Tax avoidance via Netherlands costs nations €22 billion annually: Report

Euros in an envelope
Euros in an envelopePhoto: AlexeyZel/DepositPhotos

The tax climate in the Netherlands, and the room it offers for letterbox companies and tax avoidance, costs the world an estimated 22 billion euros a year, according to calculations by economics professor Arjan Lejour of Tilburg University, Trouw reports.

Lejour based his calculations on the average results of 10 international investigations into global tax breaks. He then calculated the Netherlands' share based on the foreign investments that enter the country, and then immediately leave again.

He found that foreign multinationals avoid a lot of taxes by channeling the profits of their subsidiaries through letterbox firms set up in the Netherlands. In that way, they don't pay taxes to the countries where the profits are made. The Netherlands also doesn't see that money, Lejour said to the newspaper, because the Dutch Tax Authority doesn't tax it.

Lejour called this practice socially unacceptable. "It goes against the spirit of the law. The letterbox companies that make this channeling possible have no other function than avoiding tax."