Why was the Netherlands the country of choice for the middle?

Because of one specific feature: it did not levy a withholding tax on outbound royalties to non-EU countries, while still being inside the EU for the purposes of the directive that exempts intra-EU royalties. That combination, EU membership on one side and no exit tax on the other, made it the ideal pass-through. Few other countries offered both.

Is the Dutch Sandwich a separate offence from the Double Irish?

No. It is a component. You would not run a Dutch Sandwich for its own sake; it only makes sense bolted into a larger structure that needs to move royalties out of the EU without a withholding charge.

The Dutch Sandwich, Explained

ByLoopholeKiln EditorialPublished17 June 2026

Figures current as of1 January 2026·Corrections

← The Named Tax Structures, Explained: Double Irish, Dutch Sandwich, Single Malt and the Rest

The Dutch Sandwich is the filling, not the sandwich. On its own it does nothing. Its job was to sit in the middle of a Double Irish and remove a tax that would otherwise have been deducted as royalties passed through to Bermuda. The Netherlands closed the gap on 1 January 2021, and the route is no longer worth running.

What it is

A connecting layer, not a freestanding scheme. The Dutch Sandwich is a Dutch intermediate company inserted between an Irish operating company and a zero-tax holding company in Bermuda or similar. Its only purpose is to prevent a withholding tax being charged on royalty payments leaving the European Union for a tax haven. The "sandwich" name comes from the shape: an Irish operating company at the bottom, a Dutch company in the middle, and an Irish-registered, Bermuda-resident company on top.

How it works, step by step

A zero-tax holding company, typically in Bermuda, owns the intellectual property and licenses it to a Dutch company.
The Dutch company sub-licenses that intellectual property to the Irish operating company.
The Irish operating company pays royalties up to the Dutch company. Because both sit inside the European Union, the EU Interest and Royalties Directive means no withholding tax is charged on that leg.
The Dutch company then pays the royalties onward to the Bermuda holding company. Here is the trick: the Netherlands, at the time, charged no withholding tax on royalties paid out to companies outside the European Union. That was close to unique. Send the same royalty directly from Ireland to Bermuda and a tax could apply. Send it via the Netherlands and nothing is deducted at any point.

The Dutch company is a pure conduit. It adds no real activity. It exists so that money can cross out of the EU to a tax haven without losing a slice on the way.

Who used it

The same groups that ran the Double Irish. One major US search-and-advertising group's structure used a Dutch intermediate holding company as the middle layer, documented in that group's own regulatory filings and in academic analysis. A large US consumer-electronics group and others used equivalent Dutch conduits.

Is it still open, and when did it close

Closed. From 1 January 2021 the Netherlands introduced a conditional withholding tax on interest and royalty payments made to related companies in low-tax or blacklisted jurisdictions. It started at 21.7 per cent and now stands at 25.8 per cent. That single change removed the Dutch company's entire reason to exist: a royalty heading out to Bermuda now gets taxed on the way through. By 2024 the Netherlands extended the same conditional tax to dividends. Official figures show flows to low-tax countries via the Netherlands fell from around 37 billion euros in 2019 to about 6.5 billion.

Sources