The Company That Paid Itself

For years, Nike paid Nike to use the Nike swoosh. Not a typo: the US parent licensed its own trademark from a Bermuda subsidiary, and the royalty checks flowed from one part of the company to another — tax-deductible on the end that paid, and taxed at zero on the end that received.

The vehicle was Nike International Ltd., set up in Bermuda in 2006. It held the swoosh, the "Just Do It" mark, and a chunk of Nike's other brand IP, and it licensed that IP back down to Nike's operating companies around the world — including the ones ringing up sales in Paris, London and New York. Every time an American store sold a pair of shoes, a slice of that sale left the country as a royalty payment, deductible against US profits, and landed in Bermuda, where corporate tax was zero.

The arrangement ran under a ten-year ruling with Dutch tax authorities, part of a chain that also used Netherlands-based entities to route the payments through favourable treaty terms before they reached Bermuda. It was legally sophisticated: multiple entities, formal transfer-pricing studies to justify the royalty rates, an actual office and board in Bermuda to satisfy substance requirements. This was not a shell company with a fax machine. It was a structure built by people who understood exactly what they were doing.

Why It Worked, and For How Long

The alignment that made this profitable held for the better part of a decade. Bermuda charged nothing on the income it received. The US and other jurisdictions allowed the royalty payments as ordinary deductible expenses. Transfer pricing enforcement, at the time, gave companies real latitude to argue their internal pricing was arm's length. CFC rules had deferral gaps a company Nike's size could use. And there was no coordinated international response — each country was chasing this kind of structure alone, if at all.

Here is where the story usually gets told wrong. The common version has Nike running this play for "decades" until a wave of reform shut it down. That's not what happened. Nike's own Bermuda phase ran from roughly 2006 to 2014. As the original ten-year Dutch ruling approached its expiry, Nike restructured on its own terms, moving the IP into a new Dutch entity — Nike Innovate CV — well before any of the reforms usually credited with killing this trick had come into force. The OECD's BEPS actions on IP transfer pricing weren't finalised until October 2015. The US GILTI minimum tax dates to the 2017 tax reform. Pillar Two's global minimum only started landing from 2021 onward. Bermuda's own corporate tax didn't exist until January 2025. Nike had left the building a decade before most of the locks were changed.

That doesn't mean the reforms are fiction — they genuinely did narrow this style of structure, just for the multinationals that kept using variants of it after Nike moved on, not for Nike's own case.

What Still Works, Smaller

Those reforms mostly bind companies above Pillar Two's roughly €750 million revenue threshold. Below that line, the underlying principle — holding IP in a jurisdiction with a genuinely favourable rate, with real substance behind it — still works, just at a scale a swoosh-sized company would find beneath it.

• Ireland
  Headline corporate rate: 12.5%
  Notes: Requires genuine European operating presence

• Cyprus
  Headline corporate rate: 15% (from 1 January 2026), with IP box relief on top
  Notes: Partial exemption on qualifying IP income sits on top of the standard rate — Cyprus's headline CIT rose from 12.5% to 15% at the start of 2026

• UAE Free Zone
  Headline corporate rate: 0% on qualifying income
  Notes: Requires genuine Free Zone operations, not a mailbox

• Malta
  Headline corporate rate: Effective rate reduced via IP box regime
  Notes: Refund mechanism, not a flat headline rate

None of these work without substance: a real office, real people making real decisions in the jurisdiction, arm's-length pricing on the licensing arrangement, and a beneficial owner whose personal residency actually lines up with the structure. A UAE Free Zone company holding IP for someone who lives in London and never visits Dubai is not a structure — it's an invitation to an audit.

The Founder-Scale Version

Take a SaaS founder who has built a product with real IP value and is deciding where to hold it. If she's already resident in Cyprus, putting the IP in a Cyprus company and applying the IP box relief can bring her effective corporate rate on qualifying IP income down meaningfully below the 15% headline — not to Bermuda's old zero, but low enough to matter, and defensible in a way a Bermuda mailbox company from 2005 never was. If she's building out of the UAE and her operations are genuinely there — staff, decision-making, a lease that isn't decorative — a Free Zone entity can hold the IP at 0% on qualifying income. If neither residency fits her life, chasing the rate is the wrong move; residency should come first, and the entity should follow it, not the other way round.

That ordering is the whole lesson Nike's later, quieter restructuring actually teaches: pick where you live and operate for real reasons, then build the entity that fits, document the pricing properly, and revisit it as rules change. The version that gets companies in trouble is the one built backwards — a jurisdiction chosen purely for the number, with a structure invented afterward to justify it.

Where This Goes From Here

The Nike-scale version of this trick is mostly closed to companies above the Pillar Two threshold. The founder-scale version isn't. On a scoping call, we walk through where you and your business are actually resident, what IP you hold, and whether a holding structure would survive contact with a tax authority — not just look good on paper.

Important note: this article describes general principles for informational purposes. It is not legal or tax advice, and any IP holding structure should be built with jurisdiction-specific counsel who can review your actual facts.