← The Named Tax Structures, Explained: Double Irish, Dutch Sandwich, Single Malt and the Rest
The Double Irish is the structure that taught the public the word "loophole." For two decades it let some of the largest companies on earth route their non-American profits through Ireland and park them in Bermuda, taxed at zero. It was legal. It worked because of a mismatch between two of Ireland's own rules and one American one. Ireland closed it: shut to new entrants in 2015, fully gone by the end of 2020.
What it is
A structure that exploits a gap between how Ireland decides where a company is tax-resident and where it is incorporated, combined with a United States rule that lets a company choose how its subsidiaries are classified. Ireland, at the time, said a company was tax-resident where it was managed and controlled, not necessarily where it was registered. So a company could be incorporated in Ireland yet tax-resident in Bermuda, simply by being run from Bermuda. That single fact is the hinge the whole thing turns on.
How it works, step by step
- A US parent company moves the rights to its intellectual property, its brands, patents and software, to an Irish-registered company. Call it Irish Company 1. But Irish Company 1 is managed and controlled from Bermuda. Under Irish law of the day, that makes it tax-resident in Bermuda, where the corporate tax rate is zero.
- Irish Company 1 licenses that intellectual property to a Dutch company in the middle. (This middle step is the Dutch Sandwich, covered separately. Without it, a withholding tax would bite on the way through.)
- The Dutch company sub-licenses the same intellectual property on to Irish Company 2, which is both registered and genuinely resident in Ireland.
- Irish Company 2 is the real operating business. It collects the revenue from customers across Europe and beyond.
- Irish Company 2 then pays a very large royalty back up the chain, to the Dutch company, which passes it on to Irish Company 1 in Bermuda. Because European Union rules exempt royalty payments between connected EU companies from withholding tax, nothing is taken at the border.
- The profit now sits in Bermuda, in Irish Company 1, taxed at zero.
- For US tax purposes, the parent makes a "check-the-box" election that treats Irish Company 2 as a disregarded branch of Irish Company 1. The royalty flows between them vanish from the American view, so the structure sidesteps the US anti-deferral rules that would otherwise tax the income back home.
The result: revenue earned across Europe is taxed neither in the countries where customers paid, nor meaningfully in Ireland, but accumulates in Bermuda untouched.
Who used it
A number of large US technology groups are documented users, established through US Senate Permanent Subcommittee on Investigations hearings in 2012 and 2013, the Paradise Papers leak in 2017, and a body of academic work since. One major US search-and-advertising group's version routed non-US revenue through an Irish operating company, into a Dutch intermediate holding company, and on to a second Irish-registered company managed in Bermuda. Reporting drawing on that group's own filings put its overseas tax rate at roughly 2.4 per cent for the period examined.
Is it still open, and when did it close
Closed. Ireland's Finance Act 2014 changed the residency rule: from 1 January 2015, any company incorporated in Ireland is treated as Irish tax-resident, which removes the Bermuda step. New companies could no longer build it from 2015. Existing structures were given a grandfathering period and had until 31 December 2020 to wind down. Since 2021 the classic Double Irish is defunct. Two successors emerged to replace it: the Single Malt and the Green Jersey, each covered in its own entry.