Is it Bermuda? The Cayman Islands? The Channel Islands? Luxembourg? You’re getting warmer… It is in fact the land of tulips and windmills, the home of the International Court of Justice, and the tax haven of choice for American multinationals. 6 July 2005 was in fact the date that the tax evasion orgies began in a country – Holland – that saw its name removed from the American anti-abuse law, and could therefore completely legally welcome American companies with open arms who suddenly felt an air of relief – perhaps even liberation – by their country’s legislators.
The removal of the Netherlands from the US anti-abuse law thus opened the doors for the Dutch system to commit all kinds of abuses, implementing “commanditaire vennootschap”, or “CV” structures that – contrary to their German counterparts – cannot be imposed in their country of residence, the Netherlands. In fact, since it is the individual affiliates of the Dutch CV that were meant to be exempt from taxation, American companies gorged on this banquet with help from rather complex set-ups where a CV is held by several other entities – Dutch and others –, resulting in a whole network of companies being totally exempt from taxation in the US, the Netherlands, and elsewhere.
Dutch CVs are literally forcing US companies into this type of morally fraudulent set-up since the American tax service (IRS) esteems that a CV settles its taxes in Holland…whereas the Dutch authorities demand no taxes to be paid to them, specifying that a CV should pay its taxes in the USA. Since CVs are viewed from two radically contrasting perspectives by the two countries, they never pay any tax anywhere, and Holland is therefore profiting greatly from this marvellously-devised fiscal no-man’s-land. So that is beautiful little Holland for you, a founding member of the European Union that has now become the world’s number one tax haven for American companies, home to gigantic and renowned multinational corporations such as Starbucks, FedEx, Nike, Tesla, Pfizer and Google, among others.
This is how billions of euros in tax escape other European nations where these giants operate, without anyone getting upset over it, for the simple reason that a member-state is demonstrating great ingenuity when it allows itself to receive illegal subsidies. It’s an abhorrent system – that’s legal – and it’s highly damaging to the whole Western community, including the US, who are missing out on tax revenues, reckoned to be in the hundreds of millions of dollars, thanks to this Dutch accounting gimmick. This country, where companies – CVs – don’t even need to figure in the national Register of Companies, has to this day let 500 billion euros in tax revenue pour down the drain with at least half of the 500 biggest American companies being the happy owners of at least one CV.
Well beyond Bermuda, Luxembourg or Switzerland, it’s the Netherlands that are pulling miles ahead as the number one tax haven for US companies, boasting a number of CV registrations that nearly tripled between 2013 and 2017. It’s an immoral situation prevailing in the European Union, modelled by the British and the Germans who are concerned only with forging a mercantile zone of free trade. This has consistently put the brakes on all ambition and any project seeking to form an authentic alliance between member-nations, who have been forced into unfair fiscal competition that should be shameful for countries that are meant to share values and a common currency.
It is an eminently political problem since the deregulation and reduction of state powers – extolled by the very same who are the Champions of free trade and who also extol expansive austerity – have whittled our governments down to the size of dwarfs in the face of the GAFA corporations, who only profit from our weaknesses and divisions. Basically, it’s an aberration. The Netherlands, who are never shy to stigmatise French, Italian and Spanish deficits, are also the ones who – via CVs – are depriving these same countries, who are being accused of fiscal indiscipline, of billions of euros that could be judiciously invested for the collective good.