The Netherlands - while poor segments of Dutch population suffer Government still legally allowing 20,000 letter-box companies to circumvent taxation

The Netherlands harboring  more than 20.000 letter box companies

A White House factsheet in 2009 reported. "Nearly one-third of all foreign profits reported by US corporations in 2003 came from just three small, low-tax countries: Bermuda, the Netherlands, and Ireland."

Like the Queen in Shakespeare's 'Hamlet' who protested that 'The lady doth protest too much, methinks,' the Dutch government hypocritically objected to the Netherlands being dubbed "a tax haven" and the White House agreed and deleted the line. 

The Dutch tax haven, has now more than  20,000 letter-box companies and in recent years even Facebook joined U2, the popular Irish rock group, to circumvent the tax system.. 

The Netherlands also hosts thousands of foreign financial vehicles. Bloomberg reports that a bookkeeper’s home office in Amsterdam also doubles as the headquarters for a Yahoo! Inc. offshore unit. 

It is a scandal that deficit-strapped Holland is raising retirement ages and taxes on the working classes while the Netherlands’ Government of PM Rutte and coalition partner Samson continues to allow their country to be a €10.2trillion conduit on the global tax-avoiding network. 

 

Bloomberg says that attracted by the Netherlands’ lenient conservative policies and and an extensive network of tax treaties, companies such as Yahoo, Google, Merck & Co and Dell have moved profits through the Netherlands

Using techniques with nicknames such as the “Dutch Sandwich,” multinational companies routed €10.2trillion in 2010 through 14,300 Dutch “special financial units,” according to the Dutch Central Bank. Such units often only exist on paper, as is allowed by Dutch  law.

Google, IBM and Italian oil and gas group ENI head the list of companies using letter-box companies to cut their Dutch tax bills to between 0 and 5%, the Volkskrant daily said in an article.

According to theDutch  Financieele Dagblad , French state companies are also among those using the Netherlands to cut their tax bills.

In the meantime the Dutch Governmen has been dancing around the subject.  

Frans Weekers, Dutch deputy finance minister, said the controversy over the letterbox companies had damaged the Netherlands’ investment climate. “Over the past 10 years the trend has been for the number of letterbox companies in the Netherlands to keep growing. I want to turn that trend around,” Weekers told The Financial Times. “I see the Netherlands being portrayed in a bad light. I don’t want to be portrayed in a bad light." 

Recently the Dutch government said tax treaties with Zambia and 22 other poor countries will be revised to allow the incorporation of anti-abuse clauses where necessary, but has not said a word about the major players which have letter box companies registered in the Netherlands and are involved in these tax evading schemes 

The European Commission has now said it will attempt to close a loophole that allows companies to cut their tax bill, a top official said on Monday, but the EU executive will first need to persuade member countries to back the change.

The commission wants rules to prevent companies setting up “letter-box subsidiaries” in countries solely to qualify for a softer tax regime and cut their bill.

Algirdas Semeta, the EU’s taxation commissioner, wants to insert an anti-abuse clause by the end of next year, allowing authorities to target artificial “parent-subsidiary” schemes that flout the spirit of the tax code.

“When our rules are abused to avoid paying any tax at all, then we need to adjust them,” he said. “Today’s proposal will ensure that the spirit, as well as the letter, of our law is respected.”

Semeta declined to name countries or companies that exploited the loophole but said that billions of euros were at stake.

 EU-Digest

Tax Havens: "The Netherlands is not a tax haven", says minister - but reports contradict his statement

The Netherlands - major tax haven

The Netherlands is not a tax paradise, junior finance minister Frans Weekers said on Tuesday following the publication of two reports on Dutch tax treaties.

But reports contradict his statement.
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A report for Holland Financial Centre by economic institute SEO said that €278bn flow through shell companies based in the Netherlands every year.

This stems from the tax break on participations, relatively low tax on interest and royalties and the wide tax treaty network with other countries, the SEO report says

The SEO report states the Netherlands has some 12,000 multinational holding companies, of which 75% are based at trust offices. These holding companies generate between 8,800 and 13,000 jobs – or around only  one job per company.

Another report on Tuesday said the Netherlands’ extensive tax treaty network with other countries leads to huge revenue losses in developing countries.

Research by multinational research institute Somo shows ‘28 countries together lose €771m on dividend and interest tax income alone every year,’ because of Dutch tax treaties.

But the total amount will be far higher because the calculations do not include tax avoidance through profit shifting with the use of royalties and capital gains

‘This report shows Dutch tax treaties have a seriously negative impact on poor countries’ revenue and that there is no evidence these tax losses are compensated by an increase in investment as a result of having tax deals,’ said Somo researcher Katrin McGauran.

In particular, Eastern European countries such as Serbia, Ukraine and Croatia have very disadvantageous treaty provisions, the report states.

In late 2012, Mongolia cancelled its tax agreements with the Netherlands and other countries because of the loss of revenue.

Read more: DutchNews.nl - The Netherlands is not a tax haven, says minister