How the EU wants to put an end to letterbox companies

BNR Nieuwsradio
Peter Kavelaars, Professor of Fiscal Economics at Erasmus School of Economics
Erasmus School of Economics

Peter Kavelaars, Professor of Economics of Taxation at Erasmus School of Economics, is a guest at BNR Nieuwsradio where he talks about the new European approach to letterbox companies.

The new State Secretary for Taxation immediately has a number of tough issues on his plate. One of them is the approach to letterbox companies that Brussels advocates. ‘That will be quite a job for him', says Kavelaars. ‘Not only for the Netherlands, but also for many other countries.’

Letterbox companies are shell companies that are mainly used to reduce or avoid tax on dividends. A lot of money flows through the Netherlands because of these companies. The European Union now wants to put an end to this, which is why they have come up with a new directive. This directive entails that these shell companies will be ignored from now on. Brussels wants to be able to include these flows directly in the levy, but Kavelaars calls that a difficult job. The mailbox would then have to become an office where people work.

According to Kavelaars, the industry underestimates the new rules and the perseverance of Brussels. ‘I think there is quite a lot of support for this and you see that the European Commission gets all the measures aimed at combating tax avoidance approved. Furthermore, Member States are in favour of this, it involves a lot of money and it also brings governments a lot of benefits.’

More information

The full item from BNR Nieuwsradio, 5 January 2021, can be found here (in Dutch). 

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