Netherlands' anti-tax avoidance measures not having much effect

The measures taken by the caretaker Cabinet to combat tax evasion via letterbox firms have not yet led to an apparent and permanent decrease in money flows to countries with a mild tax climate. This is the conclusion of a committee of inquiry led by top civil servant Bernard ter Haar.

Foreign companies often use favorable laws and regulations in our country to pay as little tax as possible on the profits they make elsewhere. This is done through conduit companies. These are also called letterbox firms because they often have little or no real economic activities in the Netherlands.

These letterbox firms provide several thousand jobs and pay several hundred million in taxes each year. According to the committee, this is disproportionate to the lost tax revenues of other countries, an estimated 20 billion, and the reputational damage for the Netherlands.

Until recently, the government did not hinder companies that keep their tax bill as low as possible in this way, said Ter Haar. He acknowledged that the effects of all measures are not yet evident. But according to him, the Netherlands will have to do more to prevent excesses.

Some rules in their own country could be a bit stricter, but Ter Haar thinks that the Netherlands must do its best, especially in an international context, to reach firm agreements. "Then you really know for sure that it will really decrease, and you will not just shift the flow to another country."