While southern eurozone countries struggle to get their finances in order, Italian, Portuguese, Spanish and Greek firms are using the Netherlands to avoid paying tax in their home countries, the Financieele Dagblad reports on Thursday.
A financial holding in the Netherlands can help multinationals reduce their tax liabilities by up to 10%, the paper says.
‘Companies from Italy and Spain, and to some extent Portugal and Greece, have become increasingly international over the past decades,’ Wiecher Munting, a tax advisor and former head of the tax office’s advance tax rulings department, told the paper.
‘To prevent earnings being taxed on multiple occasions, companies try to make a deal with the tax office in the countries where they are active,’ he said.
Internal cash flow
For example, Portugal has nine companies with annual turnover exceeding €2bn. Of those, six allow much of their internal cash flow to move through the Netherlands. One of these is energy firm EDP, in which the Portuguese government has a 25.1% stake.
Of the 39 Italian firms with a turnover of over €2bn, 20 use a Dutch holding company, including oil firm Eni and energy firm Enel. Both of these are one-third owned by the Italian government.
In addition, 20 of the 28 biggest Spanish firms have a Dutch financial holding company to manage their internal cash flows. These include Banco Santander, Telefónica, Repsol YPF, Endesa and Iberdrola, the paper says.