Court calls Netherlands tax haven; same as UK, Switzerland

The Dutch tax rules are attractive to large multinationals. The same is true for countries such as the United Kingdom, Switzerland and Luxembourg.

This writes the General Court of Auditors in a report, which was requested by the Second Chamber. The report was published today. Large multinationals search around the world for ways to reduce their tax burden. The Netherlands is attractive because the profits from abroad is not taxed again and there is no retention tax on interest and royalties.

Tax avoidance is not illegal, but may have consequences for public finances in countries and for the tax burden of small and medium sized enterprises, which don't have the ability to roam all over the world with corporate profits.

The Netherlands played its full part in attracting large companies. The Netherlands also previously made tax rulings on the tax payments. Data from the Tax Authorities shows that through this multinationals do not pay 15 percent dividend tax in the Netherlands, but only 1 percent.

The Court of Auditors warns that countries competing with each other on the tax rates for business will lead to an even lower profit tax for big businesses. Not only SMEs in western countries, but also in developing countries, will suffer from it.

Such unintended effects of tax avoidance can only be countered in an international context. The Court of Auditors recommends taking action against this and being transparent in the framework of international organizations such as the OECD, the G20, the EU or the UN.

The transparency would also have to take the Dutch Cabinet into account. According to the Court of Auditors, the State Secretary of Finance will have to send the Second Chamber an annual overview of the use of the Dutch investment climate for large corporations and the financial flows involved.