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?
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% taxis 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 = €13.6Min 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)