Some of the world’s biggest technology companies have long treated Ireland as a second home thanks to a loophole called the “double Irish” tax. Google’s Dublin headquarters holds over 2,500 employees, and Apple was even dragged in front of Congress to explain its close connection with Ireland. Now both firms, along with Facebook, Twitter and others, may need to look elsewhere as the Irish government prepares to clamp down on the controversial tax break.
The “double Irish” rule lets corporations with a base in Ireland make royalty payments to a second separate subsidiary also registered in the country. Sounds fine, but the trick is that while that second subsidiary might be registered in Ireland it can actually be based in another country like Bermuda with no corporate income tax. Now the Irish government has announced plans to change the law by requiring all companies registered in Ireland to also pay taxes in the country, though the new rules won’t go into effect for any corporation already using “double Irish” until 2020.
So will companies like Google and Apple stick around? In an official statement to The New York Times Google said it plans to comply with any new laws instituted in the country. “We’re deeply committed to Ireland and will work to implement these changes as they become law,” the firm said, though we’ll see where it stands a few years from now when its “double Irish” protection expires.
“Double Irish” has been a great way for Ireland to bring in big tech companies and their well-paid employees, and the government won’t want to give up that business if it doesn’t have to. With a major tax loophole closing, the country will need to make sure it offers the best corporate taxes in Europe, or it may see an exodus to other competitive countries such as England or the Netherlands.