Survival of the Richest

Netherlands
In the Netherlands tax revenue losses due to the patent
box came to €742 million in 2012, and are estimated to
rise to €1.2 billion in 2016. 594 The patent box is by and large
used by big corporations, with 80 per cent of the total tax
profits going to large corporations, while they are only
responsible for 59 per cent of research and development in
the Netherlands. 595 The Netherlands Bureau for Economic
Policy Analysis (CPB), a government research agency, is
critical of the patent box and concluded in February 2016
that instruments such as the patent box provide incentives
and opportunities for profit shifting between countries. 596
Leaked EU documents show that the Netherlands is
attempting to undermine EU plans to tackle harmful tax
practices by introducing a minimum tax rate of 10 per cent
for royalties and interest payments. 597 They reveal that the
Netherlands has proposed exceptions in the plans for its
patent box provision, which can reduce taxation on revenues
resulting from research and development to 5 per cent.
This provision, which is a key component of the Dutch tax
system, would be threatened by a 10 per cent minimum rate.
The Dutch government states that it finds the EU’s Code of
Conduct Group to be an effective tool to remove harmful
tax practices, both inside the EU and in third countries, by
means of peer pressure. 598 However, as mentioned in the
chapter on 'Blacklisting 'non-cooperative jurisdictions'',
this group has raised concerns because of its opacity and
apparent inefficiency, 599 and leaked information published
by Spiegel showed that the Dutch government, together
with Luxembourg and Belgium, have also successfully
managed to block attempts by other EU Member States to
remove harmful tax practices during the (secret) meetings
of the Group. 600 Rather than a recent phenomenon, the
OECD and EU Code of Conduct Group have both criticised
the Netherlands for engaging in harmful tax competition for
over 15 years. 601 Under the chairmanship of Dawn Primarolo
from the UK, the EU Code of Conduct Group on Business
Taxation reported fifteen practices in Dutch Law which
were considered in contravention of the Code in late 1999.
Critiques from other EU countries, voiced since at least
the 1990s, have resulted in concerted lobby and stalling
practices by consecutive Dutch governments rather than
meaningful policy reform. 602
Global solutions
The Dutch government does not support the establishment
of an intergovernmental UN body on tax. It argues that it
wishes to “maintain the momentum of the [OECD’s] BEPS
project, and is concerned that a transfer of responsibilities
now will disrupt this process.” 603 Instead, the Netherlands
is highly engaged in the ‘Addis Tax Initiative’, 604 a coalition
of 30-plus countries and organisations, which has a strong
focus on capacity building of developing countries. 605 This
initiative has been criticized by the Independent Commission
for Aid Impact in the UK, which found that "The Addis Tax
Initiative was developed by (…) donor countries with only
limited consultation with developing countries and no
explicit assessment of their needs." 606
The government also supports an increased involvement
of developing countries in the OECD’s BEPS project, 607 but
as mentioned in the chapter on 'Exclusive global decision
making', this process now mainly focuses on implementing
the many decisions that were made while more than 100
developing countries were excluded from the negotiations.
Conclusion
The Netherlands has taken a progressive stance on the
issue of transparency, by supporting both public registers of
beneficial owners and public country by country reporting.
However, the Dutch tax system still includes a number of
structures which multinational corporations can use to avoid
taxes in developing countries as well as the rest of the world.
This includes letterbox companies, ‘sweetheart deals’ and
patent boxes. Adding to this concerning picture is the Dutch
tax treaty system, which can also have a negative impact on
developing countries. The number of tax treaties between
the Netherlands and developing countries, as well as the
average reduction of tax rates as a result of those treaties,
are both above average. However, what the average does not
show is that the Netherlands has a significant number of ‘very
restrictive’ tax treaties with developing countries.
A number of domestic provisions facilitate treaty shopping,
namely, the participation exemption and a lack of
withholding taxes on outgoing royalty, interest and most
dividend payments, even if these are made to tax havens.
Lastly, it is problematic that the Netherlands still opposes
the creation of an intergovernmental UN tax body, which
would give developing countries a chance to participate on a
truly equal footing in the setting of global tax standards.
82 • Survival of the Richest