A popular tax avoidance scheme known as the Dutch Sandwich allows corporations to avoid US corporate taxes. I can understand the benefits to Holland which ends up being the destination of the profits. I can understand why US politicians are willing to continue the policy in the face of extensive lobbying and campaign contributions. But what is the benefit to Ireland to be the pass through nation that facilitates these transactions?


1 Answer 1


The benefits to Ireland are obvious (if not very large), but compared to literally zero costs, they are still very attractive:

  • There are still some profits taxable by Ireland (smaller, but non-zero). A tax on non-zero small profit is a marginal benefit over not getting a tax on anything.

    The Irish authorities never see the full revenues and hence cannot tax them (Wiki).

    Note that it doesn't say "never see any revenues".

    The profits don’t stay with the Dublin subsidiary, which reported pretax income of less than 1 percent of sales in 2008, according to Irish records (src: Bloomberg).

    Again, note that <1% of sales * 12% tax is still infinitely more than $0 which Ireland would have collected in taxes if Google did NOT set up the scheme.

    An extra data point to show that it's still Real Money:

    Turnover at Google Ireland Limited jumped to €10.9 billion last year, from €7.9 billion in 2009, and now accounts for roughly 40 per cent of the search engine giant’s global earnings. Google earnings are driven by online advertising revenue. (src: IrishTimes )

    So, I'm gonna guesstimate that taxes paid to Ireland were €10.9B*0.01*0.125 = €13.6M in 2010.

  • Presumably, registering companies in Ireland adds some funds (again, possibly marginal but non zero) amounts to Irish economy and employment. General employees, lawyers, accountants, yadda yadda.

    That licensee in turn owns Google Ireland Limited, which employs almost 2,000 people in a silvery glass office building in central Dublin, a block from the city’s Grand Canal. (src: Bloomberg)

  • @Chad - the reference is in the Wiki article you supplied. And elementary math: $small_amount_profit*$small_tax > 0. Plus added one for employment. The numbers LITERALLY don't matter (being compared to zero), but I added them.
    – user4012
    Feb 28, 2013 at 22:14
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    @Chad - I really don't see how it matters. You asked what Ireland's benefit is. Benefit is extra money. As long as they get >0 money, even one euro, they are in the black.
    – user4012
    Feb 28, 2013 at 23:34
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    I guess what I am really looking for is a complete answer. This gives a theory of what the benefits might be. But I am hoping for one that says here is what they are and the scope of the benefit is this. This does have some good information though so +1 for that Mar 1, 2013 at 4:34
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    I do not want to get into a discussion about this but I will try to provide constructive critism of what I feel is lacking in this answer. - Your tax numbers are guestimates with out sources - what is the proportion of the gain compared to the costs of implementing the policy(This is critical to evaluating the benefit so is implicit in the question). What share of total revenue is the tax gain from this policy compared to total revenues for Ireland. In the alternative to actual numbers I would also accept an estimate from an economist in a published document. Mar 1, 2013 at 13:32
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    @Chad - I am afraid the numbers that aren't guesses may not necessarily be public, but will try to dig. "costs of implementing the policy" - what costs did you have in mind? There are no costs per se aside from marginal extra cost for one extra tax return processing that I can think of. I am still totally unclear why "share of total revenue" matters at all - it's a valid question to ask but I don't understand why anyone would care when deciding this, since there are no costs to weigh against.
    – user4012
    Mar 1, 2013 at 13:48

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