The Dutch tax office raised an advanced tax agreement made with Portuguese energy company EDP six-fold following criticism from Brussels, the Volkskrant reports on Monday.
EDP moves billions of euros a year in loans through shell companies in the Netherlands to minimize its tax obligations elsewhere, the Volkskrant says. This deal was agreed with the Dutch tax office, including how much tax the company should be liable for in the Netherlands.
The change of heart is contained in the 2012 annual report of EDP Finance, the letterbox firm located in Amsterdam’s Zuidoost district.
The paper says it is extremely unusual for an advance tax agreement to be revised. The EDP deal was the focus of attention from lobby group Tax Justice which raised the issue with the European Commission in July last year.
Initially, EDP agreed to pay just €2.2m tax on the €43m profit reported by the Dutch shell company. That has now been raised to €13.5m.
‘This revision shows that foreign firms can sometimes make ridiculously lucrative agreements with the tax office,’ Rodrigo Fernandez of multinational research organisation Somo told the paper. Somo worked with Tax Justice on establishing the Portuguese company’s tax agreements.
In 2011, the tax office made 656 advance price rulings on tax with foreign firms, the Volkskrant says.
In April, parliament gave ministers until the summer to come up with a plan to stop foreign firms setting up shop in the Netherlands with the sole purpose of reducing their tax bill.
A majority of MPs, including the ruling Labour party, voted in favour of a motion calling on ministers to come up with a plan to reduce the Netherlands’ role as a location to simply transfer money.
Letterbox companies are listed in the Netherlands on paper in order to profit from special Dutch tax deals. As well as multinationals like Starbucks and Ikea, the Rolling Stones and U2 are also based in the Netherlands for tax purposes.
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