The scheduled ending of the tax loophole named the ‘Double Irish, Dutch sandwich’ at the end of 2020 is set to cost the world’s biggest companies billions of euros, new research reveals.
The tax avoidable technique has been exploited by some of the richest corporations around the world – including Apple and Google – and sees them take advantage of lower tax rates in countries such as Ireland, Norway and Jersey to substantially reduce annual tax payments.
The loophole closure was announced in 2015 and scheduled for 2020, meaning huge companies have been able to save money and avoid paying tax for the past half a decade.
New figures from The Irish Money Funnel report reveals that notable tech companies, including Facebook, Microsoft and Google, have avoided paying up to €36.15 billion in tax by holding company operations in Ireland rather than the US, where they benefit from significantly lower corporation tax.
Tech giant Apple is based in California, yet over half of its revenue comes from a country with a population of just 4.8 million. By raising the majority of its total global revenue in Ireland, Apple has made substantial savings on corporation tax over the past year.
The Irish and Dutch tax loophole has proven controversial when used by corporations to save billions, which is achieved through reporting revenue via ‘shell companies’ registered in tax havens. The ending of the intellectual licensing scheme is expected to lead to fairer tax payments across the EU.
Comparatively, the UK-held revenue from the same 10 companies works out an extraordinarily insignificant 1.5% of total global sales, or €19.5 billion from a total figure of €844.7 billion.
The UK’s corporate tax rate is 19% – 6.5% higher than that in Ireland – making the Emerald Isle an attractive location for multinational companies looking to base themselves in Europe. However, this could be costing the UK essential funds, which could be used to improve the NHS or reduce homelessness.
With the money that Apple has saved by basing revenues in Ireland, the UK could hire 586,477 nurses, take 9,588,137 homeless people off the street, or take 2,982,777 children out of poverty. The sort of figures which would be enough to effectively end these social issues, just from the tax payments of one company.
Social media giant Facebook recorded a global revenue of just over €50 billion in 2018. Facebook Ireland raised over 50% of the total sum at €25.5 billion, resulting in a total tax bill of €63.2 million.
Companies analysed include:
Other large social media platforms Twitter and LinkedIn also record a high percentage of profits in Ireland, at 26% and 46% respectively. According to 2018 figures, tech leader Apple has the highest percentage of its revenue coming from Ireland, with 65% of its €238 billion global revenue coming from its Irish holding company.
Apple’s tech competitors Microsoft and Google also operate largely from the Emerald Isle, with 28% and 35% of their total revenues coming from subsidiaries in Ireland.
To find out more about how much of the world’s top companies’ revenue is held in Ireland, please visit: https://www.spincasino.com/