Crocs accused of using new strategy for Dutch tax avoidance: report
American shoe manufacturer Crocs found a new way to avoid taxes in the Netherlands, which is saving the company tens of millions of euros in unpaid taxes, NRC reported based on investigation by The Investigative Desk.
Crocks and 65 other American multinationals used to use the CV/BV route to avoid paying taxes. It involved American multinationals collecting profits earned worldwide in a Dutch limited partnership (CV). Neither the Dutch nor the American tax authorities levied tax on this. Companies only had to pay tax once they took money out of this CV, which they could postpone doing indefinitely.
This route was one of the main reasons for calling the Netherlands a tax haven. But tax reforms implemented after intervention from the European Union and United States made this tax avoidance trick a lot less profitable.
Crocs, however, found a new route for avoiding taxes in the Netherlands, according to NRC. A Dutch company owned by Crocs buys intellectual property from the CV and can write off that purchase. In this case, Crocs created an item of 419 million dollars, or over 345 million euros, which it can set off against future profits, resulting in the group paying much less tax in the Netherlands.
The caretaker cabinet is working on a way to stop this tax avoidance trick as well, according to the newspaper.