Multinationals Gird for Possible ‘Double Irish’ Changes; Google, Facebook Would Be Affected
Multinational companies are bracing for their last serving of the “Double Irish.”
Ireland is expected on Tuesday to announce changes to its tax code that could eventually close one of the world’s most famous corporate-tax loopholes, dubbed the Double Irish, after heavy pressure from governments and the European Union, tax experts say. Already, companies particularly in the technology and pharmaceutical sectors are setting up battle plans to cope with potential changes.
“A lot of companies are starting to plan now,” said Francesca Lagerberg, global leader for tax services at Grant Thornton International. “You can’t afford to wait.”
The Double Irish uses a twist in Irish laws to funnel royalty payments for intellectual property from one Irish-registered subsidiary to another that resides for tax purposes in a country with no corporate income taxes. It is often paired with a related tax structure that planners call the “Dutch Sandwich,” which uses a Netherlands-based structure to avoid certain taxes. The Double Irish structure allows companies to legally shift billions of euros in profit to tax havens each year.
Companies using the structure or variants include Google Inc., Facebook Inc.FB -3.95% and cloud-computing firm VMware Inc., VMW -2.44% according to corporate filings. Google and Facebook have said they pay all the taxes they owe. VMware declined to comment.