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· Posted on
February 21, 2024

Find a new place to stash your cash Google, Ireland's just not what it used to be

Ireland is the home of Guinness, St Patty's day and of course, the European HQ of some massive tech companies.

What's the key learning?

  • Ireland has lured in some of the world's biggest companies with 12.5% corporate tax rates.
  • But now 130 countries (including Ireland) are bumping their tax rate to 15%, as part of a global minimum tax agreement. They're hoping this will limit the high levels of transfer pricing and shifting of profits.
  • Transfer pricing allows companies to move profits from high-tax jurisdictions to low-tax jurisdictions.

Background: Ireland is the home of Guinness, St Patty's day and of course, the European headquarters of some massive tech companies like Google, Facebook, Airbnb and Paypal (and more).

What happened: While it doesn't seem like the obvious choice to plonk a tech company's headquarters, Ireland has lured in big companies with a sneaky tactic: 12.5% corporate tax rates. To put that into perspective, large companies pay 30% tax in Australia.

What else: 130 countries (including Ireland) are going to bump their tax rate to 15% as part of a global minimum tax agreement. The aim is to limit the high levels of transfer pricing and shifting of profits.

So what's the key learning?

💡Transfer pricing allows companies to move profits from high-tax jurisdictions to low-tax jurisdictions. And pretty much all the cool kids have been doing it.

💡Tech companies transfer a large portion of their profits from high-tax countries (*ahem* Australia) to low-tax havens like Ireland. And this comes at the expense of the high-tax countries.

💡Netflix paid around $550,000 in tax in Australia last year, despite estimates that it generated over $1 billion in revenue. Apple paid $498 million in taxable income on $9.6 billion in total revenue.

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