tax-law
Why do tech companies incorporate in Ireland instead of Seychelles?
<p>Ireland tax rate is low. 15%.</p>

<p>However, Seychelles tax rate is even lower. It's 0%.</p>

<p>So why bother incorporating in Ireland?</p>

<p>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?</p>

<p><strong>Why not Seychelles?</strong> 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. </p>

<p><strong>Why Ireland?</strong> Ireland's tax structure also lends itself to certain <a href="https://www.bloomberg.com/news/articles/2018-01-02/google-s-dutch-sandwich-shielded-16-billion-euros-from-tax" rel="nofollow noreferrer">tax sheltering techniques</a> that can be particularly useful for tech companies.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>
