Twitter's new Dublin office will help it save 16% in tax – maybe more

We’re not exactly surprised. As we predicted in May, according to Twitter is setting up its European HQ in Dublin (in fact this is its third international office outside the Valley). The reasons are simple: money. [UPDATE: It appears Twitter will in fact be reducing its tax payments by more than 60% by lowering its tax rate 16 percentage points].

Following the long- tradition of US companies in Europe (joining Google, Yahoo, AOL, Facebook, PayPal, LinkedIn, IBM, Microsoft, Oracle, Intel, Apple, HP and Zynga) Ireland’s 12% corporation tax, and 45 minute flight from London (where corporation tax is 28%) is just too tempting not to take advantage of. One annual board meeting later and you can be back at you Mayfair pad in one day.

Facebook employs around 250 people in Ireland and Google, according to Silicon Republic, employs almost 2,000 people at its European headquarters there. However, generally speaking the engineering centres remain in the US.

Twitter’s London operation is an advertisng sales office located in London’s West End, home of the media.

The Dublin operation will be Twitter’s third location outside of the United States.

Note that Twitter recently won a tax fight with the San Francisco city.

According to Bloomberg, Google managed to cut its taxes by $3.1 billion in the last three years by moving most of its foreign profits through Ireland and the Netherlands to Bermuda.

This strategy is known to lawyers as the “Double Irish” and the “Dutch Sandwich”. You move money through Amsterdam and Dublin. Thus Google reduced its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization.

Apart from London Twitter also has an office in Japan, where it’s enjoyed a lot of success.

It would be interesting to see if Twitter ends up following such a path following the Dublin move.