The “Double Irish” is neither two shots of Jameson’s nor a shot of Tullamore in a glass of Guinness. Instead it is a tax avoidance scheme used by scores of American companies including Allergan, Facebook and Google in which that company sets up a subsidiary that employs people in Ireland and routes the profits made by that subsidiary to another Irish subsidiary that consists solely of a mailbox address in an offshore tax haven like the Caymans.

By convincing the Irish government that it is managed and controlled abroad, an American company such as Apple or the ones mentioned above can largely escape paying Irish income tax. And at the same time since American law provides that subsidiaries are tax residents of the United States only if they are incorporated here an Apple can therefore defer paying corporate taxes on any income generated by its foreign subsidiaries if those profits stay offshore. Thus, by shifting assets to its Irish subsidiary, for corporate tax purposes, those profits are in a “no man’s land” for purposes of tax avoidance, stateless and therefore not payable to any jurisdiction under its tax laws.

In May 2013 a U.S. Senate Investigative Committee found that Apple was attributing billions of dollars in profits each year to three Irish subsidiaries that declared “tax residency” nowhere in the world. Apple reports that nearly 70% of its worldwide profits are earned offshore. By October 2013 Apple had accumulated over 100 billion dollars in offshore cash, mostly in its Irish subsidiaries on which it paid almost no corporate income tax.

Well, all things must come to an end. European regulators are trying to force such countries as Ireland, Belgium, Luxembourg and the Netherlands to collect back taxes from companies that utilized such schemes. Apple, for example, is being pursued for over fourteen billion dollars in back taxes after the E.U. ruled that the above tax scheme amounted to illegal state aid from the Irish government. As a result, that government is planning to phase out the “Double Irish” at the end of 2020. Note, however, that since Apple has a real subsidiary in Cork, Ireland that employs over 6,000 people which serves as its European headquarters, those employees pay taxes and spend money in Ireland and, therefore, contribute to the Irish economy. See

So, what does Apple do? It moves the tax home of two of its Irish companies, Apple Sales International and Apple Operations International to the island of Jersey in the English Channel, which typically does not tax corporate income. See Apple kept a third subsidiary, Apple Operations Europe, as resident in Ireland. Why? One possible reason is that while Ireland did away with the “Double Irish,” it expanded its tax deductions for companies that move their intellectual property rights in their patents and trademarks into Ireland such that an Irish company that spent fifteen billion dollars buying such rights, even from a fellow subsidiary, could claim a billion-dollar tax deduction each year for 15 years.

According to the New York Times article discussed in this post (See, according to a former I.R.S. official, based on Apple’s American securities filings, he estimated that by moving its intellectual property into Ireland to take advantage of the latter deduction that transfer was worth about $200 billion dollars.

The 2005 American Bar Association publication, Fundamentals of Intellectual Property Valuation, states “if one were to value companies in which the brand identity overarches everything else, then a market capitalization methodology might be used.” Using Coca-Cola as an example, that publication notes that “it is a company with a single umbrella brand under which virtually all other activities and intellectual property are gathered. The Coca-Cola name covers the technical know-how imbedded in the proprietary recipe, processing methods, and subbrands like Diet Coke.” Using that analysis, given Coke’s 2004 total capitalization of approximately 138 billion dollars, its tangible assets were only 29 billion and the remaining value of its business may be attributed to its intangible assets and goodwill; the key intangible asset, the Coca-Cola brand would be worth 109 billion of the 138 billion dollars.

60% of Apple’s revenue in 2016 was generated by iPhone sales (See , a product that is manufactured for it by two Taiwanese companies. See So, plant and equipment, labor, and similar balance sheet items as well are outsourced off of Apple’s balance sheet for its most important product. See

So, while the double Irish may be being phased out, because the largest piece of Apple’s valuation, its intangible intellectual property, is still subject to a giant tax deduction by the Irish government, the bite in the apple found on Apple’s logo won’t be the bite mark of an Irish tax collector anytime soon.



The material on this website is for informational purposes only. It should not be considered legal advice and is not intended to create an attorney-client relationship. If you have questions regarding any material presented herein, we recommend that you consult an attorney. This web site and information presented herein were designed in accordance with Illinois law. Any content in conflict with the laws or ethical code of attorney conduct of any other jurisdiction is unintentional and void. I am a Chicago attorney practicing in the areas of trademark, copyright and information technology law as well as general corporate law. Formerly a trademark examining attorney with the United States Patent and Trademark Office, I have been in private practice since 1987 representing clients in a wide variety of industries, including the consumer products, financial services, information technology and entertainment industries. You can contact me at, by phone at 773.934.5855 or by mail at 417 S. Jefferson St., #304, Chicago, IL 60607 USA
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