Wednesday 21 April 2021

Netherlands destination of choice for tax-dodging multinationals – report

Amsterdam’s Zuidas business district. Photo: DutchNews.nl

Multinational companies channel more than $3 trillion a year in “phantom” foreign investment through the Netherlands in order to bring down their corporate tax bills, according to research published in the Financial Times.

The Netherlands and Luxembourg were the conduit for more than 50% of all phantom FDI, which amounted to a record $15 trillion in 2017.

The IMF and the University of Copenhagen said nearly 40% of foreign direct investment passed through ’empty corporate shells’ with ‘no real business activities’ that existed almost solely for the purpose of moving assets offshore.

The G7 group of leading economist has been trying to cut down on cross-border tax evasion in recent years, following France’s move to tax global technology companies that operate in the country.

Large global corporations have increasingly used FDI regulations to invest their capital in companies that bring no economic benefit to the host nation. According to the study, the proportion of the total figure identified as ‘phantom’ FDI has increased from 30% to 38% since 2010.

Brad Setser, an international economist at the Council on Foreign Relations in New York, told the FT that the study showed ‘these structures — phantom companies or phantom investments — are optimised for minimising firms’ global tax’.

Thank you for donating to DutchNews.nl

The DutchNews.nl team would like to thank all the generous readers who have made a donation in recent weeks. Your financial support has helped us to expand our coverage of the coronavirus crisis into the evenings and weekends and make sure you are kept up to date with the latest developments.

DutchNews.nl has been free for 14 years, but without the financial backing of our readers, we would not be able to provide you with fair and accurate news and features about all things Dutch. Your contributions make this possible.

If you have not yet made a donation, but would like to, you can do so via Ideal, credit card or Paypal.