The 12.5 Percent Corporate Tax

How Ireland's low corporate tax rate attracted multinationals, how structures like the "Double Irish" cut global taxes, and how the 15 percent global minimum tax changed things.

Ireland is known for its 12.5 percent corporate tax rate.

The strategy

Ireland set a low 12.5 percent rate on trading profits (fully from 2003).
It attracted multinational headquarters and operations.

Profit shifting

Structures like the “Double Irish” let companies route profits through Irish subsidiaries to tax havens, paying very low taxes globally.
Ireland phased out the Double Irish from 2015 to 2020 under international pressure.

Criticism

Critics called Ireland a tax haven.
Other countries lost tax revenue.

Global minimum tax

In 2021, Ireland joined the OECD agreement for a 15 percent global minimum tax on large multinationals.
Ireland applies 15 percent to large firms from 2024, keeping 12.5 percent for smaller ones.

Windfall

Ironically, corporate tax receipts surged, giving Ireland large budget surpluses.

Debate

Tax competition attracts jobs but can erode global tax bases.

The profit route

A tech company's European profits flow to an Irish subsidiary, then under old rules to a Bermuda-based entity, paying almost no tax.

Thinking low taxes only attract paper profits

Ireland also gained real jobs and investment.

Key takeaways

Ireland's corporate tax rate is 12.5 percent.
The Double Irish enabled profit shifting until 2020.
Ireland joined the 15 percent global minimum tax.
Corporate tax receipts surged, creating surpluses.