The Dutch government will announce plans to levy more tax on multinationals in next week’s 2020 budget presentation, by changing the rules on deducting losses, broadcaster NOS has reported.

Sources in The Hague have told NOS that the changes will end the way multinationals can offset their losses outside the Netherlands from their Dutch tax bills, a move which will generate €250m for the treasury.

Earlier this year both Shell and Philips admitted they do not pay tax on their Dutch operations because of the tax break.

The Dutch tax system allows companies like Shell and Philips with an international headquarters here, the option of deducting costs against the international HQ, such as losses booked elsewhere.  As a consequence, the Dutch companies are, on balance, loss making and do not have to pay any corporation tax.

MPs have demanded the government act to remove this anomaly and, NOS says, ministers have now agreed to adopt draft legislation drawn up the left-wing green party GroenLinks.

They also say it is unfair on small firms which do not operate abroad and which do have to pay corporation tax.

The tax break was first put in place to encourage multinationals to move to the Netherlands to create jobs and according to the Telegraaf, the changes will come into effect from 2021.

Employers organisation VNO-NCW said it would wait until the finalised proposals are published before commenting.