Certain loopholes in tax law in the Netherlands have allowed interest, royalties and dividends to be transferred to other countries. Two years ago there were 12,400 of these companies in the Dutch sector.
Netherlands still attracts fans avoid taxes or hide money with call “Mailbox Companies”But it damages the Dutch reputation, greatly undermines its economy and harms countries that have lost tax revenue, a commission appointed by the Dutch government to investigate the impact of these practices has concluded.
NS tax law loopholes The Netherlands has allowed interest, royalties and dividends to be transferred to other countries, allowing multinationals to pay as little tax as possible on profits made in other jurisdictions, according to a report released this week. .
The plan that allows them to reach this positive balance are “mailbox companies”, whose numbers “remain high”, when There is little or no real economic activity in the country And according to the commission led by Dutch official Bernard ter Haar, they offer little benefit to the Netherlands.
In 2019, the home of the Dutch region was 12.400 of these companies with a total balance of 4,500,000 million euros—5.5 times the size of Dutch GDP—but They have only created between 3,000 and 4,000 jobs and represent less than 1% of the country’s tax revenue.
“Logically, the tax does not apply to the total of this balance, but only to payments received and made. Between 2015 and 2019 (…) an average of 170,000 million euros flowed through mailboxes In 2019, the Treasury received an estimate of 650 million euros from mailbox companies, or 0.2% of total tax revenue,” he adds.
This is “proportionate” to the loss of tax revenue carried by other countries through the Netherlands, which is estimated to be around €22 billion, and hurts the reputation of the country in the world, while companies and their tax advisors are the main beneficiaries of this practice.
The caretaker Dutch government has tried to change this practice in recent years by introducing a series of measures to make letterbox companies less attractive, but the effects are yet to be seen. “The truth is that We don’t see in the statistics that the Netherlands has become a normal country.” In this sense, Ter Gar was sentenced.
proposal to reverse the scenario
The committee asks the government to “enhance transparency” about shell companies, which “Strengthen Supervision” of the sector and allow said entities to report more on their activities”, as this would make the country “less attractive” to these companies and “normalise” this practice of tax avoidance.
It also proposes Registry with names of final beneficiaries To expose “who is hiding behind these companies”.
In addition to national measures, this commission believes that the Dutch government should Seek firm agreement in an international context Because “then you also know for sure that it will actually reduce (tax avoidance) and you will not only divert the flow to another country.”
“We want countries to jointly remove tax benefits for empty entities, such as participation exemptions, and actively share data on mailbox companies,” the committee says.
The Secretary of State for Finance, Hans Wijlbreif, promised in response that the Dutch government would continue to play an active role in reforming the international tax system, But he regretted that it would depend on the next government – still in the process of formation – decide whether to implement the recommendations of this commission or not.
According to a study conducted in 2019 by the Office of Economic Policy Analysis (CPB) Many companies have given their royalties to Bermuda Through this country, with tech giant Google as one of the most important, with the diversion of European profits to Bermuda via Ireland and later the Netherlands, a construction it no longer uses.
NS tax avoidance is not illegal, since based on the use of legal channels To minimize the payment of taxes, but avoid hiding the income. However, in recent years there has been increased criticism about multinationals using the tax haven to avoid paying large amounts of money to state officials.
Various countries are working to stop these practices. Ireland concluded in 2015 that its structure was a way to circumvent the Icelandic Withholding Tax and decided to change it, meanwhile, America Introduced new tax rules for accessing the funds of your multinationals in tax havens.
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