STOP

Fifty Shades of Tax Dodging • 83
Special Purpose Entities (SPEs)
The beneficial tax policies attract many Special Purpose
Entities (SPEs) in the Netherlands, and are part of the
reason why there are major inflows and outflows and
related stocks of foreign direct investment (FDI) in the
Netherlands. Around 80 per cent of the Dutch outward
investment position (Dutch FDI stock abroad) is attributable
to Dutch SPEs. 886 Largely due to SPEs, the Netherlands is the
largest investor worldwide. 887 The routing of investments is
especially favourable through the so-called Special Financial
Institutions (SFIs). The Dutch Central Bank reports there
were approximately 14,400 of these in 2013. The Central
Bank estimates that the balance sheets of SPEs, which
consist mainly of foreign assets and liabilities, continued to
grow to a total of €3,545 billion in 2013. 888
Patent box
According to a European Commission report, the
Netherlands makes use of tax credits, enhanced allowance
and a patent box. 889 The lost tax revenue associated with
the patent box – or ‘Innovatiebox’, as it is known in the
Netherlands – was approximately €625 million in 2012. 890 The
patent box offers a reduced tax rate of 5 per cent, compared
to the statutory rate of 20-25 per cent, on profits of which at
least 30% has been derived from patents. 891 In early 2015,
the Ministry of Finance released figures showing that, in the
period 2010-12, the number of patent box users doubled from
910 to 1,841, while the revenue loss associated with the policy
grew from approximately €345 million to €852 million. 892 The
figures also showed that, while big companies (those with
more than 250 employees) only made up 11 per cent of patent
box users, they accounted for 60 per cent of the budgetary
costs of the incentive. 893
Within the Base Erosion and Profit Shifting (BEPS) process,
together with the UK and others, the Netherlands had
initially refused to agree to “curbs on patent boxes aimed
at stopping ‘harmful’ tax competition that were supported
by 40 other countries.” 894 In May 2015, members of the
European Parliament’s special committee on tax rulings
(TAXE) questioned the Dutch Deputy Minister and other
stakeholders on the harmful effects of the innovation
box. 895 Questions on abuse of the innovation box were also
asked by Dutch politicians. 896 In the European Council, the
Dutch government has welcomed efforts to “put a stop
on innovation/patent boxes that encourage profit shifting”
and “trading of patents only for the purpose to move them
to the most favourable tax regime”. However, at the same
time they have called for a wider interpretation of which
activities qualify for reduced rates offered under patent
boxes. 897 The Dutch patent box is currently under review by
the government, and an evaluation report is expected at the
end of 2015. 898
Tax treaties
In a welcome development, the government is approaching
23 developing countries with which the Netherlands already
has a tax treaty, or with which negotiations are taking place,
with the intention of including an anti-abuse clause in these
treaties. 899 A recent report from ActionAid shows, however,
that treaties can have a harmful impact in spite of anti-abuse
provisions, for example, due to low withholding tax rates. 900
In its response to the questionnaire for this report, the
Netherlands states that it is willing to accept higher rates of
source state taxation in treaties with developing countries
compared to what it would otherwise accept. 901 However,
evidence of this intention is limited in existing treaties
with developing countries, which on average reduce the
withholding tax rates by 3.5 percentage points. 902 In general,
the Netherlands adheres to the Organisation for Economic
Co-operation and Development (OECD) Model, but the
government states that both the OECD and the UN Model are
reflected in Dutch tax treaties with developing countries. 903
In 2015, the Netherlands started talks with Senegal, Iraq
and Mozambique to negotiate new tax treaties. 904 A renewed
treaty with Malawi was recently signed after Malawi
cancelled its treaty with the Netherlands in 2013. 905
Financial and corporate transparency
Public reporting for multinational corporations
Earlier in 2015, the Dutch Parliament adopted a resolution
calling for public country by country reporting for all
multinational companies. 906 In May 2015, the Dutch
government wrote to the European Commission stating that
the government “supports the initiatives for public countryby-by
reporting” and further encouraged the Commission
to “give priority to the impact assessment [announced by
the Commission in March 2015] for the expansion of public
country-by-country reporting.” 907
The government supports the OECD threshold for country
by country reporting, meaning that only companies with
annual revenues of more than €750 million would have to
report on a country by country basis. In the Netherlands,
this means that companies like Shell, Heineken and
Unilever would be required to comply, whereas companies
like Telegraaf Media Groep 908 (media concern), Van Wijnen 909
(construction company) and Zeeman Groep BV (textile
company) 910 would not.