What Is the Double Irish Tax Strategy and How Does It Work?

Learn how the Double Irish tax strategy helps multinational companies reduce taxes by routing profits through Irish subsidiaries and tax havens.

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The Double Irish arrangement is a tax strategy that some multinational corporations use to reduce their tax liabilities. By exploiting differences in the tax laws of different countries, a company can shift profits through two Irish companies to a tax haven. The first Irish company holds the intellectual property and licenses it to the second, which then re-licenses it to global subsidiaries, funneling profits to jurisdictions with lower taxes. This strategy, while legal, has faced significant scrutiny and has been subject to policy changes aimed at closing such tax loopholes.

FAQs & Answers

  1. What is the Double Irish tax strategy? The Double Irish tax strategy is a method used by multinational companies to reduce tax liabilities by routing profits through two Irish subsidiaries and then to tax havens, exploiting differences in tax laws.
  2. Is the Double Irish tax scheme legal? While the Double Irish strategy is legal, it has faced significant scrutiny and many countries have implemented laws to close these tax loopholes.
  3. Why did companies use two Irish companies in this tax strategy? Companies use two Irish companies—one holding intellectual property and licensing it to the other—to shift profits through jurisdictions with lower taxes, minimizing overall tax payments.
  4. Has the Double Irish tax loophole been closed? Many tax jurisdictions, including Ireland, have introduced policy changes aimed at closing the Double Irish tax loophole to prevent profit shifting and tax avoidance.

Watch More

For further insights on international tax tactics and how governments are responding to corporate tax avoidance, explore our videos on the 'Single Malt' tax strategy and the global crackdown on tax havens.

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