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<p>The Double Irish, one of the largest tax avoidance strategies used by U.S. multinational companies, was effectively terminated by the Irish government in 2015, with existing users given until 2020 to comply. Using U.S. administrative corporate tax data, we present the first comprehensive analysis of profit repatriation following this landmark policy change. We find that in 2020, the first year of full implementation, firms previously using the Double Irish structure redirected $59 billion in royalty payments to the United States. To isolate the impact of the Double Irish closure from concurrent international tax reforms, we use propensity score matching to construct a comparable control group. Our difference-in-differences analysis finds that Double Irish users reported an average increase of $565 million in royalty payments after closure. However, we demonstrate that this average effect is driven by a small subset of firms, highlighting the structure’s highly skewed distribution. In total, between 1998 and 2018 Double Irish users channeled an estimated $1.2 to $1.4 trillion in profits to low-tax jurisdictions through this structure. Notably, the royalty payments redirected to the United States in 2020 represent only 31 to 38 percent of profits within the Double Irish arrangement as of 2018, suggesting that substantial profits may remain offshore. These findings indicate that existing literature likely underestimates the magnitude of U.S. tax base erosion through profit shifting.</p>

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Doubling down on tax avoidance: the effect of Double Irish closure on the profit shifting of U.S. multinational companies

  • 期刊论文

  • 发表日期：

    2025年4月21日

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  • Navodhya Samarakoon,
  • Paul R. Organ

摘要

The Double Irish, one of the largest tax avoidance strategies used by U.S. multinational companies, was effectively terminated by the Irish government in 2015, with existing users given until 2020 to comply. Using U.S. administrative corporate tax data, we present the first comprehensive analysis of profit repatriation following this landmark policy change. We find that in 2020, the first year of full implementation, firms previously using the Double Irish structure redirected $59 billion in royalty payments to the United States. To isolate the impact of the Double Irish closure from concurrent international tax reforms, we use propensity score matching to construct a comparable control group. Our difference-in-differences analysis finds that Double Irish users reported an average increase of $565 million in royalty payments after closure. However, we demonstrate that this average effect is driven by a small subset of firms, highlighting the structure’s highly skewed distribution. In total, between 1998 and 2018 Double Irish users channeled an estimated $1.2 to $1.4 trillion in profits to low-tax jurisdictions through this structure. Notably, the royalty payments redirected to the United States in 2020 represent only 31 to 38 percent of profits within the Double Irish arrangement as of 2018, suggesting that substantial profits may remain offshore. These findings indicate that existing literature likely underestimates the magnitude of U.S. tax base erosion through profit shifting.