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Ireland is referred to as a tax haven because of the country’s taxation and economic policies. The country’s tax laws heavily favor businesses, and the economic environment is very hospitable for all corporations, especially those invested in research, development, and innovation.
Key Takeaways
- Many people regard Ireland as a tax haven because of its taxation and economic policies, which favor the establishment and operation of corporations.
- The Irish economic economy is very hospitable for all corporations, especially those invested in research, development, and innovation.
- Ireland is particularly hospitable to research and development intensive start-ups, which can claim back taxes.
General Taxation
The United States has a flat corporate tax rate of 21%. Ireland’s taxation rate for corporations is 12.5%. In addition, Ireland only charges a corporate tax rate of 6.25% for revenue tied to a company’s patent or intellectual property. Ireland’s development as a low corporate tax regime can be traced to 1956 when it introduced tax relief on export profits.
Ireland’s taxation policies on research and development positions offer great incentives for corporations to invest in innovative ideas. Ireland has enacted policies allowing research and development-intensive start-ups the ability to claim back taxes. This is true even if the start-up incurs losses and cannot pay its corporate tax. In addition, the 25% tax credit is applied against the corporate tax rate of only 12.5%.
Ireland heavily relies on corporate tax and has a clear incentive to remain a corporate tax haven and not implement adverse policies. Ireland has a tax treaty with over 70 countries, over 25 of which are developed countries.
Fast Fact
In 2025, President Donald Trump accused Ireland of using favorable tax policies to unfairly attract U.S. companies: “Ireland was very smart. They took our pharmaceutical companies away from presidents that didn’t know what they were doing and its too bad that happened.”
Economic Policies
Transfer pricing allows corporations to shift profits from high-tax jurisdictions to low-tax jurisdictions. Thus, a corporation is trading with different subsidiaries rather than with external companies. This artificial shift, when performed by multinational corporations that produce up to 80% of the world’s trade, will result in lower taxes.
This transfer pricing policy resulted in a U.S. Senate investigation of Apple Inc. The Senate found that an Apple entity in Ireland received $74 billion in global receipts from 2009 to 2012, on which Apple paid a tax of less than 2% to Ireland. Another entity received $30 billion and paid nothing. In 2024, the European Court of Justice upheld the decision and required Ireland to collect 13 billion euros in unpaid taxes.
The financial environment of Ireland allows for special-purpose vehicles (SPVs) to be established for the reduction of taxes. As of the third quarter of 2023, there were 3,608 special-purpose vehicles located in Ireland, holding a reported 1,147.5 billion euros in assets. The reason for the high usage of special-purpose vehicles relates to financial transparency, as Ireland has little to none. The government does not require transnational corporations to provide public accounts of turnover, subsidies received, profit, or amount of taxes paid.
Which Country Has the Lowest Corporate Tax Rate?
According to the tax foundation, Turkmenistan has the lowest corporate taxes, with a statutory rate of 8%. Barbados, Hungary, and the United Arab Emirates are close behind with tax rates of 9%. Ireland ranks at about 16th worldwide with a corporate tax rate of 12.5%.
How Do Companies Avoid Taxes in Ireland?
The “double Irish Dutch sandwich” was a tax avoidance scheme used by multinational companies to route their profits through low tax jurisdictions. Essentially, it works by using two Irish and one Dutch company. The Irish company owns the IP rights to a product, which it licenses to a Dutch company, which sells the product abroad and routs the profits back to a second Irish holding company, where they are taxed at Ireland’s low corporate tax rate.
How Do Corporations Avoid Paying Taxes?
Corporations can use a variety of accounting techniques to reduce their tax liabilities. These can include accelerated depreciation, or moving profits overseas to low-tax jurisdictions. They can also take advantage of tax credits and incentives designed to encourage economic activity.
The Bottom Line
Ireland has gained a reputation as a low-tax haven for multinational companies. Although it’s not quite as business-friendly as some jurisdictions, the low 12.5% tax rate has attracted major companies like Apple and Google.
