Double Irish With a Dutch Sandwich

The “double Irish with a Dutch sandwich” is a multinational tax-planning arrangement used by some large corporations to shift profits from higher-tax jurisdictions to low- or no-tax jurisdictions. It combines two Irish entities and a Dutch intermediary to route royalties and other profit streams to a tax haven, substantially reducing the group’s effective tax rate.

Key takeaways
* The structure uses two Irish companies and a Dutch company to move profits to a tax haven.
* It relies on differences in national tax rules (on residency, withholding, and intra-EU transfers).
* Widely used by tech and intellectual-property–intensive firms because IP income is easy to relocate.
* Ireland moved to close the loophole for new structures in 2015; legacy arrangements were phased out by 2020.

How the scheme works (step by step)
1. Assign IP and charge royalties: A company assigns intellectual property to an Irish-incorporated company that is treated as a tax resident in a low-tax jurisdiction (historically possible under Irish residency rules). That Irish entity charges royalties on sales in markets worldwide.
2. Route payments through the Netherlands: A second Irish company that handles European sales pays royalties to a Dutch subsidiary. Dutch law (and EU directives) historically allowed tax-free transfers for certain intra-EU payments, avoiding Dutch withholding taxes.
3. Move funds to the non-resident Irish entity: The Dutch intermediary forwards the payments to the first Irish company (the one treated as non-resident for Irish tax purposes) or directly to an offshore parent. Because of how residency and withholding rules interacted, the funds escaped taxation in Europe and were accumulated in the tax haven.

Why the Dutch “sandwich” is used
* The Netherlands often served as a conduit because its rules and bilateral agreements minimized or eliminated withholding taxes on certain cross-border payments, making transfers between EU subsidiaries tax-efficient.
* The combination of Irish residency rules and Dutch transfer rules created a tax-efficient path from operating revenues to a final tax haven destination.

Why tech companies used it
* Tech firms generate large streams of royalty and licensing income tied to intangible assets (software, patents, trademarks).
* Moving IP ownership and licensing fees to favorable jurisdictions allowed those firms to reallocate much of their global profits to low-tax entities with relatively little physical presence.

Example
* Large multinationals (notably some U.S. tech companies) reportedly used the structure to move tens of billions of euros/dollars through Dutch and Irish subsidiaries to offshore entities that paid little or no corporate tax. For example, reports indicated transfers of roughly €19.9 billion in certain years routed through a Dutch company and then to an Irish-registered entity located in a tax haven.

Regulatory response and current status
* International scrutiny—including pressure from the European Union, the United States, and OECD initiatives on base erosion and profit shifting (BEPS)—led Ireland to change its tax residency rules.
* In 2015 Ireland announced legislative changes to end the use of the “double Irish” for new arrangements; companies with existing structures were allowed a transition period that largely ended by 2020.
* Broader international reforms (OECD BEPS, EU state aid and transparency measures) have reduced but not completely eliminated aggressive profit-shifting techniques. New tax-planning strategies and bilateral/tax treaty considerations continue to evolve.

Criticism and implications
* Critics argue the structure erodes national tax bases and shifts tax burdens onto smaller businesses and individuals.
* Supporters (typically corporations) have called such arrangements legal tax planning under existing laws and essential for competitiveness.
* The controversy prompted policy changes, increased transparency (country-by-country reporting), and a global push for minimum corporate tax standards.

Conclusion
The double Irish with a Dutch sandwich was a prominent example of how multinational corporations exploited mismatches between national tax rules to minimize taxes. Legislative changes and international cooperation have curtailed its use, but the episode highlights ongoing challenges in taxing profits generated by globally mobile intangible assets.