How AbbVie shifted profits offshore and lowered its tax bill through Ireland

Over the past decade, AbbVie Inc. has reported strong global earnings. But the distribution of those profits, and where they were taxed, tells a different story. From 2014 to 2024, AbbVie recorded over 115 billion dollars in pre-tax foreign profits, while posting more than 37 billion dollars in domestic losses. This mismatch helped the company achieve an average global effective tax rate from 2014-2024 of just 11.8 percent, well below the statutory rates in either the United States or Ireland.

The strategy behind this outcome relies on the ownership and movement of intellectual property, as well as Ireland’s favourable tax regime. When AbbVie acquired Allergan in 2020, it gained more than pharmaceutical assets. It took control of a set of Irish subsidiaries designed to house valuable intangible assets, including patents. These Irish entities allowed AbbVie to continue shifting profits out of the United States and into a lower-tax jurisdiction with generous amortisation rules.

By 2024, AbbVie held over 20,000 active patents through its Irish subsidiaries. Allergan Unlimited Company alone controlled more than 17,000. Other Irish entities such as AbbVie Ireland Unlimited Company and AbbVie International Holdings Unlimited Company also played key roles. These subsidiaries were not just licensing hubs. They formed the legal core of AbbVie’s global tax structure.

Ireland’s tax appeal goes beyond its 12.5 percent corporate rate. The real benefit lies in its capital allowances for intangible assets, which let companies deduct the value of patents and other IP against their profits. This means that once AbbVie transferred intellectual property to an Irish company, that entity could charge royalties to affiliates in the United States and elsewhere. These royalties reduced taxable income in high-tax countries, while generating income in Ireland that could be offset by amortisation and other deductions.

The result was a systematic shift of taxable profit from the United States to Ireland. Between 2014 and 2024, AbbVie paid only 3.4 billion dollars in tax on more than 115 billion dollars in foreign earnings, a foreign effective tax rate of just 2.9 percent. Meanwhile, despite reporting cumulative losses in the United States, it still paid 5.8 billion dollars in domestic tax. These payments often reflected deferred tax accounting and the release of previously reserved liabilities, rather than current year profitability.

After the Allergan acquisition in 2020, AbbVie’s tax position became even more aggressive. That year, it reported nearly 8 billion dollars in foreign earnings and a 4.5 billion dollar loss in the United States. Yet it still booked a 1.2 billion dollar global tax benefit, driven in part by the amortisation of newly acquired intangible assets. In 2022, it earned more than 18 billion dollars abroad and paid less than 500 million in foreign tax. In 2024, despite reporting 11.5 billion dollars in foreign profit, the company recorded another global tax benefit of 570 million dollars, pushing its global effective tax rate negative.

Over the entire decade, AbbVie’s US operations never turned a profit. Every year showed losses. But this did not reflect weak performance. AbbVie’s drugs, including Humira, Skyrizi, and Rinvoq, consistently ranked among the best-selling treatments in the US. The losses were instead a result of intercompany payments, particularly royalties, which shifted earnings to offshore entities.

Irish subsidiaries played a central role. Allergan Unlimited Company held the largest number of patents. AbbVie Ireland Holdings Unlimited Company and AbbVie Manufacturing Management Unlimited Company also handled substantial revenue and cost flows. All of these subsidiaries are 100 percent owned by AbbVie and structured as unlimited companies.

Abbvie’s complex multi-jurisdictional corporate (MJG) structure is obviously legal. But it raises questions about how global multinational groups use intangible assets and international tax rules to minimise liabilities in different jurisdictions. Intellectual property is not just a source of innovation for MJGs like AbbVie. It is also a key tool for profit shifting.

From 2014 to 2024, AbbVie pursued a consistent approach. It located valuable IP (and the licences to exploit the IP), in low-tax jurisdictions, used cost-sharing and intercompany licensing to move profits offshore, while offsetting foreign income with tax-deductible amortisation. The result was billions in tax savings and a business model built not only on science, but on profit-shifting.

Here is the financial breakdown behind the strategy: