Double Irish With A Dutch Sandwich


When it comes to international tax planning, companies often employ complex strategies to minimize their tax liabilities. One such strategy that has gained notoriety is the “Double Irish with a Dutch Sandwich.” This technique allows multinational corporations to exploit loopholes in tax laws and significantly reduce their tax burden. In this article, we will delve into the intricacies of this strategy, understand how it works, and explore its implications.

Understanding the Double Irish with a Dutch Sandwich

The Double Irish with a Dutch Sandwich is a tax avoidance strategy used by multinational corporations to shift profits to low-tax jurisdictions. It involves creating two Irish subsidiaries and a Dutch intermediary company. The profits are routed through these entities, taking advantage of the favorable tax laws in Ireland and the Netherlands.

Here's how the strategy works:

  1. The company establishes an Irish subsidiary (IrishCo1) in a low-tax jurisdiction like Ireland, which has a corporate tax rate of 12.5%.
  2. The company then transfers its intellectual property (IP) rights to IrishCo1. This allows IrishCo1 to charge royalties or licensing fees to other subsidiaries or customers.
  3. IrishCo1 licenses the IP rights to another Irish subsidiary (IrishCo2) for a higher price than the cost of production. This creates a deductible expense for IrishCo2, reducing its taxable income.
  4. IrishCo2, in turn, sells the products or services to customers outside of Ireland, generating revenue.
  5. To further reduce the tax liability, IrishCo2 transfers a portion of its profits to a Dutch intermediary company (DutchCo) through a series of internal transactions.
  6. DutchCo, being located in the Netherlands, benefits from the country's extensive tax treaty network and favorable tax regime.
  7. Finally, DutchCo transfers the remaining profits to a tax haven or low-tax jurisdiction, where the tax liability is minimal or non-existent.

Benefits and Implications

The Double Irish with a Dutch Sandwich strategy offers several benefits to multinational corporations:

  • Tax Minimization: By exploiting the differences in tax rates between Ireland, the Netherlands, and tax havens, companies can significantly reduce their overall tax burden.
  • Profit Shifting: This strategy allows companies to shift profits from high-tax jurisdictions to low-tax jurisdictions, where they can be retained or reinvested.
  • Confidentiality: The use of intermediary companies in tax havens provides an additional layer of confidentiality, making it difficult for tax authorities to trace the flow of funds.

However, the Double Irish with a Dutch Sandwich strategy has faced criticism due to its implications:

  • Tax Revenue Loss: Governments lose out on significant tax revenue as companies exploit loopholes to minimize their tax liabilities.
  • Unfair Competition: Small and medium-sized enterprises (SMEs) often lack the resources to employ such complex tax strategies, putting them at a disadvantage compared to multinational corporations.
  • Public Backlash: The use of aggressive tax planning techniques can damage a company's reputation and lead to public backlash.

Case Studies

Several high-profile companies have utilized the Double Irish with a Dutch Sandwich strategy to minimize their tax liabilities. One such example is Google, which employed this technique to reduce its tax payments by billions of dollars.

In 2018, Google announced that it would no longer use the Double Irish with a Dutch Sandwich strategy, following increased scrutiny and changes in tax laws. However, the company had already accumulated significant tax savings through this method.

Another notable case is Apple, which faced a European Union (EU) investigation into its tax practices. The EU ruled that Ireland had granted illegal state aid to Apple by allowing it to use the Double Irish with a Dutch Sandwich strategy. As a result, Apple was ordered to pay €13 billion in back taxes.

Regulatory Changes and Future Outlook

Due to the widespread use of aggressive tax planning techniques like the Double Irish with a Dutch Sandwich, governments and international organizations have taken steps to address these issues.

In recent years, there has been a global push for tax transparency and the closing of tax loopholes. The Organisation for Economic Co-operation and Development (OECD) has introduced the Base Erosion and Profit Shifting (BEPS) project, which aims to combat tax avoidance by multinational corporations.

Furthermore, countries like Ireland and the Netherlands have implemented changes to their tax laws to prevent the abuse of these strategies. Ireland, for instance, phased out the Double Irish structure in 2015, making it less attractive for companies to employ this technique.


The Double Irish with a Dutch Sandwich strategy has allowed multinational corporations to significantly reduce their tax liabilities by exploiting loopholes in tax laws. While it offers benefits such as tax minimization and profit shifting, it has also faced criticism for its implications, including tax revenue loss and unfair competition.

However, regulatory changes and increased scrutiny have led to a decline in the use of this strategy. Governments and international organizations are working towards closing tax loopholes and promoting tax transparency. As a result, multinational corporations are now facing stricter regulations and increased tax scrutiny.

It is crucial for companies to stay informed about changes in tax laws and ensure compliance with the evolving regulatory landscape. By doing so, they can navigate the complexities of international tax planning while maintaining their reputation and contributing to the societies in which they operate.

Leave a Reply