European tax evasion language toned down after Dutch raise concerns

European Union States decided to tone down the language used in the European Commission's proposals on reducing tax evasion by multinationals, Trouw and the Financieele Dagblad reports.

The two newspapers, both involved in the international investigation into the Panama Papers and tax evasion, managed to get hold of a copy of the draft text of the European directive on tax evasion.

Among other things, the EU countries agreed to mitigate the so-called switch-over clause. According to the Telegraaf, the clause states that European multinationals pay taxes in the EU if their subsidiaries outside the EU pay a lower income tax. The member states also decided that EU multinationals do not have to pay taxes if the country in which it is located has a tax treaty with the country that has a low profit tax. This is good for the Netherlands because it has a large number of tax treaties with other countries

The Tweede Kamer, the lower house of Dutch Parliament, previously expressed concerns about this specific clause. The parliamentarians worried that the clause would make the Netherlands less attractive to businesses tax-wise.