According to the Tax Justice Network (TJN, 2021) the Netherlands has been ranked 4th on the Corporate Tax Haven Index, indicating that the Netherlands is number 4 of the main tax havens in the world. Only Bermuda, the Cayman Islands and the British Virgin Islands are ranked higher and therefore are countries that are even more tax-efficient for companies and the rich.
The Netherlands is mainly marked as tax haven because it is possible to avoid taxes through royalties and informal capital. Multinationals make use of complex structures and exemptions to circumvent taxation. Through holding companies in the Netherlands, multinationals can channel their benefits by applying different ‘legal’ constructions. Uber is an example of a multinational that avoids taxes through holdings companies in the Netherlands. As a result, not only the Netherlands but also other countries miss out on millions of taxes a year.
Tax Justice Network measures to which extent countries allow companies to avoid tax. They also examine how much money from multinationals has flowed through a country using (complicated) schemes. According to TJN, the world loses over $427 billion in taxes each year through international tax abuse, based on 10-year averages. Of the $427 billion, nearly $245 billion is lost to multinational corporations that shift profits to tax havens in order to underreport how much profit they actually made in the countries where they do business and as a result pay less tax than they should. The remaining $182 billion is lost to wealthy individuals hiding undeclared assets and incomes offshore, beyond the reach of the law.
In 2021, the Netherlands lost more than 11 billion dollars in taxes due to global tax abuse. This amount is equal to 5.6% of tax revenue and approximately $646 per member of population. Of this loss of taxes due to global tax abuse, $3 billion is caused by multinationals whereas $8 billion is committed by private internationals.
As the Netherlands was ranked 4th last years as well, it was not a surprise that the Netherlands scored high on the Corporate Tax Haven Index again. Although new rules have been introduced by the government, the Netherlands continues to be popular among multinationals and the rich as a conduit company for tax avoidance.
For more interesting numbers, please visit the website of Tax Justice Network.
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