A vast proportion of foreign investment in the Netherlands leaves the country again through shell firms, according to new research by the national statistics office CBS.

Last year, €4,587bn was brought into the Netherlands by what it called ‘special financial entities’ but 80% of that left again, the CBS said.

Some 14,000 shell companies, or letterbox firms, are located in the Netherlands. Four in five carry out no economic activities and are used, in the main, to avoid tax, the CBS said.

Last year, €3,665bn left the Netherlands, of which just over half was invested outside the EU.  Asia and Oceania topped the list of destinations – mainly India, Hong Kong, China, Australia and New Zealand.

Last year, University of Amsterdam researchers said the Netherlands is the biggest conduit to offshore tax havens in the world, with almost a quarter of fiscal constructions having a Dutch link.

‘Only five big countries act as conduit-OFCs,’ the researchers from Corpnet said in a new report. ‘Together these five conduits channel 47% of corporate offshore investment from tax havens, according to the data we analysed.’

The two biggest conduits by far are the Netherlands (23%) and the United Kingdom (14%), followed by Switzerland (6%), Singapore (2%) and Ireland (1%).

Industry

The cabinet is cracking down on the shell company industry in the Netherlands in line with international and EU agreements.

From next year, companies applying for a ruling will have to have ‘substantial economic activities’ in the Netherlands, rather than just a letter box.

In addition, the amount of money flowing through the company must be in line with its activities in the Netherlands.

‘For example, it would not be logical if a distribution centre with a workforce of 100 was busy managing billions of euros in loans,’ the finance ministry said in November. All international rulings will be checked in advance by a special panel of experts and rulings will only run for a maximum of five years.