Russian oligarchs exploit loophole in Dutch laws to shield finances
Russian oligarchs are reportedly using a loophole in Dutch regulations to classify their mailbox companies as microbusinesses, allowing them to obscure financial flows and avoid stringent reporting requirements, despite the companies often being worth millions of euros, as reported by NOS.
Among these oligarchs is steel magnate Aleksej Mordasjov, who became one of Russia's wealthiest figures during the privatization era of the 1990s. Mordasjov, placed on the European Union's sanctions list following Russia's invasion of Ukraine, owns SMTT Holding BV, a company registered in Amsterdam with a valuation of 65 million euros.
Despite its substantial value, SMTT is categorized as a microbusiness under Dutch law, benefiting from reduced financial disclosure requirements.
Under Dutch regulations, a company qualifies as a microbusiness if it meets at least two of the following criteria: it employs fewer than 10 people, has a balance sheet total not exceeding 450,000 euros, or generates a net revenue of no more than 900,000 euros.
This classification offers significant advantages. Microbusinesses are only required to file minimal annual financial reports, with no obligation to disclose details on profits, taxes paid, or the company's assets. These rules were originally intended to reduce administrative burdens for small entrepreneurs but have become a tool for larger entities, including multinational corporations and sanctioned oligarchs, to hide their financial activities.
One key benefit for oligarchs is that microbusinesses are exempt from the requirement to have their financial statements audited by an accountant. This is particularly advantageous for Russian oligarchs, many of whom have struggled to find accountants since global firms severed ties with Russian clients after the invasion of Ukraine.
For instance, oligarchs Dmitri Poempjanski and Igor Kesajev have been unable to secure replacement accountants for their Dutch companies. Mordasjov, however, avoids this issue entirely due to SMTT’s classification as a microbusiness.
The Dutch government has knowingly maintained this regulatory loophole, which allows companies without employees to qualify as microbusinesses. Additionally, income from interest or dividends—common revenue streams for mailbox companies—does not count toward the revenue threshold for microbusiness classification.
While the European Union has permitted member states to include such income in their calculations since 2013, the Netherlands has chosen not to adopt this provision. A 2021 advisory commission recommended closing the loophole, but the government opted to wait for broader EU negotiations on the issue.
Several Dutch-registered companies linked to sanctioned Russian oligarchs benefit from these lenient rules. Airport Alliance (Netherlands) BV, for example, is a subsidiary of the Russian state-owned VTB Bank. The bank’s chairman, Andrej Kostin, is a longtime associate of President Vladimir Putin from their time serving in the KGB.
Another example is Safmar BV, a mailbox company tied to Mikhail Gutseriev. Gutseriev, a billionaire who made his fortune in the oil trade, is a close ally of Belarusian President Alexander Lukashenko.
Large companies are typically required to have their financial reports audited. Without such oversight, they cannot file their annual accounts with the Chamber of Commerce within the legally mandated 12-month deadline. Failure to comply constitutes an economic offense, potentially resulting in fines.
However, the loophole allows oligarch-linked companies to avoid these requirements entirely. Mordasjov’s SMTT Holding BV, for example, remains under the radar due to its microbusiness classification, despite its significant financial assets.
The absence of stricter oversight also hinders transparency around financial flows, making it difficult to trace how these companies manage their funds.
