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Ireland tax rate is low. 15%.

However, Seychelles tax rate is even lower. It's 0%.

So why bother incorporating in Ireland?

I mean are there any laws in US, Ireland, or Seychelles that motivate IT companies to incorporate in Ireland instead of tax haven like Belize?

phoog
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user4234
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    I'm voting to close this question as off-topic because it is not a question about the law or legal process. –  May 04 '18 at 05:24
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    The motive must be law. I make that more clear. There have to be some law differences in those countries that make them want to incorporate in relatively expensive tax haven. – user4234 May 04 '18 at 06:11
  • Or there are cultural differences or there are political differences or there are accessibility differences... Not everything is based on the law, and claiming that this must be, with no supporting evidence, doesn't make sense. To then ask "are there any such laws?" is still too broad for Stack Exchange. –  May 04 '18 at 07:09
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    I differ. C'mon. Many wants to incorporate in Seyschelles or Belize due to 0% tax laws. I do not think cultures and political differences matter at all. After all, the companies aren't even really there. There could be some culture things like Seyschelles is less private than Ireland. But that is law. To be more exact, what laws motivate corporation to incorporate in higher tax heaven? – user4234 May 04 '18 at 07:11
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    Seriously? After 10 years in tax law, I can tell you that this is definitely a legal question. Answer below. – bdb484 May 04 '18 at 12:26
  • Thanks @bdb484. I have no idea why would anyone think differently. – user4234 Nov 08 '18 at 23:17

3 Answers3

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Why not Seychelles? Because Seychelles is internationally recognized as a tax haven in important ways that Ireland is not, particularly with respect to tax transparency and disclosure rules. Locating yourself in the more egregious haven states will subject you to additional scrutiny in the United States and elsewhere.

Why Ireland? Ireland's tax structure also lends itself to certain tax sheltering techniques that can be particularly useful for tech companies.

bdb484
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  • So, for Indonesian, Seychelles all the way – user4234 Nov 08 '18 at 23:18
  • What kind of scrutiny and by whom? Can you share some examples, @bdb484? – stf Aug 23 '23 at 05:26
  • The main concern would be audits by the revenue agencies in whatever other jursidcitions the company operates. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2192495 – bdb484 Aug 23 '23 at 13:15
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By far the most important reason is that Ireland is part of the European Union. It's nice that you pay 0% tax in the Seychelles, but if you can't realize your profit there then it's pretty meaningless. Within the EU it's easy to organize all national operating companies as daughters of the Irish holding company.

MSalters
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    Are you alluding to the problem of "repatriating" corporate profits? This warrants more explanation. – feetwet May 04 '18 at 14:25
  • @feetwet I don't read the answer this way. I think it is more of an issue of rule of law reliability and travel/free trade zone issues. – ohwilleke May 04 '18 at 19:44
  • Doesn't really matter. The whole operation can be done in other countries. Only the "company" is in seyschelles. – user4234 Nov 08 '18 at 23:18
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Where a company pays tax is not merely based on where it is incorporated. If it has a business base in another country (what is called a permanent establishment), it will generally be subject to tax there. So one reason Ireland's 12% rate is attract is that Ireland is often also a good place from which to do business.

In contrast, the cases where you can use a Seychelles or Belize company without having a significant business operation there are more limited, though such tax havens have been used for companies providing finance or holding intellectual property (patents, copyrights, etc.). New international tax rules are trying to limit such uses.

In the past (before 1996?), Ireland determined corporate residence solely on the basis of place of central management, whereas the US uses place of incorporation, so a company incorporated in Ireland but with no business there and not managed there would not be subject to Irish tax. That was changed to add incorporation in Ireland as an alternative test for residence, but with an exception that a number of US tech companies were able to take advantage of. Following the outcry over Apple's 'stateless' subsidiaries, this exception is being closed down.

Winter96
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