This article is written by Yuga Adarkar pursuing a Diploma in International Business Law. This article has been edited by Ruchika Mohapatra (Associate, Lawsikho).

This article has been published by Sneha Mahawar.                                                                                       


Avoidance of tax is always a major concern for developed and developing countries. Loopholes in tax laws enabled giant MNEs like Apple, Microsoft, Google to earn huge profits by using price-shifting strategies like Double Irish and Dutch Sandwich. CFCs rule allowed parent’s subsidiary holding companies which are incorporated overseas not to pay taxes except with implication of same country rule. To avoid taxes these MNEs used the Check-the box rules and Look-through regimes. This avoidance of tax has gained the spotlight throughout the world and needs a strong tax law. So OECD launched a project BEPS which framed some action plans to curb or put an end to the Double Irish and Dutch Sandwich strategy. In this article, we will learn what is Double Irish and Dutch strategy with examples, its benefits, implementation of 15% Corporate tax law residency, impacts after the abolition of the Double Irish and Dutch strategy, and various solutions adopted by the Indian Government.

Download Now

Double Irish and Dutch Sandwich strategies have given ample profit to huge corporations like Apple, Google, Microsoft for over a decade. To abolish the same, the European countries with the US, enacted the rules of 15% corporate tax levied upon Ireland. It came into force in 2015 but the corporation could still benefit in 2020 from the DIDS. Since the DIDS is abolished, the corporations are searching for other loopholes like Single Malt. So, indirectly the DIDS continues to exist. To cease the same, the Indian Government has adopted a few measures which shall be discussed ahead in the article. 

How does Double Irish and Dutch Sandwich (DIDS) work

The Double Irish and Dutch Sandwich strategy is a tax avoidance scheme by giant corporations in the world by shifting their subsidiary holding corporations to a low tax country or offshore area.

“A” is a parent company based in the U.S. ” A” incorporated its subsidiary company “B” in Ireland to whom intellectual property license is being granted. In return “B” pays low royalties to “A”. Since “B” is in offshore territory it is rightly said as “B” incorporated in the tax haven and hence there is no need to pay tax to US corporation “A”.

To fall under the scheme of DIDS, Ireland law stated that a subsidiary corporation that falls under offshore jurisdiction cannot be treated as a resident hence classed as a tax haven but this subsidiary corporation shall wholly own another subsidiary to be classed under Irish resident.

Then “B” sub-licenses to “C” subsidiary corporation which will be incorporated in Ireland itself. Where “C” exploits the right and generates revenues. And pays license fees and royalties to “B”. Here all dividends are enjoyed by subsidiary ” B”. In the Double Dutch Sandwich strategy, there will be a third subsidiary shell corporation incorporated in the Netherlands namely “D” wherein there won’t be any employees, no physical existence of the corporation. The subsidiary “C” to avoid any Irish withholding tax payments transfer royalties to subsidiary “D” before “B”.

Live Examples of Giant corporations with Double Irish and Dutch Sandwich

MNEs like Google used the Double Irish and Dutch sandwich strategy to gain a huge profit for the company from taxation. This works like shifting royalties from an Irish subsidiary to a Dutch Company which has no employees, and then in return, the Dutch company forwards the royalties to a Bermuda mailbox owned by another company registered in Ireland. It is also noted that as per Washington Post, Google’s cash transfers to Bermuda reached $27b in 2016. Google’s parent company Alphabet announced that they will be abandoning the double Irish and Dutch sandwich loopholes. Apple Inc was always a central topic for tax affairs within EU countries and the US for decades. It is noticed that in 2009, earned $30 billion profit and didn’t pay taxes to both state Ireland-subsidiary corporations as well as to California.

Effect of Double Irish and Dutch Sandwich strategy on countries

The US and UK have high corporate tax rates i.e 35% and 19% tax rates respectively. And DIDS benefits the MNEs by reducing their taxes rate by profit shifting in tax haven jurisdiction. This creates chaos in the states like the US and the UK generating heavy losses in terms of revenue. This is because the subsidiary company gets an Intellectual property license from the parent company. And this subsidiary company is incorporated in a tax haven jurisdiction which means either paying low tax or no tax at all. Since the subsidiary company resides in a tax haven that falls under offshore, overseas jurisdiction does not come within the purview of US Tax laws. Hence, there is an increased rate of corporate tax levied on small and individual companies affecting their growth adversely.

Implementation of 15% Corporate tax and end to Double Irish and Dutch Sandwich

The G20 summit in Rome agreed upon a minimum 15% corporate tax rate globally marking the historical endorsement of this new regime. Under this regime, there are two pillars. Firstly, the 100 top companies which earn a profit above 10 percent, shall pay a 25% rate of corporate tax 

Secondly, the companies incorporated in tax havens or overseas and offshore jurisdictions shall pay a minimum of 15% of the corporate tax rate. This was done to tackle the issue of tax avoidance or to bridge the gap in loopholes provided by the double Irish and Dutch sandwich strategy. This means whether companies are physically operating or not, will not be a matter of consideration for avoiding tax. Irrespective of whether companies are incorporated in any jurisdictions, they have to pay the standard global minimum 15% corporate tax. The 15% corporate tax made a mandate to end the double Irish and Dutch strategy in 2015. However, companies were allowed to take benefits up to 2020.

Implementation of 15% corporate tax and BEPS action plan on Indian economy

The organization for Economic Co-operation and Development (OECD) introduced a set of 15 Base Erosion and Profit Shifting Action plans which brought ample benefits to the Indian economy by implementing bye-laws. Apart from the implementation of the BEPS action plan, India levied an Equalisation levy on companies irrespective of the parent company wherever it is incorporated but has transactions in India.

General Anti-Avoidance Rules (GAAR) have also been incorporated in Chapter X-A of the Income Tax Act, 1961 of India, implemented in the 2018-2019 financial year. India faced the issue of Treaty-Shopping with regards to the India-Mauritius DTAA. Now Indian authorities based on their discretion can tax Mauritius residents upon their transactions. India also entered Tax Information Exchange Agreements (TIEA) with several tax havens such as Bermuda, Bahamas, Liberia, Belize to disclose any secrecy and illicit gain tax-related information available in tax haven countries. So India can restrict such huge stores of black money in tax havens.

Due to the implementation of OECD’s BEPS action plans, Equalisation levy, and other digital taxes, India saw a steady decline from the year 2013-to 2017 in terms of illegitimate storage of black money in a tax haven by MNEs.


The Double Irish and Dutch Sandwich strategy was used to avoid tax by giant MNEs like Apple, and Google to shield the corporate profit by price shifting to tax haven jurisdictions. It ended due to the G20 summit held in Rome and the mandate of the rule to abolish the said strategy in the year 2015. The implementation of the OECD BEPS 15 action plan and Equalisation levy on giant corporations would bring steady growth to the economy. This would in return bring ample schemes for the welfare of the people of the state. Such regimes or rules to prevent tax avoidance or to curb the double Irish and Dutch Sandwich strategy are highly appreciable as they help in ushering in a better economy.

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.


Please enter your comment!
Please enter your name here