The double Irish Dutch sandwich is a tax avoidance scheme used by multinational companies. Under this scheme, a company sets up two subsidiaries in Ireland: a holding and operating Irish company. The holding company registers in a tax haven, which allows it to avoid paying taxes on its profits.
The double Irish with a Dutch sandwich is a tax avoidance technique employed by certain large corporations. The scheme involves sending profits first through one Irish company, then to a Dutch company and finally to a second Irish company headquartered in a tax haven.
The Irish State, and its advisors, have refuted the tax haven label by invoking the 1998 OCED definition of a "tax haven" as the consensus definition: No or nominal tax on the relevant income; Lack of effective exchange of information; (with OECD) Lack of transparency; (with OECD)
In fact, the tax treatment in Ireland enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire EU Single Market. This is due to Apple's decision to record all sales in Ireland rather than in the countries where the products were sold.
Conviction on indictment: Fine not exceeding€126,970 or, at the discretion of the court, to imprisonment for a term not exceeding 5 years (or both).
How many years does a Revenue audit cover? An audit will generally focus on one year and not necessarily on all tax heads. However, Revenue is legally entitled to go back four years in selecting a period for audit and even further if it believes there is fraud or neglect by the taxpayer.
Revenue will always investigate and challenge tax avoidance schemes and will litigate cases up to the appropriate court if necessary. If you enter into a tax avoidance scheme you are exposing yourself to significant costs, often greater than the potential tax advantage.
Tech giant Google Ireland agreed a €218 million tax settlement with Revenue this year, according to documents just filed. This formed part of its total corporate tax bill of €622 million, which is detailed in its 2020 financial accounts.
The double Irish allows companies to collect profits through one Irish unit that actually employs people in Ireland and is tax resident there, then route those profits to a second Irish subsidiary that claims tax residency in a low-tax island such as Bermuda, Grand Cayman or the Isle of Man.
Image Credits: Netflix
While Netflix historically allowed you to sign up for the service on your iPhone, it ditched the iTunes billing in 2018 to avoid paying the commission. Instead, Netflix's iOS app just provided a sign-in option with no in-app process or link to its website for creating your account.
You may not have to pay Income Tax if you or your spouse or civil partner are aged 65 or over. This applies if you are single, married, in a civil partnership or widowed. Your total income must be less than, or equal to, the exemption limits. This exemption applies to Income Tax only.
Ireland is referred to as a tax haven because of the country's taxation and economic policies. Legislation heavily favors the establishment and operation of corporations, and the economic environment is very hospitable for all corporations, especially those invested in research, development, and innovation.
Ireland ranked 36th¹ out of 38 OECD countries in terms of the tax-to-GDP ratio in 2021. In 2021, Ireland had a tax-to-GDP ratio of 21.1% compared with the OECD average of 34.1%. In 2020, Ireland was ranked 35th out of the 38 OECD countries in terms of the tax-to-GDP ratio.
Regardless of where it is based, Irish tax law and the double taxation agreement with Australia stipulate that it is responsible in that country for all taxes due on the rental income of an Irish property. Essentially, the property is taxed in the country where it is located, not where the owner is located.
If you worked in Ireland for part of the year and you have now gone to live abroad, you may be due a refund of tax. To claim a refund: log into PAYE Services within myAccount and select 'Claim unemployment repayment'.
Tax implications of owning a second home in Ireland
Namely the vacant homes tax will apply to people in this situation. The vacant homes tax will apply to any residential properties which are occupied for less than 30 days in a 12-month period. You should fully investigate the tax implications of buying a second home.
High Quality of Life
Ireland is among the best countries to live in worldwide based simply on the quality of living the country provides its residents. It is a leader in developed, free countries, and the quality of healthcare is highly prized.
Location. Location is another important reason why Google set up its headquarter outside US. Ireland is one of the most open and globally connected countries in the world. Dublin is considered to be an attractive location for multinational workforce as it is the key gateway to Europe, Middle East and the USA.
Google moved €19.9bn ($22.7bn) through a Dutch shell company to Bermuda in 2017, as part of an arrangement that allows it to reduce its foreign tax bill, according to documents filed at the Dutch chamber of commerce.
While the Google Australia P&L shows tax expense on profit of $366m for 2022, the cash-flow statement shows actual tax paid almost halving from $86m to $45m. And bear in mind that profit – not even taxed at 30% corporate rate – is calculated on a dodgy revenue number of $1.95b.
But if you take a longer-term view, you'll see these five countries have a mixed historical record of sovereign default over the last 200 years, with Ireland never defaulting on its obligations and Italy only once during a seven-year period in World War II.
These lower effective tax rates are achieved by a complex set of Irish base erosion and profit shifting ("BEPS") tools which handle the largest BEPS flows in the world (e.g. the Double Irish as used by Google and Facebook, the Single Malt as used by Microsoft and Allergan, and Capital Allowances for Intangible Assets ...
Whilst tax evasion is illegal, tax avoidance is not. Tax evasion is the illegal practice of not paying taxes by not paying the taxes owed; reporting taxes that are not allowed legally; and not reporting income. It can apply to employment taxes, sales taxes, and income taxes.
The main tax incentives in Ireland are: 12.5% corporation tax rate on active business income. A 25% credit on qualifying R&D expenditures; total effective tax deduction of 37.5%. Ability to exploit IP at favourable tax rates.
Nearly all income is liable to tax. Tax on income that you earn from employment is deducted from your wages by your employer on behalf of Revenue. This is known as Pay As You Earn (PAYE). The amount of tax that you have to pay depends on the amount of the income that you earn and on your personal circumstances.