Double Irish with a Dutch sandwich ( English Double Irish Dutch Sandwich , sometimes Double Irish whiskey with a Dutch sandwich ) is a popular scheme in the USA for optimizing tax obligations by using two Irish and one Dutch company. Irish companies act as "bread", and between them is a Dutch company, like "cheese" or "sausage."
This optimization structure is used primarily by large US corporations in relation to the optimization of income from intellectual property.
The scheme allows you to significantly reduce taxes, both in the United States and in the states of origin of income.
Content
- 1 Scheme structure
- 2 Similar schemes
- 2.1 Double Irish
- 2.2 Cyprus
- 3 Application
- 4 See also
- 5 notes
- 6 References
Scheme Structure
Three companies are being created for the Double Irish with Dutch Sandwich scheme. The company using the scheme transfers its intellectual property to an affiliated company (No. 1), registered in Ireland but a tax resident of any offshore zone. The second company is created in the Netherlands and sublicenses the intellectual property rights of the first company. Then the third company, which is a tax resident of Ireland, sublicenses the rights of the Dutch company. [one]
Due to the nature of Dutch tax laws and international agreements, such sublicensing and payments are not taxed.
Company No. 3 is often a 100% subsidiary of company No. 1. The same company also conducts real business in various countries, sending almost all the profits through the Dutch company (No. 2) in the form of royalties .
Similar schemes
Double Irish
The Double Irish scheme uses two Irish companies. The first one is offshore, which owns intellectual property rights. This company is registered as a tax resident in an offshore zone , for example in the Cayman Islands or in Bermuda. According to Irish tax laws, a company is a tax resident of the country from which it is managed, so an Irish company may not be a tax resident of Ireland. The first company licenses for a large amount of the rights of the second company, which is a tax resident of Ireland. The second company receives income from the use of rights in various countries (except the USA), but only the difference between royalties and income is taxed. This difference is subject to a tax of 12.5%.
On October 14, 2014, The Independent reported that Irish finance minister Michael Noonan ruled out the possibility of applying a “controversial” “double Irish” tax scheme by changing corporate tax residency rules. Non-resident companies registered in Ireland must switch to other taxation schemes by 2020, and new companies by January 1, 2015. [2]
Cyprus
With regard to Russian reality, the main tool for optimizing the income from intellectual property is the use of companies of the Republic of Cyprus. Starting January 1, 2012, eighty percent income tax exemption (Income Tax) is granted for intellectual property income in Cyprus. Thus, the effective tax rate is 2.5%.
Application
Some large companies used the double irish or double irish with dutch sandwich schemes:
- Adobe Systems [3]
- Apple [4] [5]
- Eli Lilly and Company [3]
- Facebook [6]
- Forest Laboratories [3]
- General Electric [6]
- Google [3] [6] [7]
- Johnson & Johnson [6]
- Microsoft [3]
- Nederlandse Spoorwegen [8]
- Oracle [3]
- Pfizer [3]
- Starbucks [6]
See also
- Asset keeper
Notes
- ↑ Companies will be left without a “Dutch sandwich” // RBC, 01/24/2013
- ↑ Ireland abolishes controversial "double Irish" tax rule . The Independent (October 14, 2014). Date of treatment October 18, 2014.
- ↑ 1 2 3 4 5 6 7 Chitum, Ryan (2007). “How 60 billion are lost in tax loopholes”, Bloomberg.
- ↑ Charles Duhigg . How Apple Sidesteps Billions in Global Taxes (April 28, 2012). Dates April 29, 2012. "In the late 1980s, Apple was among the pioneers in creating a tax structure - known as the Double Irish - that allowed the company to move profits into tax havens around the world ...".
- ↑ Double Irish with an apple. The US Senate suspected Apple of tax evasion . Lenta.ru (May 23, 2013). Archived May 24, 2013.
- ↑ 1 2 3 4 5 Google 2.4% Rate Shows How $ 60 Billion Lost to Tax Loopholes - Bloomberg . www.bloomberg.com . Archived May 24, 2013.
- ↑ How Google saved $ 2 billion in income tax - Times of India . www.timesofindia.com . Archived May 24, 2013.
- ↑ NS drukt belasting via Ierland (1 September 2012). Date of treatment January 17, 2013.
Links
- The tax structure of a combined double Irish and Dutch sandwich: Google in law // Russian Tax Portal, 12/14/2012
- Companies will be left without a “Dutch sandwich” // RBC, 01.24.2013
- Jane G. Gravelle, Tax Havens: International Tax Avoidance and Evasion : “Transfer Pricing”, page 11 // CRS Report for Congress, copy on FAS website, 2013-01-23
- US Companies & Their Use Of The Double Irish Dutch Sandwich // Pearse Trust 2012-06-13 - schematic diagram