Europe Takes Aim at Deals Created to Escape Taxes

The laws in Netherlands shield a variety of profits from taxation, making it attractive for big multinational companies like Starbucks, Google and IBM to set up offices. Even rock stars like the Rolling Stones and U2 have taken advantage of Dutch tax shelters.

The same goes for Luxembourg, Bermuda, Ireland and the British Caribbean countries like the Cayman Islands. Along with the Netherlands, those places rank among the top destinations for foreign direct investment from the United States, according to a review of data collected by the Bureau of Economic Analysis that shows how entrenched tax avoidance strategies have become.

.. In some ways, authorities are performing a futile task: As officials move to close certain loopholes, others are likely to pop up in their place.

.. Last month, Ireland said it would phase out a loophole that Apple helped pioneer and is currently used by many other companies, known as the Double Irish. The maneuver allows companies to pay royalties from one Irish subsidiary to a second subsidiary incorporated in Ireland and domiciled in another country with low or no corporate tax. The strategy is often paired with a Netherlands subsidiary and known as Double Irish with a Dutch Sandwich.

.. A United States Senate report last year found that from 2009 to 2012, Apple transferred “$74 billion in worldwide sales income away from the United States to Ireland where Apple has negotiated a tax rate of less than 2 percent.”