The Green Jersey, Explained

The Green Jersey is the structure Ireland kept. Where the Double Irish moved profit out of Ireland to Bermuda, the Green Jersey keeps it in Ireland and then deletes the tax with a deduction. It works entirely inside the Irish system, using a relief for buying intellectual property. It is still on the statute book, though a global minimum tax now limits how far it can go.

What it is

A structure built on Ireland's Capital Allowance for Intangible Assets, a relief that lets a company write off the cost of buying intellectual property against its taxable trading income. Unlike the Double Irish, which routed profit around Ireland, the Green Jersey deliberately keeps the profit in Ireland, then shelters it with a deduction so large that almost no tax is paid. The name comes from the role a Jersey company often plays in supplying the loan.

How it works, step by step

1. A US parent, or one of its subsidiaries in Cayman or Bermuda, holds valuable intellectual property.
2. An Irish-resident company buys that intellectual property from the related foreign company, at a price reflecting its market value, which can run to billions.
3. The Irish company funds the purchase with a loan from another company in the same group, often based in Jersey or Cayman. That creates a large intra-group debt.
4. Under the Capital Allowance for Intangible Assets (section 291A of the Taxes Consolidation Act 1997), the Irish company writes down the cost of the intellectual property against its Irish trading income, up to 80 per cent of that income in any year. On top of that, it deducts the interest on the acquisition loan.
5. Between the capital allowance and the interest deduction, nearly all of the Irish company's taxable income is wiped out. The effective tax rate in Ireland approaches zero, even though, for transfer-pricing purposes, the profit is treated as earned in Ireland.

Who used it

A large US consumer-electronics group is the documented example. The Paradise Papers in 2017 showed that this group restructured around the Green Jersey when the Double Irish became unviable. One of the group's companies in Ireland borrowed from another of its companies in Jersey to buy intellectual property that the Jersey entity had held, creating the deduction base. The Council on Foreign Relations described the move as the group shifting its tax residency from Ireland to "stateless," then moving its intellectual property back into Ireland to take advantage of the capital allowance.

There is a sharp detail here. When Ireland reinstated the 80 per cent cap on the allowance in the Finance Act 2017, the cap applied only to expenditure on intangible assets incurred on or after 11 October 2017; assets onshored before that date kept the older, uncapped treatment. Commentators have noted that intellectual property onshored in the preceding window, which on the Paradise Papers timeline included that group's Q1 2015 restructuring, therefore fell on the grandfathered side of the line.

Is it still open, and when did it close

Still open. The Capital Allowance for Intangible Assets remains on the Irish statute book and the 80 per cent income cap is still in force. What constrains the structure now is not its repeal but three external pressures:

• The global minimum tax (Pillar Two), which sets a 15 per cent floor for groups with more than 750 million euros of revenue, can top up tax that the structure would otherwise have avoided.
• OECD transfer-pricing documentation requirements.
• The European Commission's state aid ruling against that same group, confirmed by the Court of Justice of the EU in September 2024, which challenged how specific profits of the group were allocated.

The structure survives, but in a more limited form for the largest groups.