Google avoids tax with ?Double Irish Dutch Sandwich? ? The Register
We've all heard about this scheme, which is essentially used to avoid paying Irish corporate tax.
In the example given in the article, when an Australian company pays for Google services, they actually pay to Google Ireland. Then, Google Ireland pays royalties to its parent company in Holland - meaning Google Ireland's profits are reduced on paper and they pay less tax on them. Then the Dutch company pays the money back to another Google-owned Irish company, which then pays it on to Barbados.
It sounds like it would be very easy to fix this by charging tax on the profits sent to Barbados. How much revenue does Ireland lose by allowing this to continue?Under Dutch law, and because EU member countries do not charge withholding taxes on transfers within the EU, the transfers to and from the Netherlands are essentially tax free.
And under Irish tax law, the second Irish resident subsidiary is not taxed on the royalty payment because it is controlled by managers elsewhere.