Taxation Maximization

The End of the Double Irish

Google HQ in Ireland_Bloomberg_cut
Google's Europe HQ in Dublin.
  • Why it matters

    Why it matters

    Ireland has built its economy on the presence of foreign multinationals. Now it has given in to pressure to close tax loopholes that allowed these companies to keept their tax liablities to a minimum.

  • Facts


    • Ireland announced on Tuesday it was ditching the Double Irish loophole.
    • Ireland’s corporate tax rate is 12.5 percent.
    • Big tech companies like Google, Apple, Facebook and LinkedIn have their European headquarters in Ireland.
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It was a funeral without much pomp. As he delivered Ireland’s budget on Tuesday, Finance Minister Michael Noonan threw in a line that marked the end of an era.

“I am abolishing the ability of companies to use the ‘Double Irish’ by changing our residency rules to require all companies registered in Ireland to also be tax-resident,” he said.

The Irish law, often called the  “Google Tax” or “Apple Tax” according to its most famous beneficiaries, currently allows large multinationals based there to reduce their tax liabilities by having two companies regsitered in Ireland, one of which can be tax resident in a tax haven such as Bermuda.

Many companies have also reduced their tax liablities by routing profits through a shell company in the Netherlands, through a maneuver called the “Dutch Sandwich.”

From 2015, all newly established companies in Ireland must also be a tax resident – as is common worldwide. Companies currently using the system will have until 2020 to put their affairs in order. This gives companies such as Apple and Google time to rearrange their tax systems.

Ireland has come under increasing pressure from the European Commission and the OECD, which have long called on the country to close the loophole.

James Stewart, a tax expert at Trinity College Dublin, said Noonan “had no choice,”  but to change the rules, as the international pressure on Ireland was too high. He said new OECD regulations against excessive tax avoidance and profit-shifting would have soon made the loophole unviable anyway.

Ireland has long defended its generous corporate tax rate of 12.5 percent, which has formed the cornerstone of its industrial strategy. U.S. tech industry giants including Microsoft, Intel, Apple, Facebook flocked to the Emerald Isle. While the companies say they have established beachheads  there also because of the presence of a young well-educated English-speaking workforce, it is largely thanks to the generous tax laws.

However, the tax loopholes like the Double Irish have allowed the companies to pay far lower than this rate. A U.S. Senate Committe last year claimed Apple was only paying 2 percent tax on much of its income due to its presence in Ireland.

In Apple’s case, it may have gone beyond availing of the Double Irish loophole.

The European Commission is now investigating Apple and Ireland for possible illegal state aid, based on a special tax arrangement made between the company and the country’s tax authorities in 1990.

“We welcome the fact that Ireland now took this step.”

German Finance Ministry Spokesman

Google’s Ireland office, for example, generated a turnover of about €17 billion ($22 billion) in 2013, but paid only €27.7 million corporation tax.

Other countries within the European Union have become increasingly irritated with the Double Irish, especially after the European Union bailed out Ireland after the financial crisis.

E.U. Competition Commissioner Margrethe Vestager recently described the model as “a very unpleasant arrangement.”

The United States, Britain and Germany also made it clear they were unhappy with the arrangement.  “We welcome the fact that Ireland now took this step,” a spokesman for the German Finance Minister Wolfgang Schäuble (CDU), said.

Mr. Noonan did, however, offer some concessions to the companies that will be hit by the withdrawal of the Double Irish, which together employ some 160,000 people – one-10th of the working population.

The OECD will continue to allow tax breaks on profits generated through the use of patents, and Mr. Noonan promised to make it easy for companies to seek tax breaks for research and development, and for intellectual property. The Double Irish may be ending but the Knowledge Box will take over.

Carsten Herz is Handelsblatt’s London correspondent. Donata Riedel is based in Berlin and covers finacial policies. Siobhán Dowling, an editor at Handelsblatt Global Edition, contributed to this article. To contact the authors:,,

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