If one thing became clear during the last few years, it is the
fact that the status of The
Netherlands as tax haven is finally getting in the crosshairs of the United
States and European institutions, like the European
Commission and Parliament.
The Dutch
government, as well as politicians in the Dutch Second Chamber of Parliament, almost
frantically deny that The Netherlands IS a tax haven: the Dutch parliament
even accepted a ridiculous motion, in which The Netherlands officially denies to
be one. Nevertheless, the writings are on the wall.
Numerous foreign companies and private millionairs from all
over the globe knew where to go to, when they wanted to forward their money at
a bargain price to tax-friendly savings’ banks and other financial hotspots in
the Carribbean area or elsewhere. And it weren’t the Ghostbusters...
Money, that these people and companies earned with foreign-based
dividends, or with royalties, patents and other earnings, coming from foreign
subsidiaries, made a U-turn through The Netherlands, only to end at a
beautiful, palmtree-laden island somewhere on the globe, with more banks and
companies than inhabitants… on paper. But it seems that something is finally changing
in Europe…
Not that this change is grasped by The Hague yet; the Dutch
politicians still assume the ostrich position (“Please move on, nothing to see here”) when it comes to the Dutch
role in the ubiquitous tax avoidance (our should we call it evasion?) by large
corporations, as well as rich businessmen and famous artists like U2
and the Rolling Stones.
Nevertheless, it seems that the ‘Big Four’ accountancy firms
(KPMG, PWC, EY and Deloitte) finally understand that a different wind is
blowing in Europe, after they have all been invited to plea for the TAXE
committee on taxes of the European Parliament.
Their pleas were meant to discover/discuss the best arrangements
to make the tax collection by individual countries – within the European Union
and outside of it – as fair as possible, for both the corporations in question,
as for the countries where the underlying yields are earnt.
The ultimate goals are: no double taxing for corporations in
countries at both the emitter and the receiver side of money transfers, but
also no zero taxing by both parties. And an end to the artificial, fiscal
constructs that large corporations use to scoop out their taxable profits and
income.
Is it a coincidence that recently a movement has started in
The Netherlands, which seemingly wants to make an end to the numerous,
so-called letterbox-companies in this country? Letterbox companies, which
seemed only created for exactly that purpose of scooping out money from corporate
profits and income? Let’s see what happens along the way.
Prisco Battes, journalist at Het Financieele Dagblad (FD)
wrote an article about this new phenomenon. Here are the pertinent snips of it:
Fiscal counsels increasingly
question letterbox companies, which are established in The Netherlands for the
single purpose of transferring corporate income from interest and royalties to
tax havens.
Partners of large tax
consultancy bureaus tell the FD, that they are informed by foreign customers
with subsidiaries in The Netherlands, that they should be so wise to abolish
these letterbox firms.
According to leaving
chairman Marnix van Rij of the Dutch Order of Fiscal Counsels, The Netherlands
has to guard its favorable fiscal climate for the establishment of companies
and ‘it should look after not being punished for a side product of this favourable
fiscal climate’.
My comment: In
plain English, this opaque remarks means that ‘everybody and their sister
should leave the sinking ship of the empty letterbox firms’.
The discussion about
the letterbox companies is very topical, now that there is an international
movement working towards the establishment of measures, which should prevent against
scooping out the basis of tax assessement and avoidance of revenue taxes by
international companies.
“As a guild, we went
through a certain process regarding empty letterbox companies”, according to
Van Rij in an interview with the FD. “We don’t close our eyes for reality and we
are not in the defensive in order to keep everything as-is. Empty companies,
which don’t have another purpose than transferring money flows through The
Netherlands against the absolute minimum amount in taxes, are bad for the Dutch
image. By maintaining this tactics, The Netherlands could be punished by both
the OECD and the EU for what is mainly a fiscal side product.
Until recently,
employment and tax yields were arguments to keep the ‘empty’ letterbox
companies. Now, fiscal counsels of large tax consultancy firms state that these
constructs are not viable anymore.
Companies must have a
certain ‘substance’ in The Netherlands. Customers belonging to such companies
with substance, warn The Netherlands that it puts its favourable fiscal climate
under jeopardy, when it maintains its policy with respect to letterbox companies.
When even the large accountancy firms, as well as the
chairman of the Dutch Order of Fiscal Counsels, think that change is necessary
in The Netherlands with respect to some fiscal arrangements, you can bet that
change IS indeed necessary.
And last Friday, the special TAXE committee of the European
Parliament visited Dutch State Secretary Eric Wiebes of Financial (i.e. Fiscal)
Affairs to ask him about the Dutch situation with respect to fiscal constructs
and special tax rulings for large corporations.
Wiebes bravely stood his ground and maintained his
denial of The Netherlands being a tax haven, according to De Financiële
Telegraaf, while reluctantly giving a little bit more openness about the
favourable fiscal rulings for large corporations in our country.
The national revenue
services of The Netherlands and Germany will soon automatically exchange data,
regarding tax deals with large corporations: the so-called tax rulings. Within
two weeks both countries will sign a treaty to that respect, according to State
Secretary Eric Wiebes of Financial Affairs.
He stated that, after being
visited by a delegation of the European Parliament, which is investigating the
infamous tax-rulings in a number of countries, with multinationals, like Starbucks.
Wiebes stated that The
Netherlands wants to be a front-runner in Europe in the battle against tax
evasion. Yet there is nothing wrong with the Dutch tax-rulings, which are according
to Wiebes ‘flawless and professional’. Wiebes also wants to make an end to the
existence of empty letterbox companies, which are established solely to evade
taxes and don’t bring any employment in the country of their establishment.
Earlier that Friday,
Wiebes stated that the tax rulings are meant to offer certainty in advance
about the height of their tax assessment, but did not “hand out presents to
large companies”. “The Netherlands is not a tax-haven”, according to the liberal-conservative
State Secretary (VVD).
The last remark is where The Netherlands, represented by
this State Secretary differs in opinion
with many, many other countries, people and institutions, who consider that The
Netherlands is exactly that: a tax haven!
One thing is certain: in spite of all the bold words of Eric
Wiebes and in spite of the fact that chairman Marnix van Rij of the Order of
Fiscal Counsels does not want to slaughter the goose with the golden eggs, by
totally abandoning the (empty) letterbox firms, it seems that these fiscal
constructs have a bright future behind them.
And when the Dutch government does not voluntary abandon the
most blatant fiscal presents to the likes of Starbucks, the European Parliament
probably will. That is news that will undoubtedly lead to broad disappointment among
the financial industry and government of Ireland, The United Kingdom, Luxemburg
and The Netherlands. Nevertheless, it will also lead to sheer happiness among
numerous countries all over the globe, who see their natural resources being
emptied by large, multinational companies, who hardly pay one penny in taxes in
exchange.
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