US Companies & Their Use Of The Double Irish Dutch Sandwich


Commentary in the media suggests that many US companies are using a structure called the “Double Irish Dutch Sandwich” to reduce their worldwide taxation liabilities connected with Intellectual Property (IP). The US companies in Ireland said to be using this structure include Apple, Facebook, Google, Microsoft, Oracle Corp and Pfizer Inc. The structure utilises advantageous taxation rules in Ireland and the Netherlands to limit the taxation payable on flows of royalty income generated from IP, and is also tax efficient from a US perspective.

How The Structure Works

Double Irish Dutch SandwichBased on the content of various reports in the media, the structure is used by US companies which hold IP. The US parent company (USCo) transfers the IP to an Irish incorporated company, tax resident in an offshore country, e.g. Bermuda (IRCoA). IRCoA sublicenses the IP to a company tax resident in the Netherlands (NETCo). NETCo sublicenses the IP to a company tax resident in Ireland (IRCoB). IRCoB is a wholly owned subsidiary of IRCoA. IRCoB sub licences the IP to companies located in various jurisdictions outside the US.

Royalty Flow

IRCoB receives royalties from the various companies in the non-US jurisdictions to which it has granted sub licences. IRCoB retains a small margin of these royalties (usually 5-10%) and passes the remainder to NETCo. NETCo retains a small margin of the royalties it receives from IRCoB and passes the remainder to IRCoA. The royalty margins retained by IRCoB and NETCo are presumed to be compliant with the minimum required for transfer pricing rules.


  • IRCoB is liable to Irish taxation on only the portion of the royalties which it retains. For Irish taxation purposes, the royalties paid to NETCo are allowed as a deduction against the royalty income received.
  • No Irish Withholding Tax (“WHT”) arises on the royalties paid from IRCoB to NETCo.
  • No Dutch WHT arises on the royalties paid by NETCo to IRCoA.
  • The royalties received by IRCoA suffer a low or nil rate of taxation in Bermuda.
  • It may be worthwhile for USCo to transfer the IP to IRCoA early (i.e. when the IP has a low value) in order to limit the amount of US tax payable.
  • The structure is also advantageous from a US CFC perspective.


The “Double Irish Dutch Sandwich” tax structure has become increasingly popular with many US companies holding IP.  The structure (in which the two Irish companies are referred to as the “bread” and the Netherlands company as the “cheese”) is designed to help many US multinationals reduce their global taxation liabilities through the use of the favourable taxation regimes in both Ireland and the Netherlands. The structure is also designed to comply with the US CFC tax legislation.

Please note that this commentary is extremely general in nature and the information is sourced from general commentary in the media. Detailed appropriate advice should be taken before any particular transaction is entered into.

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