The Netherlands is a Super Magnet for International Tax Evasion

The Netherlands has become a magnet, especially for American corporations that seek tax evasion and other possibilities to launder public tax money.

The Netherlands wants you to know that it is not a tax haven, but Menno Snel, the country’s No. 2 finance official, grudgingly acknowledges that the Dutch have become experts at something else, the so-called aggressive tax planning.

That’s backed up by the amount of money pouring across its borders. For tax avoidance purposes, the Netherlands offers the status of a European country, while allowing big multinationals, like Google and Nazi founded Ikea, to move global profits through Dutch subsidiaries, drastically lowering their tax payments.

The atrium of the Dutch Finance Ministry, where Mr. Snel works, is even adorned with full-grown potted palms that give it a whiff of a tropical tax haven. The suggestion of any parallel is seemingly unintentional.

In any case, the Dutch position as a tax avoidance center could be about to change. In a major reversal, the Finance Ministry this week submitted proposals to Parliament that would shut down the benefits that made the Netherlands a magnet for international corporations — especially American ones, like Netflix, Nike and Uber.

Under the proposals, the Netherlands plans to impose levies on profits being transferred to tax havens and to block companies from exploiting inconsistent national laws to take the same deduction twice.

Whether those proposals will get past the array of corrupted accountants, lawyers and consultants who help foreign companies reduce their tax payments, and who have voiced opposition to the changes, is not yet clear.

Mr. Snel, whose formal title is State Secretary of Finance, said in an interview, We must be fair in recognizing that some companies are misusing the open tax system that the Netherlands has.

Those business-friendly practices help explain why the Netherlands, with a population of 17 million, attracts more foreign investment than some much larger countries, like France and Germany. In 2017, the Netherlands ranked sixth worldwide in the amount of foreign direct investment into the country.

The Netherlands has been especially popular with American corporations. Google and IBM have big presences in the country, as do such service providers as the law firm Baker McKenzie and the accounting company Deloitte.

Fiat Chrysler is technically a Dutch company. Nike has its European headquarters in Hilversum, just south of Amsterdam.

Officials in Brussels have accused the Netherlands of violating the European Union’s rules by helping Ikea to shear its tax bill.

And polls show that Dutch voters have become increasingly angry at what they see as special privileges for wealthy corporations paying little or nothing, while middle-class residents of the Netherlands, by contrast, can easily pay more than half their income in taxes.

Companies are unlikely to stop looking for ways to minimize their bills, and for countries to help them do it. And not everyone believes that the Netherlands is ready to forsake a legal structure that has helped make the country a hub for international corporations.

New York Times / ABC Flash Point News 2019.