Are the Netherlands a tax haven?

According to a majority of the members of the European Parliament, the Netherlands is, just like Malta, Cyprus, Ireland and Luxembourg, a fiscal paradise and it is demanding (without any underlying jurisdiction, incidentally) that the European Commission place these five countries on its list of tax havens. This list is, of course, is more akin to a pillory than an honours roll.
1 jul 2019 Laatst gewijzigd: 1 jul 2019 Opinie mr. Joost de Leeuw

Does the Netherlands merit being designated as a tax haven?  Most inhabitants of the Netherlands would not experience this as being the case; after all, the VAT on shopping, for crying out loud, has increased by 50% this year alone (from 6 to 9%), and the highest bracket in income taxation (over EUR 68,508) remains at 51.75%:  a solid taks burden indeed.  It is true that taxation on company profits has decreased from 20 to 19%, but this latter figure is still considerably higher than in Ireland (12.5%) or Bulgaria (10%), for example.  Furthermore, companies making profits higher than EUR 200,000 continue to pay 25% over this threshold.

The supposed paradise-like status of the Netherlands can only therefore be based on the absence of withholding taxation on interest and royalties, and the so-called “ruling practice”.  In many countries, for example, 5, 10 or 15% taxation must be paid on outbound interest or royalty payments.  In principle, only dividends are subject to such levies here. Thus, if a Dutch B.V. pays a million euro in interest to its sister company in a low-tax place like Dubai, it is non-taxed and deductible here in the Netherlands, and subsequently taxed at 0% income tax in Dubai.  Like this, profits are siphoned off, quite simply.

This is, of course, rather black and white.  In practice, payments, as in the above example, are subject to “transfer pricing”: this means that related parties must charge each other the same prices and rates as they would when trading with independent third parties.  In other words:  50% interest on a long-term borrowing, for example, is very unusual and will be corrected in the Netherlands, which leads to a higher taks base.

Which brings us to the ruling practice.  It is difficult to comment on this, since, for many years, it remained outside of the public domain.  Here are the facts:  the European Commission has previously ruled that the Netherlands has made “illegal” agreements with Starbucks.  These agreements, incidentally, relate to the transfer pricing referred to above. Just like other companies, Starbucks pays 19-25% taxation on profits.  The question is, however: on what basis?  How is the profit determined?  Before or after the deduction of huge interest and trademark rights’ payments to affiliated entities in lower taxed jurisdictions?

The ruling practice is being adjusted:  for the promotion of policy unity, all international rulings will be put before a Tax Authorities’ team.  Additionally, anonymous summaries will be published, so that people on the outside can follow the policy.  Furthermore, the substance requirements are being adjusted, and no more rulings will be granted involving countries on the black list of non-cooperative countries.

It will, therefore, become more difficult for multinationals to make too-good-to-be-true deals with the Tax Authorities, and this will, ultimately, benefit the tax authorities of other nations. Companies such as Starbucks have been set up in the Netherlands, after all, because of the rulings. For smaller entrepreneurs, fortunately, the Tax Authorities continue to be approachable and – usually – amenable to reason. One can still agree on a temporary lowering of the usual fee for a start-up, for example.

The Tax Authorities recognise us here at DTS as a taxation consultancy firm and, as such, we can help you making contact, negotiating and making agreements with them.

Auteur

Leeuw_de_Joost_foto.jpg

mr. Joost de Leeuw

DTS Duijn's Tax Solutions B.V.
Amsterdam
Specialisme(n): Internationale belastingrecht, vennootschapsbelasting, dividendbelasting, inkomstenbelasting
Profiel
Neem contact op voor een gratis consult

Lees meer van deze auteur ...

Is Nederland een belastingparadijs?

1 jul 2019 Volgens (een meerderheid van) het Europees Parlement is Nederland, net als Malta, Cyprus, Ierland en Luxemburg, een belastingparadijs. Het eist (zonder onderliggende bevoegdheid, overigens) dat de Europese Commissie deze vijf landen op haar lijst van belastingparadijzen zet. Deze lijst is uiteraard geen erelijst, maar een schandpaal.
Fiscaalconsult

Fiscaalconsult is het kenniscentrum en online adviesplatform voor financiële of juridische dienstverleners, als ook controllers van ondernemingen die op zoek zijn naar fiscale expertise.

Fiscaalconsult
Kanaalpark 157
2321 JW Leiden

Volg ons op

 
Fiscaal nieuws ontvangen?

Fiscaal nieuws ontvangen?

Ja, stuur mij de nieuwsbrief met fiscale updates en ontwikkelingen. Gegevensverwerking en verzending overeenkomstig de Algemene Verordening Gegevensbescherming (AVG). U ontvangt maximaal 1 nieuwsbrief per week.

Controleer nu uw mailbox

U ontvangt een bericht met instructies om uw e-mailadres te bevestigen.

Fiscaalconsult © 2019. Alle rechten voorbehouden. Privacybeleid en disclaimer

Ready for Online Business
1
0
1