Stricter tax demands for multinationals in the Netherlands

Updated on 19 February 2024

Tax evasion is a worldwide problem, which makes it necessary for governments to actively monitor this problem and deal with it accordingly. In the Netherlands this has also been a hot topic during the past few years, which instigated some government reforms in order to impose stricter rules. However, since these government reforms do not seem to stretch far enough in reality, Dutch lawmakers have initiated an inquiry on how to make (large) multinationals and other tax avoiding companies pay their legally expected share of tax.

This happened just after some harsh public criticism regarding the reforms not being severe enough. Multiple multinationals pare their tax bills by using the Netherlands as a funnel, but the Dutch are not exactly amenable to minimizing company tax. The interesting fact is that minimizing company tax is legal and has been unchallenged for a long time, although this is starting to change. One of the main instigators is Royal Dutch Shell, who acknowledged that the company had paid almost no Dutch corporation tax in the year 2018.

The root of the problem

Shell refused to release any details regarding their choice in a hearing of a parliamentary panel on taxation. One of the main factors of anger is the fact, that every single Dutch citizen is expected to pay a rather large amount of income tax in relation to their wages. Even people who earn the minimum wage. Seen from this perspective, it’s absurd that a multibillion company would not pay taxes. After extensive research the government’s data shows, that there are assets parked within a very large amount of so-called letter box companies in the Netherlands. These assets have a cumulative value of more than 4 trillion euros. Many of these are exploited to funnel profits via the Netherlands to low-tax countries. And the Dutch government has had enough.

No more shady deal making

The Dutch government now wants to introduce new reforms, in order to break with this dark image of back-door deal-making. There is a certain shady quality about tax evasion, especially if the working class gets hit by the problem. Menno Snel, the Dutch official in charge of this issue, stated that companies that solely establish a business here to channel away capital to foreign countries are made very unwelcome in the near future.

Dutch lawmakers have stated that they feel the government still falls short in regulating tax avoidance, and want more details published when it comes to tax rulings such as the company name. According to a member of parliament, a lot of Dutch citizens feel duped, since they feel they paid for the financial crisis in a way. And due to the issue, citizens also have to pay higher taxes like VAT, whilst corporate taxes are lowered simultaneously. This obviously provides a stable basis for confusion and, in the worst case, corruption.

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Whether you want to establish a new company in the Netherlands, set up a branch office or just want to know more about tax regulations and laws; we are here to help you in any way we can. We can provide you with all necessary information in order to run a successful company legally, whilst making the most out of your business at the same time. We can also assist you with company accounting requirements.