Transcription as follows:
Hi! Welcome to a Global Private Partners Presentation. Today, we’d like to talk a little bit about the Double Irish-Dutch Sandwich, which is a structure that some multi-companies use in order to reduce their taxation in their home country.
Essentially, a US-based company establish and create a subsidiary in Ireland. That subsidiary has a tax owner in the Bahamas then another subsidiary company is created in Netherlands – that’s a Dutch subsidiary.
So step-by-step, USA parent company establishes the Irish-based subsidiary. That subsidiary usually has no employees.
The Irish subsidiary has its tax home in the Bahamas, which is a major shareholder.
The US company then establishes another subsidiary in the Netherlands. And that usually also has no employees.
The Irish subsidiary A creates a second Irish subsidiary called subsidiary B and subsidiary B is the day-to-day operations of the business, it has the employees and may setup other subsidiaries in other countries. For example you’re doing business in Asia and Africa then you would setup subsidiaries that are owned by the Irish subsidiary B.
How does it work from an operations perspective?
Company A provides an intellectual property license to the Dutch subsidiary for that it gets a royalty for free. You can see that there in fact isn’t any royalty that’s paid back to Company A because Company A is in your Irish tax country.
The Dutch subsidiary sub-licenses the intellectual property to Irish subsidiary B, which is the operational entity, again for a royalty or fee.
So using that license, subsidiary B Irish subsidiary B gathers most of the non-United States revenue for Company A. Company A is the parent company so anything that is outside the US is done by the Irish subsidiary B.
The Irish subsidiary B pays the profits as royalties or fees to the Dutch subsidiary. Dutch subsidiary transfers its profits that it has received as fees to Irish subsidiary A. Any transfer within the EU is tax-free. So subsidiary A, Irish subsidiary A transfers its profits to its tax owner or shareholder back to the Bahamas.
Why is it called the Double Irish? Well in fact there are two Irish companies, Subsidiary A and Subsidiary B and that’s why it is called that.
Why is it called a sandwich? It’s got Ireland, and Holland or the Netherlands together and you match them all together and it’s called a sandwich.
So is this applicable to you if you’re listening in Asia or you’re listening outside the United States? Sure. It’s 100% legal and it’s not likely to change anytime soon. Contrary to whatever you hear in the media, the EU is looking to make changes certainly but they’ll be looking for a long time because the biggest users of these structures are governments. And so on that basis, it’s certainly not going to change in the near future.
We can actually achieve this same effect on only slightly easier for Asian-based companies, companies based in Australia especially New Zealand and any of the higher tax countries in Asia.
What would be an ideal scenario for a company if you’re thinking about setting something up is if you’ve got offering services that are intellectual-property based – software, license to use methodology, it could be a way of manufacturing a methodology – anything that could be made intellectual property based.
If you’ve got clients outside of your home country or you could have clients outside of your home country, it’s also ideal. And if your services could be or are being delivered outside of your home country then this is very easy to put together.
Who are we? Global Private Partners. We’re effectively in the business of helping businesses set in other countries up which is completely legally and we have a business office function which helps manage or help you operate these entities over and above what a normal accountant would do. These business agreements, these contracts, a number of things that you need to go out to put together and then on an ongoing basis provide consulting to you and your operational teams as to how to best utilize those structures. How to run effective transactions and at the end of the day how to make use of the increased profits that you would most likely have.
We also do immigration, help people immigrate from country to country and relocate themselves, their families and their businesses.
We have a private equity arm that’s involved in introducing capital for businesses and ideas that we think are worthwhile. We take and acquire, make acquisitions into business and we have a business acceleration program, which when we look at a business and we don’t think it’s worth acquiring fully, we may take a minor equity stake and work up the business, put them through process, procedures, and assist that business to grow into something that could be acquired or that it just simply going to grow and generate awesome returns and your also returns as the owner.
And we have a private membership, call it a high-level group, called the G128, which we meet in various cities around Asia and Australia.
If you’d like to talk to us about any of these and how these could be applicable to you, the Double Dutch-Irish Sandwich, or a local variant for Asia, then please call +85231834500 or email trex@globalprivatepartners.com.
We’re looking forward to sharing more information with you in our next installment. Bye for now.