The Netherlands does not want to be a tax haven

Marnix van Rij is well brought up. So he knows, he says in a room in Brussels on Thursday, “that if you get the invitation to appear at a party, that it is honorable, that you should do it.” Van Rij, CDA member and State Secretary for Taxation in the Rutte IV cabinet, is not someone who laughs at his own jokes, but he is relaxed. Even though he has just had to justify himself in a hearing for Dutch cabinet policy, about tackling tax avoidance, a subject on which his country does not have the best reputation, and that in the European Parliament, the same parliament that the Netherlands declared by motion in 2019. to tax haven. For years, the Netherlands has been under fire internationally for this. Other countries were annoyed by the shadowy constructions and floor rates with which the cabinets of The Hague made it attractive for international companies to establish themselves at the Zuidas or another anonymous letterbox address – at least on paper. Good for the treasury perhaps, but “undermining the integrity of the European market”, a research group of MEPs concluded in 2019. It can go wrong. The members of the European Parliament that Van Rij will meet this week are suddenly mild-tempered. A writing on the wall: in the eyes of the rest, the Netherlands is no longer the naughtiest student in the tax class. In Van Rij’s words, his work consists of eliminating an ‘undesirable side effect’ of the open Dutch economy and the favorable business climate. Those ultra-low taxes, he says in the European Parliament, were never intended as the main lure. The State Secretary is therefore very modest about the role of the Tax and Customs Administration and of his predecessors in the cabinet. The Netherlands pioneered new tax structures and in some cases even contributed to the fees of consultants who helped companies pay as little tax as possible. This summer, a leak to The Guardian revealed that the Tax and Customs Administration was training a European investigation into the Uber taxi service in 2014 and 2015, thus thwarting other Member States . The fact is that something has changed. Economist Thomas Piketty put the unequal distribution of wealth on the map, while criticism of multinationals took off as a result of the financial crisis and a series of revelations about the fiscal handshake between governments and large companies, including in the Panama Papers. At first I was critical of the Netherlands, now I can use it as an example “As a result, a different wind has started blowing,” says tax economist Arjan Lejour, affiliated with Tilburg University. “The Rutte 3 cabinet showed that it no longer wanted to be an international pariah.” In Brussels, Van Rij can show off the results of this new course. The Netherlands is rarely the final destination, but much more often a useful diversion route to channel money through. That is why the cabinet introduced a ‘withholding tax’ on interest and royalties intended for low-tax countries, such as the Cayman Islands. Dividends that have been diverted should also be taxed in this way in a year’s time. In 2019, 38 billion euros flowed over such routes via the Netherlands to countries with a super low rate,now that is still 6 billion . “There is still a big legacy to clear up,” says PvdA member Paul Tang, but he agrees with the progress. Tang is the MEP who introduced the motion that referred to the Netherlands as a tax haven. He is now the chairman of the committee that has invited Van Rij. “I was once a Dutchman who went against his own country. And now I can use the Netherlands as an example for the rest of how things can be improved.” This new attitude also offers the Netherlands a strategic advantage. After all, Van Rij can now argue in the EU that the next steps should above all be taken jointly. And he can start without hesitation about countries that, although they have their taxes in order, are attracting companies with subsidies and other douceurties. Or about Hungary, which opposes the introduction of a worldwide floor rate for profits tax in the EU. As far as the Netherlands is concerned, the rest must now speed up, if necessary by forgoing unanimity in such decisions. He gets compliments. Even the Greens deputy hears ‘a lot of progress’. And she has a question: “How do we get the rest as far as the Netherlands?” A version of this article also appeared in the newspaper of October 15, 2022