Irish tax haven, popular with GAFA, set to end in 2023

Ireland has just signed the OECD agreement which aims to set up a minimum tax rate on multinationals. This reform targets in particular the giants of the web who take advantage of the advantageous tax conditions of the country.

After months of negotiation, Ireland has finally agreed to sign the agreement proposed by the OECD on the taxation of multinationals on October 7, 2021. Already signed by more than 130 countries, this reform seeks to establish a tax rate global minimum of 15% to all major groups. In the viewfinder of this program, we obviously find the big players of the web that are Apple, Google or Facebook, all installed in Ireland for tax reasons.

Google bills Google

Ireland has so far offered one of the lowest corporate tax rates in the world, with a tax of just 12.5%. For years, web giants and other multinationals have therefore set up their headquarters there to avoid paying too much tax. The agreement signed by Dublin will therefore put an end to the privileged status that the country had, and make the tax optimization operated by the web giants more complicated.

Facebook had been installed in the country since 2008, Google since 2003. Apple employs more than 6,000 people. In all, more than 800 American companies have offices in the country. These subsidiaries actually hold the intellectual property of the companies, which they monetize at various branches around the world. Google Ireland Ltd therefore invoices the other subsidiaries of Google for the use of its service. Most income is “generated” in this way in Ireland, which currently has a lower corporate tax rate than other European countries.

150 billion expected

A first round of tax screwing had already been operated, at the end of 2020, to put an end to the “Irish doubles”, a tax mechanism used, in particular by Google and others, to evade the tax. Ireland’s recently accepted global tax rate is a continuation of this tax fairness effort.

Apple campus in Ireland // Source: Sean O’Sullivan

According to the Irish Minister of Finance, this new rule will allow “ meet the tax challenges of digitization “. All companies generating more than 750 million in turnover (i.e. most of the large technological groups established in the country) will have to submit to this 15% tax. According to the OECD, the introduction of this rule will generate 150 billion euros in revenue and harmonize international taxation. Despite everything, the Irish government remains confident that the large digital multinationals, which have created jobs there, will not move following the implementation of this new tax rate.

If all goes as planned, this corporate tax harmonization should come into force in 2023.

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