Dozens of multinationals base their brand rights in Holland
Dozens of multinational companies have based their branding rights in the Netherlands in order to reduce their tax bills, the Financieele Dagblad reports on Thursday.
Earlier this week, US coffee giant Starbucks came under attack in a British parliamentary commission for using the Netherlands to get round British taxes. Starbucks UK pays a fee to its Dutch arm for using its branding and coffee recipes, so cutting its tax bill.
Ikea has made a similar move, and research by the FD shows numerous international firms including SABMiller, Nike, Bacardi-Martini, Zara, Speedo and Volkswagen have set up similar financial constructions. All these firms also have financial holding companies in the Netherlands.
‘There are very, very many’ companies which have made this move, a tax advisor told the paper.
The Netherlands is increasingly becoming a ‘switching centre’ in this sort of construction, the FD quotes Jan Pieter Hustinx from law firm De Brauw Blackstone as saying.
The constructions are completely legal but companies are reluctant to talk about them in order to avoid the veneer of tax evasion, the paper said.
The paper says branding rights are rarely included in financial reports and only appear in the Benelux brand register when there is an intellectual property issue.
Brewing group SABMiller is an exception in its openness, the paper says. It has set up a special limited company in the Netherlands which manages its brand rights. For example, the brand rights to Castle Lager sold outside of South Africa are owned in the Netherlands, if not in the relevant African countries, SABMiller says.
The paper says in some countries, royalties based on intellectual property can be taxed at up to 30%. However, in the Netherlands, advance deals with the tax office mean incoming royalties are taxed in some cases at 7%, making the move on paper very beneficial.
These tax agreements are secret but the finance ministry is looking into their implications, the FD said.
‘I think politicians are going to pay more attention to this in the future,’ Karin McGauran of the Somo research group told the FD. ‘This system is unique to the Netherlands and other EU countries are not always happy about it.’
Do you work for one of the companies named? What do you think?
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