Ireland Considers changes on Corporate Tax
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.
“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.
The Organization for Economic Cooperation and Development has said that one goal of its recommended changes to tax laws is to end so-called cash-box arrangements that allow companies to shift profits to tax havens.
The Irish government has bristled at the pressure. “Any changes to Ireland’s taxation system is a decision to be taken by government as part of the budgetary process,” a spokesman for the Irish finance ministry said, adding that the new budget is due Tuesday.
Companies are already considering possible changes to corporate structure, tax experts said. Those could involve closing subsidiaries or shifting where they house their intellectual property. “We’ve been working with client companies” to figure out “what their options might be,” said Anna Scally, a tax partner at KPMG Ireland.