Example of a tax minimization technique, called “double Irish with a Dutch sandwich”


Example of a tax minimization technique, called “double Irish with a Dutch sandwich”

The double Irish with a Dutch sandwich is a tax avoidance technique employed by large corporations, such as Google, Apple and Microsoft. This construction is called double Irish because two Irish companies are used in the arrangement. It involves the use of a combination of Irish and Dutch subsidiary companies to shift profits to low tax jurisdictions. One of the Irish companies is tax resident in a tax haven, such as the Cayman Islands or Bermuda. The double Irish with a Dutch sandwich’s essence is to send profits first through one Irish company, then to a Dutch company and finally to a second Irish company headquartered in a tax haven (the ultimate owner of the intellectual property).


  1. An industrial company pays an IT-company for software to be used in Germany.
  2. The IT-company sends the money to its first subsidiary in Ireland, which holds the  IP.
  3. The tax payable in Ireland is 12.5 percent. As the Irish company pays a royalty to a Dutch subsidiary, it gets an Irish tax deduction. The activities of the Dutch licensing company primarily consist of receiving royalties from or on behalf of group companies. The Dutch company is typically not the owner of intellectual property rights, but it only obtains a license from a group company which it then sub-licenses to other parties.
  4. The Dutch company pays the money to the second Irish subsidiary that is tax resident in a tax haven. There is no withholding tax on inter-EU transactions and The Netherlands do not levy any transfer taxes with regard to the transfer of intellectual property.
  5. The owner of the IP is a group company. In order to avoid a high tax burden at the level of the owner of the IP, it is quite common that the company which owns the IP (and thus receives royalties from the Dutch company) is established in a jurisdiction which levies no or only few taxes over the IP income (tax haven). The Dutch tax system allows an easy transit of royalties to a tax haven company. The profits can thus land in an overseas zero-tax haven where they are stored for years.

Under the new Irish tax rules, companies not already operating in Ireland may not use the “Double Irish” technique as of January 2015. The companies that already use this technique have until 2020 to find another arrangement. They have to look for a replacement for Ireland, which is not so hard to find.