Over the last quarter of a century something fundamental seems to have changed in the way in which capitalism works. The tendency since 1970 has been towards greater geographical mobility of capital.

Pot  of  gold  or  Fool’s  Gold?  Richard  Murphy    

•  Taxa:on  of  subsidiary  companies  –  allows  royal:es  to  be  paid  to  subsidiary  companies  resident  in  tax  havens,  avoids  residence  basis  for  taxa:on  

•  Taxa:on  of  dividends  –  dividends  from  tax  haven  subsidiaries  oCen  received  tax-­‐free  by  the  parent  company  in  Ireland  

•  ‘Thin  capitalisa:on’  –  financing  of  subsidiary  ac:vity  through  intra-­‐group  loans  rather  than  capitalisa:on,  and  manipula:on  of  interest  rates  to  receive  tax  ‘relief’    

•  Corporate  secrecy  –  ‘secrecy  jurisdic:on’  that  undermines  the  regula:on  of  another  domain  

•  ‘Light  touch  regula:on’  of  transfer  pricing  –  two  or  more  companies  that  are  part  of  the  same  parent  company  trade  with  and  loan  to  each  other  

In  2009/10,  Ireland  had  inward  investment  of  $31.1bn.  Outward  investment  in  that  period  was  $31.0bn.  ‘In  other  words,  Ireland  is  not  the  loca:on  in  which  foreign  direct  investment  is  taking  place’  (Murphy,  2011:  11)  

Follow  the  money?  

The  Double  Irish  •  The  intellectual  property  

(IP)  of  companies  such  as  Google,  Apple,  Facebook  are  registered  in  subsidiary  companies  in  Ireland.  

•  For  example,  Google  Ireland  Ltd.  is  the  Irish  subsidiary  of  Google  Inc.    

   

§  Google  Ireland  Ltd.  makes  all  its  money  through  selling  ads  

§  If  a  person  in  Germany  buys  an  ad,  the  sale  is  recorded  in  Ireland    

§  Royal:es  from  this  sale  accrue  to  Google  Ireland  Ltd.    

 

However  …    •  Irish  law  only  recognises  a  

company  as  being  ‘tax  resident’  in  Ireland  if  its  main  centre  of  business  is  in  Ireland.  

•  So  another  ‘Irish’  company  is  established  in  a  tax  haven  such  as  Bermuda  (the  ‘double  Irish’)  

 •  E.g.  Google  Inc.  established  

Google  Holdings  Ltd.  in  Bermuda    

§   Management  team  based  in  Google  Holdings  Ltd,  Bermuda      

§   Google  Ireland  Ltd  pays  royal:es  to  Google  Holdings  Ltd.    

§  Bermuda  –  0%  corpora:on  tax.    

§  Avoid  paying  tax  in  Dublin    

•  h_p://www.irishleCreview.org/2013/06/18/explaining-­‐double-­‐irish-­‐map-­‐pile-­‐euro-­‐coins/  

•  Sincere  thanks  to  Conor  McCabe  for  sharing  his  research  on  the  IFSC  and  for  assis:ng  with  the  prepara:on  of  this  presenta:on.