This is a famous tax avoidance strategy adopted by renowned multinationals like Apple, Google etc. This unique arrangement will leave you amazed and it is also very informative. It tells us about the loop holes in the legal systems which are sometimes utilised by business entities to increase profits.

1. DOUBLE IRISH ARRANGEMENT
WITH DUTCH SANDWICH
Tax Avoidance Strategy

2.  As the name suggests, it is completely legal
and thus, it is tax avoidance.
 Companies transfer IP to Irish subsidiary and
then transfer the royalties earned to an
Caribbean entity because Caribbean nations
are tax havens
 PopularTech companies are the ones
involved.
 Eg. Google,Apple,

3. Setting the stage
 Company incorporated in Ireland will be
treated as resident in Ireland for tax purposes.

4. Setting the stage
 Company incorporated in Ireland will be
treated as resident in Ireland for tax purposes.
 Exception for a relevant company

5. Setting the stage
 Company incorporated in Ireland will be
treated as resident in Ireland for tax purposes.
 Exception for a relevant company
 Relevant company: Company that is
ultimately controlled by persons resident in
the EU or in a country with which Ireland has
concluded a double taxation treaty.

6.  US has a double-taxation treaty with Ireland

7. Why Ireland
 low corporate tax rate,
 favorable tax treaties that limit the tax on
transactions between subsidiaries,
 and a well-educated and English speaking
workforce.

8. Why Dutch
 Ireland does not tax money being transferred
among the EU
 Neither Netherlands levy any such tax and
only charges a small amount of fee for using
its tax system.
 This allows the royalty payments to be
transferred to the first Irish company virtually
tax free except of the fee charged.

9.  Apple Inc.
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10.  Apple Inc.
 Sets up a subsidiary in Ireland named Apple
Irish Co.
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11.  Apple Inc.
 Sets up a subsidiary in Ireland named Apple Irish
Co.
 Apple Irish Co. sets up Apple Dutch Subsidiary in
Netherlands
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12.  Apple Inc.
 Sets up a subsidiary in Ireland named Apple Irish
Co.
 Apple Irish Co. sets up Apple Dutch Subsidiary in
Netherlands
 Apple Dutch Subsidiary sets up Irish SubC Co. in
Ireland
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13. Transactions
 Apple Inc. will give Intellectual Property for
eg. Copyrights to Apple Irish Co.
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14. Transactions
 Apple Inc. will give Intellectual Property for
eg. Copyrights to Apple Irish Co.
 Apple Irish Co. will give royalty fees in return.
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15. Transactions
 Apple Inc. will give Intellectual Property for
eg. Copyrights to Apple Irish Co.
 Apple Irish Co. will give royalty fees in return.
 The Apple Irish Co. will then license the
intellectual property rights to Apple Dutch
Subsidiary in return for some substantial
royalty payments.
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16. Transactions
 Apple Inc. will give Intellectual Property for eg.
Copyrights to Apple Irish Co.
 Apple Irish Co. will give royalty fees in return.
 The Apple Irish Co. will then license the
intellectual property rights to Apple Dutch
Subsidiary in return for some substantial royalty
payments.
 Apple Dutch Subsidiary again sells the rights to
Irish SubC Co. and gets payment in return
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17. Transactions
 Apple Inc. will give Intellectual Property for eg.
Copyrights to Apple Irish Co.
 Apple Irish Co. will give royalty fees in return.
 The Apple Irish Co. will then license the intellectual
property rights to Apple Dutch Subsidiary in return
for some substantial royalty payments.
 Apple Dutch Subsidiary again sells the rights to Irish
SubC Co. and gets payment in return
 Irish SubC Co. will then receive income from the use
of the licensed assets in countries outside the US.
Image

18.  The transfer of the rights means that when
subsidiary receives rights then it is enables to
receive all income from sales and use of the
intellectual property outside of Apple Inc’s
home state and it will go to Irish SubC Co.
 Irish SubC Co. carries out the ‘rest of the
world’ operations and transfers that outside-
US profit to Irish Dutch Subsidiary in the form
of payment for the IP rights.

19.  Apple Dutch Subsidiary will use their received
fees to pay for their own to Apple Irish and
thus, transferring the profits.
 This essentially transmits the majority of
income to Apple Irish Co., where it can sit tax
free in an offshore tax haven like Bermuda.

20. How it is done

21. GOVERNMENT INTERVENTION
 Ireland has announced that beginning in
2015, companies will have to be a tax resident
to be incorporated in Ireland, so the Double
Irish tax strategy will no longer work quite as
well

22. THANK YOU
By Samyak Chaudhary