channel its non-US profits through its Irish subsidiaries. As the corporation avoided taxation to a substantial extent, Vestager declared that this practice amounted to indirect state subsidies. The state of Ireland responded that it would ‘appeal before the European Courts to challenge the European Commission’s decision on the Apple State aid case’ According to the Irish government, low-taxation environments serve the need to ‘remain [...] competitive as the economy continues to grow’ while adhering to the international taxation standards, so treating them as indirect state subsidies was inappropriate[6].

Yet Ireland has recently sought to reform its tax code to better adhere to international taxation standards. The legislative action included an obligation for companies incorporated in Ireland to declare their profits as Irish tax residents and came into effect with the Irish Finance Act 2014 in beginning of 2015[7]. Corporations currently employing the double Irish were granted a transitional period to find a new business arrangement until 2020. The double Irish has attracted a lot of media attention to Ireland[8][9][10], but the setup of the Irish taxation system cannot be considered exceptional in the global context. Several countries are known for offering business-friendly tax environments to attract corporations to their jurisdictions. Tax havens, such as the Cayman Islands, have no corporate tax and represent ideal conditions for businesses to maximize their profits[11]. Within the EU, smaller countries such as the Netherlands have chosen to implement a low-tax regime or to offer similar incentives to multinationals[12].

The informal economic activity, known as tax optimisation, is often viewed negatively as ‘it denies the state revenue and [complicates the planning of] economic…fiscal and monetary policy’[13]. In the UK, estimated tax revenues lost from the 700 largest corporations amounted to £12 billion in 2006[14]. Tax avoidance is a form of tax noncompliance different from tax evasion in that it systematically uses legal means to reduce tax liability. However, the line distinguishing between ‘unacceptable avoidance and legitimate mitigation’ is highly debatable[15]. The practice of double Irish underlines the intense pressure for profit maximization in international corporations and the crucial role of national tax systems and loopholes in corporate strategies.

Variations in governmental and judicial attitudes concerning the definition and implementation of anti-tax avoidance measures are partly a result of taxation systems evolving with the country’s ‘history, experience and cultural perspectives’[16]. At the same time, the double Irish scheme is also indicative of institutional competition – the conflicts between states competing for economic activity in their legislations. International pressure to limit informal economic activity and reduce the magnitude of tax avoidance has affected this institutional competition, as suggested by the agreed ending of the double Irish practice by 2020.


  1. 1.0 1.1 Darby, Joseph B. and Leamaster, Kesley. 2007. ‘Double Irish More than Doubles the Tax Savings - Hybrid Structure Reduces Irish, U.S. and Worldwide Taxation’, 15 May, Practical US/International Tax Strategies, 2-16
  2. Committee of Public Accounts. 2016. ‘Corporate tax settlements Twenty-fifth Report of Session 2015–16’, House of Commons,
  3. Brunsden, J. and Noble, J. 2016. 2016. ‘European Commission to examine Google’s UK tax deal’, Financial Times, 28 January,
  4. European Commission. 2016. Statement by Commissioner Vestager on state aid decision that Ireland's tax benefits for Apple were illegal, 30 August,
  5. Beesley, A. and Barker, A. 2016. ‘Apple tax deal: how it worked and what the EU ruling means’, Financial Times, 30 August,
  6. Department of Finance. 2016. Statement by the Minister for Finance on the Government Decision to appeal the Apple State aid decision, 2 September,
  7. Somerville, J. 2015. ‘Ireland: Irish Finance Act 2014-Double Irish Finished? How About a KDB?’, International Tax Journal,41(1): 5-8, 45
  8. Scott, M. 2016. ‘Ireland Doesn’t Want Apple’s Back Taxes, but the Irish Aren’t So Sure’, New York Times, 11 September,
  9. Reuters. 2016. ‘EU hits Apple with $14.5 billion Irish tax demand’, 30 August,
  10. Kahn, J. and Drucker, J. 2016. ‘Google Lowered Taxes by $2.4 Billion Using European Subsidiaries’, Bloomberg Technology, 19 February,
  11. PWC. 2016a. Worldwide Tax Summaries - Corporate Taxes 2016/17, Central America and The Caribbean,, pg. 63.
  12. PWC. 2016b. Worldwide Tax Summaries - Corporate Taxes 2016/17, Europe,, pg. 1490.
  13. Danopoulos, Constantine P. and Znidaric, Boris. 2007. ‘Informal Economy, Tax Evasion, and Poverty in a Democratic Setting’, Mediterranean Quarterly, 18(2): 67-84, pg. 67.
  14. Jones, B. 2015. Corporate Power and Responsible Capitalism? Towards Social Accountability. Cheltenham and Northampton: Edward Elgar, pg. 110.
  15. Tax Law Review Committee. 1997. Tax Avoidance: A Report by the Tax Law Review Committee. London: Institute for Fiscal Studies, pg. 3.
  16. Tax Law Review Committee. 1997. Tax Avoidance: A Report by the Tax Law Review Committee. London: Institute for Fiscal Studies, pg. 17.