Double Irish Tax Strategy

A strategy used by major corporations like Apple, Nike, and Facebook to minimize their tax burden through strategic use of international subsidiaries and IP holdings.

Core Strategy Components

• Create two Irish companies:
  • One owns intellectual property rights
  • Second company is subsidiary with US directors
• Exploit tax law mismatches:
  • US law says companies incorporated elsewhere should be taxed in that country
  • Irish law says companies with US directors should be taxed in US
• Result: Company becomes "stateless" and pays effectively zero taxes

How Companies Execute This

• Step 1: Create offshore entity to own IP (like Nike's swoosh trademark)
• Step 2: Main company pays large royalty fees to offshore entity
  • Reduces taxable income in high-tax countries
  • Example: $10B revenue becomes $1B taxable after $9B royalty payment
• Step 3: Offshore entity receives royalty payments tax-free
• Step 4: When loopholes close, companies find new arrangements

Real World Example: Nike's Implementation

• Initially set up shell company in Bermuda owning swoosh trademark
• Later moved to Netherlands using royalty income exemption
• When Netherlands closed loophole, created dual Dutch company structure
• Achieved ~3% effective tax rate on billions in revenue
• Constantly adapted strategy as regulations changed

Notable Corporate Users

• Apple: Held $300B offshore through Irish structure
• Nike: Used for trademark/IP holdings
• Facebook: Maintains Dublin office for tax purposes
• Other major tech companies use similar structures

Regulatory Response

• Governments periodically close specific loopholes
• Companies quickly adapt with new structures
• Revealed through leaks like Panama Papers and Paradise Papers
• Public statements often conflict with actual practices
  • Example: Tim Cook claimed Apple doesn't use "tax gimmicks" while actively using Irish structure