Survival of the Richest

Netherlands
One of the most crucial aspects of the government’s
proposal is who will be able to get access to which
information and how. While the register will be public, the
Dutch government has proposed two restrictions, which
it argues will ensure the “privacy” of the UBO´s: 1) The
registration of the users of the registry; 2) a fee for the use
of the registry. The government has also suggested that
only the minimum set of data will be made available in the
public register, and when there is a risk of kidnapping or
blackmailing in individual cases, UBO data will be shielded
from the public registry (and in the case of minors). Only
specific authorities (such as the Dutch Central Bank, public
prosecutor, etc.) will gain unlimited access, which includes
information on the address of the beneficial owner and
his or her Tax Identification Number (TIN). Others will
only be able to access the name, year and month of birth,
nationality, country of residence and the nature and size of
the economic interest of the UBO. 580
The Dutch Chamber of Commerce, which will be administering
the registry, is currently not registering company information
according to an open data format, and an open data format is
currently not foreseen in the future. 581 In May 2016, the Dutch
Parliament adopted a motion requesting the government
to take into account the importance of accessibility of the
register for civil society and journalists. 582 The final outcome
of the register remains uncertain at the time of writing.
A publicly accessible UBO register, however, is crucial
not only in the fight against tax dodging, but also money
laundering. According to the 2015 Financial Secrecy Index, the
Netherlands has the eighth highest level of financial secrecy
out of the 18 countries included in this report (ranked at
number 41 at the global level). 583
Taxation
Tax treaties
The Netherlands, which in total has some 90 bilateral tax
treaties, is known to be used for treaty shopping using
Dutch letterbox companies. 584 Corporations resident in other
countries and thus not entitled to Dutch treaty benefits set
up a Dutch letterbox to benefit from, amongst others, lower
withholding tax rates in countries of operation. This enables
them to shift profits out of the countries where business
activity is taking place, via the Netherlands to tax havens.
This Dutch conduit arrangement is facilitated by domestic
tax laws, such as the participation exemption and lack of
withholding taxes on outgoing royalty, interest and most
dividend payments, even if these are made to tax havens.
Recognising that treaty shopping is incoherent with
development goals, 585 the Netherlands announced in 2013
that it will propose including anti-abuse provisions in its tax
treaties with 23 developing countries. All 23 countries have
now been approached and so far five treaties have been
changed to include anti-abuse rules (Ethiopia, Zambia, Kenya,
Malawi and Ghana). The government is in talks with seven
other countries. 586
The government claims that, when it comes to developing
countries, it is more willing than in other cases to accept
taxation measures benefiting the source country, such as
higher withholding tax rates at source. 587 Yet research by
ActionAid found that the Netherlands currently has seven tax
treaties with developing countries that are 'very restrictive',
and impose significant restrictions on the corporate tax
collection in the developing countries that sign them. 588
In total, the Netherlands has 44 tax treaties with developing
countries, which is slightly above average among the
countries covered in this report (42 treaties). The average rate
of reduction of tax rates within those treaties – 4 percentage
points – is also above average (3.8 percentage points). 589
Harmful tax practices
As mentioned above, the Dutch letterbox system remains an
issue of high concern. Furthermore, corporate tax rulings
constitute another potentially harmful aspect of the Dutch tax
system. Through these rulings, companies can negotiate with
the Dutch government the terms on which they will be taxed
while they are in the Netherlands. As mentioned in in the chapter
on 'Sweetheart deals', these type of agreements were the
center of the so-called LuxLeaks scandal, and can be used by
multinational corporations to avoid taxes. They remain a secret
to the general public as well as Parliament. The total number
of advance pricing agreements and advance tax rulings in 2015
came to 642, compared to 632 in 2014 and 669 in 2013. 590
In 2015, the European Commission ordered the Netherlands
to claim back €20 to €30 million in tax from Starbucks, after
the Netherlands, in the view of the Commission, gave the
company an unfair advantage as part of an advance pricing
agreement. 591 The Dutch government has appealed the
decision. According to the Ministry of Finance, the same tax
provisions apply to taxpayers with and without a tax ruling;
they do not benefit one tax payer over the other. 592
A recent study commissioned by the European Commission
found the Netherlands to have the highest number of
harmful tax practices in the EU. Out of 33 indicators,
the Netherlands scored 17. 593 Three of these are active
indicators, namely the patent box, the excess profit rulings
scheme and the fact that tax deductions are allowed for
interest cost without corresponding adjustment.
Survival of the Richest • 81