Is the Netherlands a tax haven?

In the wake of a denial from Dutch finance minister Wouter Bos, the US government decided to remove the Netherlands from a list of ‘known’ tax havens; a list that included Bermuda and Ireland, as countries that levy a much lower level of corporation tax. Bos and his people have pointed out that the Netherlands’ corporation tax rate is 25.5% compared to the 35% levied in the US (although the US rate is very often reduced to an average of about 22% through various ‘breaks’).

Obama’s administration is concerned over the number of outsourced US jobs and the movement of untaxed capital to foreign countries. It is clear that some US companies do set up foreign offices to avoid the higher tax rate, meaning there is no need to jump through (relatively easy) hoops to get tax reductions, or that even more reduction may be possible. Anyone who knows how a corporation operates would be a fool to deny this possibility.

One area where the Netherlands does excel in tax-exemption is in the intellectual property rules. There is no tax levied on the royalties collected on patents or copyrights, the only real stipulation is that the holders have a functioning business operation in the Netherlands and that this provides some employment and any resulting income tax from this. Many large corporations take advantage of this. It’s also not a coincidence that fair-weather socialists like the rock band U2 shifted their main publishing business to the Netherlands after obviously shrewd financial advice on how to collect tax-free royalties.

The Netherlands is not the only European country committed to giving a helping hand to corporations so the ire of the finance minister (another faux-socialist) is justified on that point, but that doesn’t wriggle out of the fact that the Netherlands rolls out the red carpet for big business.


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