The Netherlands: A Tax Haven?

Abstract

All the empirical evidence indicates that the Netherlands is a tax haven. This is because it deliberately offers companies who would not otherwise seek to be resident within its territory the means to reduce their tax charges on interest, royalties, dividend and capital gains income from foreign subsidiaries. This SOMO report investigates the extent to which the Netherlands can be regarded as a tax haven, and analyses the factors behind this, such as the unique network of bilateral treaties for the avoidance of double taxation and the special fiscal regimes for group financing operations. It estimates the number of mailbox companies, mostly established to route financial flows through the Netherlands purely for fiscal reasons, at almost 20,000, and this number has been increasing rapidly in recent years. The Netherlands benefits primarily from attracting financial flows to its territory by increasing the tax yield it enjoys from corporate income and from employment generated in the trust and tax consultancy sector. These benefits do not, however, outweigh the negative consequences for other countries. Hence, Dutch tax policy is inconsistent with its policy on Official Development Assistance (ODA) and its associated high contribution to financing the achievement of the Millennium Development Goals (MDGs). The tax haven features of the Netherlands also facilitate money laundering and attract companies with a dubious reputation. In order to promote a fair and just global economic system in which tax avoidance by multinational corporations is minimised, the report gives recommendations for the Dutch government and all other relevant actors.

Publication
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