The Netherlands: biggest tax haven for Fortune 500 companies

16 June 2014, by
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The European Commission has opened an investigation to examine whether the taxes paid by Starbucks in the Netherlands comply with the EU rules on state aid. The investigation is one of three, with Apple being investigated in Ireland and Fiat in Luxembourg.

This comes after revelations that the Netherlands is the biggest tax haven worldwide for US multinationals: no other country has so much money funnelled through it for tax purposes by US companies as the Netherlands.

The Netherlands as a tax haven

Offshore Shell Games, a report by American organisations Citizens for Tax Justice and the Public Interest Research Group, says that in 2010, large US multinationals from among the Fortune 500 placed 127 billion US dollars (93 billion euros) in the fiscally friendly Netherlands.

That’s more than famous tax havens like Bermuda (94 billion US) and the Cayman Islands (51 billion US). According to the report, there is no country in the world where so many US multinationals have one or more limited companies. Of the Fortune 500, 48 per cent have one or more limited companies (b.v.) in the Netherlands.

The Dutch Ministry of Finance said that these companies are not here only for tax reasons, but also have their European headquarters here, with production companies and distribution centres that are responsible for thousands of jobs.

That, however, only explains small part of the 127 billion. Previous reporting showed that "letterbox" companies in the Netherlands have been active since 2005, during which they have annually put through 12.000 billion euros; 20 times the gross national income.

EU’s Starbucks investigation

Announcing the investigation into Starbucks, Apple and Fiat, European Commission Vice President in charge of competition policy Joaquín Almunia said, “Under the EU's state aid rules, national authorities cannot take measures allowing certain companies to pay less tax than they should if the tax rules of the Member State were applied in a fair and non-discriminatory way."

The Netherlands as a tax haven for US multinationals

Investigations by the UK government of Starbucks’s operations in Britain revealed that the company had paid UK corporation tax just once in 13 years, thanks to what seem to be specially negotiated deals with national tax offices in the Netherlands and Switzerland.

Starbucks's chief financial officer for the UK told British MPs in 2012 that the company had an agreement with the Netherlands that included a "very low rate" on its operation there.

Response to EU investigation

Starbucks has insisted that they comply with all relevant tax rules, laws and OECD guidelines and that "we're studying the commission's announcement related to the state aid investigation in the Netherlands."

From the Dutch government, State Secretary of Finance Eric Wiebes said, "I am confident that the ultimate conclusion is that there is no question of state aid and that the agreements with Starbucks Manufacturing EMEA BV comply with the OECD guidelines on transfer prices."

When Starbucks announced in April 2014 that it was moving its European headquarters from Netherlands to London, Wiebes argued that England was busy copying Dutch tax excellence.

Sources: European Commission, Volkskrant, The Guardian, USPIRG
 

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Alexandra Gowling

Alexandra is an Australian citizen and an experienced expat, having spent (quite a bit of) time in A...

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