Why the Netherlands differs significantly from Bermuda

Erasmus School of Economics

In an article from One World, Professor of International Taxation at Erasmus School of Economics Dirk Schindler identifies what kind of country the Netherlands is in the tax haven debate.

Tax haven?

The Netherlands: some might say that it’s a tax haven. If we look at some statistics, it’s very understandable that one might draw this conclusion. We have more than 10,000 shell companies, until recently no withholding tax was levied and between 2012 and 2019, 128 billion euros in royalties was transferred to Bermuda via the Netherlands for Google alone (!). By negotiating tax treaties to prevent companies from paying tax twice, the Netherlands is attractive for multinationals. However, this opens the gates for big and wealthy companies to hire tax experts to come up with constructions that make tax evasion possible. The party that profits from these treaties thus is the multinational: simple companies or citizens are unable to exploit these rules but do have to pay to facilitate this behaviour.

Conduit country

According to Schindler, the Netherlands is more so a conduit country than a tax haven: ‘the Netherlands is no classical tax haven: it doesn’t have a low corporate income tax rate, the country is relatively big and the profits don’t really end up in the Netherlands. Still, the Netherlands makes a big impact. It is one of the biggest conduit countries in the world which facilitates shifting profits and evading rules and taxes’. The consensus is that it is no good for the Netherlands to retain its current stance: the positive effect on employment opportunities is marginal, the amount of economic gain isn’t big either and it’s bad for the international reputation of the Netherlands. However, fortunately, there is a shift in the attitude of the Netherlands: it partakes more actively in the international debate on tax evasion and introduced a withholding tax. It seems that the Netherlands is moving in the right direction.

More information

You can read the full article from One World, 4 October 2021, here.

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