Death of the Double Irish

BONO may front one of the world’s most popular rock bands, but the U2 singer did not earn many new fans when he recently defended Ireland’s controversial tax policies, which are widely seen as helping multinationals to avoid paying their fair share. Even Ireland’s government seems to be having doubts. On October 14th it announced plans to close the country’s biggest loophole, the “Double Irish”.

The Double Irish allows companies to shift their profits from high-tax countries to havens. This is typically done by transferring royalty payments for intellectual property to a firm in Ireland, then on to another Irish-registered subsidiary that is tax-resident in a country with no corporate-income tax, such as Bermuda. Users can thereby cut their effective tax rate—perfectly legally—far below Ireland’s already low 12.5% rate, in some cases down to less than 2%. The ruse is popular with American computing and pharmaceutical firms.