By Sam Willie

On October 14^th, Ireland’s Minister for Finance announced plans to close the infamous and controversial “Double Irish” tax loophole, a tax avoidance scheme favored by foreign companies, and in particular US technology giants. Whether closure will affect Ireland’s status as an attractive tax jurisdiction for foreign companies looking to protect IP royalties is another matter.

Companies like Facebook, Google, and Microsoft have benefited from this tax scheme, transferring intellectual property royalty payments to firms in Ireland, and then on to Irish registered subsidiaries in other countries who abstain from taxing corporate income. The Economist has reported that the “Double Irish” could slash a company’s effective tax rate on IP profits to less than 2%. That rate could be lowered still when the “Double Irish” is used in conjunction with a “Dutch Sandwich,” where, as an intermediary step between transferring profits among Irish firms, the payments are routed through yet another tax haven, such as the Netherlands. Forbes reported that Facebook has sent $700 million in profits to the Cayman Islands through the scheme. Additionally, Google has used both the “Double Irish” and the “Dutch Sandwich” to save billions, and in a single year the scheme enabled Apple to avoid $9 billion in U.S. taxes.

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November 14, 2014

By Joe Vladeck

The number of European bankers earning more than 1 million euros jumped 11 percent from 2011 to 2012, according to new data from the European Banking Authority (EBA). The report is timely in Europe, where regulators are struggling to set limits on the financial industry compensation, hoping to reduce incentives for bankers and traders to take undue risks. New caps on bonus payments are set to come into effect in 2014. 

Reuters has a detailed summary of the EBA report. British bankers account for the bulk of European high-earners, representing more than 2,700 of the 3,500 million-euro bankers. 

And, predictably, the countries hardest-hit by the ongoing financial crisis saw banker pay fall. Spain saw a 20 percent decrease in million-euro bankers, as did Ireland. Despite Greece's recent financial calamity, a single banker in the country is somehow still earning more than a million euros in compensation. 

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December 11, 2013

By Sam Obenhaus

While the United States has one of the highest corporate tax rates in the developed world, it is often pointed out that the effective tax rate – what corporations actually pay – is significantly lower than the official rate.  For a number of tech companies, this is largely due to one man: Feargal O’Rourke, the head of PricewaterhouseCoopers’ tax practice in Ireland.

Ireland, of course, is at the center of many tech companies tax strategies.  O’Rorke is a chief architect of many of these plans, including those used by Google, LinkedIn, and Facebook.  Each of those companies funnels its profits through Ireland on their way to other tax havens, such as Grand Cayman and the Isle of Man.  These strategies are estimated to cost the U.S. federal government and its European counterparts an estimated $100 billion per year in lost revenue.

With austerity gripping much of Europe and sequestration in the United States, Ireland has found itself in the middle of a controversy.  Governments need more revenue, and some U.S. lawmakers have started calling Ireland a tax haven.  But O’Rourke – perhaps Ireland’s biggest defender – is undeterred. 

He points out that Ireland’s tax strategies have led many multinational corporations to set up offices in Ireland.  These operations are estimated to employee approximately 100,000 people.  Further, he notes that the United States and other countries could tip the balance overnight by simply changing their own tax laws.  What O’Rourke may be less willing to discuss is his role in shaping Ireland’s tax policies. 

Bloomberg has more on O’Rourke, while Reuters reports on Ireland’s recent moves to shed its image as a tax haven.

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October 29, 2013

By Elizabeth Gibson
 

Under pressure from European regulators, Facebook stopped using facial recognition in Europe last year and deleted existing data on European users. However, PC World and the Washington Post are reporting that the issue may be resurfacing.

Facebook released proposed changes to its privacy policy last week, and German regulators told PC World that they are concerned that the policy mentions facial recognition. For now, Irish regulators said they have confirmed with Facebook that the feature is still disabled in Europe.

Read more at PC World and the Washington Post. 

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September 01, 2013