A Double Irish Arrangement is a tax strategy that allows corporations that are not located in Ireland to take advantage of the country's 12.5% corporate tax rate. This strategy is accomplished by a company setting up a corporate subsidiary, or a smaller company controlled by the primary corporation, in Ireland and selling the foreign rights to its products. The subsidiary then sets up its headquarters in a tax haven. A second Irish subsidiary is set up by the primary Irish subsidiary to receive profits. According to Irish tax law, if a company is headquartered elsewhere, its profits aren’t subject to Irish taxes. In the US, the tax rate for corporations is generally about 35%.
More about corporate taxes:
- The official tax code for the US is roughly 67,000 pages long.
- Companies saved an estimated $100 billion US Dollars (USD) in tax payments in the US and Europe by using tax avoidance strategies, such as the Double Irish Arrangement.
- The average corporate tax rate in Europe had decreased from 45% in 1983 to 25% by the early 21st century.