This works because under Irish tax law (until 2015) it is possible for a company to be incorporated in Ireland but tax-resident in Bermuda. An example of how t

This works because under Irish tax law (until 2015) it is possible for a company to be incorporated in Ireland but tax-resident in Bermuda. An example of how this might work: A US tech company A, wants to sell to customers in the UK. They transfer the rights to their patents to a Bermuda "headquartered" but Irish incorporated company B. They set up a sales company in Ireland C (this one is Irish tax resident). They set up an IP company D in the Netherlands which has favourable tax treatment for income from intellectual property - the same reason that U2 transferred the rights to their music catalogue to a holding company there. They (may) set up a company E in the UK for doing support. Now if you're in the UK and spend £1000 to buy a product from the company: 1) You buy from C which records revenue of £1000 2) C pays £990 in IP licensing fees to D in the Netherlands. 2b) After covering its sales costs from the remaining £10, C makes barely any profit so pays little tax at Ireland's low 12.5% corporate tax rate. 3) D transfers the money to B after paying a very small amount in Dutch taxes 4) B is incorporated in Ireland but tax resident in Bermuda. Since the money has come in as a transfer from a group company within the EU, there is no withholding tax to be paid. 5) Money is safely in Bermuda. Of course if A ever wants to bring money back from B it will then have to pay US corporate income tax on it.