Because of a quirk in Irish law, if the Irish subsidiary is controlled by managers elsewhere, like the Caribbean, then the profits can skip across the world tax-free.

Irish subsidiary

Second Irish subsidiary

PRODUCT

Netherlands

... and then back to the first Irish subsidiary, which sends the profits to the overseas tax haven.

And because of Irish treaties that make some inter-European transfers tax-free, the company can avoid taxes by routing the profits through the Netherlands ...

At one time, a company would actually manufacture products in Ireland. But today, it’s more likely to use factories in China, Brazil or India that ship directly to consumers.

Manufacturing subsidiary

The profits can land in an overseas tax haven where they are stored, invisible to authorities, for years.

NO-TAX COUNTRY 0%

Caribbean or other tax haven

PRODUCT

When the same product is sold overseas, money from the sale is sent to a second Irish subsidiary.

Overseas consumer

If the profits from the sale of a product stay in the United States, they would be subject to a federal tax of 35 percent. But if money is paid to an Irish subsidiary as royalties on patents the company owns, it can ultimately be taxed at far lower rates.

U.S. consumer