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2017 | OriginalPaper | Buchkapitel

15. The Netherlands: A Tax Haven?

verfasst von : Eric C.C.M. Kemmeren

Erschienen in: Netherlands Yearbook of International Law 2016

Verlag: T.M.C. Asser Press

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Abstract

The taxation of multinational enterprises is currently subject to intensive international and national debates. In these debates the Netherlands has sometimes been labelled as a ‘tax haven’. This term has a strong negative connotation. In any case, a country’s reputation is at stake if it is qualified as a tax haven. The main research question of this chapter is: Is the Netherlands a tax haven? In this context, it will be discussed whether the following features make the Netherlands a tax haven: (1) The Dutch participation exemption (2) The non-existence of withholding taxes on outbound interest and royalties (3) The Dutch tax treaty network (4) The Dutch advanced tax ruling and advance pricing agreement practice (5) The Dutch exchange of information rules and practice.The chapter starts with the question of whether tax havens are a problem. Subsequently, it discusses a number of definitions of the term tax haven. Based on one of them, the Netherlands’ position will be tested and the research question will be answered. At the end, the author sums up his main conclusions and suggestions for improvement of the Dutch tax system, inter alia in respect of letterbox companies.

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Vorheriges Kapitel The Dutch Referendum on the EU-Ukraine Association Agreement: Legal Implications and Solutions

Nächstes Kapitel Recent Developments Regarding the Direct and Indirect Application of Treaties by Dutch Courts: Fresh Approaches to Self-Executing, Non-Self-Executing and Non-Binding International Law

See, e.g., Resolution of member of parliament Van Vliet, Kamerstukken II 2012/13, 25087 no. 35; European Commission 2015; and OECD 2015a.

See, e.g., Henry 2012; Oxfam Novib 2016; and Oxfam 2016.

S. Alonso (2015) Hoe lang is Nederland nog een belastingparadijs?, NRC, 30 March 2015; C Giles and V Houlder (2016) G20 Threatens Tax Havens Over Standards, Financial Times, 15 April 2016.

See, e.g., VPRO Tegenlicht (2013) The Tax Free Tour, 4 May 2013, https://www.youtube.com/watch?v=tvlLO_pTmeY, accessed 23 January 2017; Konrad and Stolper 2015; Oxfam Novib 2016; Castro 2016; and Oxfam 2016, at 6, 12–14, 16, and 25.

OECD 1998, at 8.

See, e.g., Pinto 2003, at 52.

See also, e.g., Bratton and McCahery 2001; and Kiekebeld 2004, at 3–34.

See, e.g., Pinto 2003, at 1–52, and references; and Kemmeren 2005, at 2.

See, e.g., OECD 1998, at 8, 14–16; Council of The European Union (1998) Resolution of the Council and the Representatives of the Governments of the Member States, Meeting within the Council of 1 December 1997 on a Code of Conduct for Business Taxation, OJ C 2, 06/01/1998, at 2; Platform for Tax Good Governance 2013, at 3–9; OECD 2015b, at 15–16; and Oxfam 2016, at 9.

See, e.g., Ngoy 2001; Pinto 2003, at 13, 15, 254, 271–272, 287–288; Evers et al. 2011, at 60–65; Konrad and Stolper 2015; and Castro 2016.

See, e.g., OECD 1998, at 19–21; and OECD 2000, at 2. Remarkable is the resolution of the Dutch Member of Parliament Van Vliet, which calls upon the Dutch government to decline the term and to insist in debates not to use this term (Resolution of member of parliament Van Vliet, Kamerstukken II 2012/13, 25087 no. 35).

See, e.g., X BV and TBG Limited v Staatssecretaris van Financiën, CJEU, Judgment, Joined Cases C-24/12 (X BV) and C-27/12 (TBG Limited), ECLI:EU:C:2014:1385, 5 June 2014, paras 37, 51 and 53, which used the term in the context of (preventing) tax avoidance.

See, e.g., K Scannell and V Houlder (2016) US Tax Havens: The New Switzerland, Financial Times, 8 May 2016.

See, e.g, Henry 2012; Felixstowe Dock and Railway Company Ltd, and others v The Commissioners for Her Majesty’s Revenue & Customs, CJEU, Judgment, Case C-80/12, ECLI:EU:C:2014:200, 1 April 2014 (‘Felixstowe’), para 32; European Commission (2016) Communication from the Commission to the European Parliament and the Council on an External Strategy for Effective Taxation, Brussels, 28 January 2016, COM(2016) final 24, at 2. See for a similar observation, e.g., Evers et al. 2011, Sect. 2.

OECD 1998, at 19–20.

OECD 1998, at 22–23.

OECD 1998, at 20.

OECD 1998, at 21–23.

Even if the tax haven does impose tax, the definition of domestic source income may be so restricted as to result in very little income being taxed. See OECD 1998, at 23.

It limits the access by tax authorities to the information required for the correct and timely application of their tax laws. See OECD 1998, at 24.

Transactions may be booked there without the requirement of adding value so that there is little real activity, i.e. these jurisdictions are essentially ‘booking centres’. It can be difficult to determine when and whether an activity is substantial. For example, financial and management services may in certain circumstances involve substantial activities. However, certain services provided by ‘paper companies’ may be readily found to lack substance. See OECD 1998, at 22 and 24.

See also, e.g., Evers et al. 2011, Sect. 2.

See, e.g., OECD (2004) The OECD’s Project on Harmful Tax Practices: The 2004 Progress Report, OECD, Paris, 4 February 2004, at 14–15.

See, e.g., OECD 2015b, at 15–16.

European Commission and Kingdom of Spain v Government of Gibraltar and United Kingdom, AG Jääskinen, Opinion, Joined Cases C 106/09 P and C 107/09 P, ECLI:EU:C:2011:215, 7 April 2011, para 123 (references omitted). The AG refers to OECD 1998, para 47.

See for an overview, e.g., Pinto 2003, at 279–286.

Ngoy 2001, at 1.

See, e.g., OECD 2015a, at 4–5, 9, 15–16.

See, e.g., Kemmeren 2001, at 18–55.

Oxfam Novib 2016, at 5–10 and 15–16.

Meldgaard et al. 2015.

Oxfam Novib 2016, at 5–6 and 15–16.

Meldgaard et al. 2015, cover sheet.

See, e.g., Oxfam Novib 2016, at 5.

European Commission (2012) Recommendation on aggressive tax planning, 6 December 2012, C(2012) 8806 final, para 2. See also Meldgaard et al. 2015, at 15–16 and 23.

Meldgaard et al. 2015, at 68. See for an overview of the 33 ATP indicators, Meldgaard et al. 2015, at 51–67. The scope of this chapter does not allow us to discuss them.

Meldgaard et al. 2015, at 51.

Meldgaard et al. 2015, at 120–123.

Meldgaard et al. 2015, at 47–49, 57–58, 66, 74, 136 and 163.

Meldgaard et al. 2015, at 15–16 and 18.

Meldgaard et al. 2015, at 8.

Oxfam 2016.

Oxfam Novib 2016.

Oxfam 2016, at 11.

Ibid.

Oxfam 2016, at 12–13. It is beyond the scope of this chapter to discuss in detail Oxfam’s methodology.

Article 12b Corporate Income Tax Act 1969 (Wet op de Vennootschapsbelasting 1969; CITA 1969).

See, e.g., Framework for State Aid for Research and Development and Innovation, OJ C 198, 27.6.2014, p. 20.

OECD 2015b, at 24–36; and Articles 12b-12bg CITA 1969.

Oxfam 2016, at 13 and 19.

European Commission (2015) Commission Decision of 21 October 2015 on State aid SA.38374 (2014/C ex 2014/NN) implemented by the Netherlands to Starbucks, C(2015) 7143 final. Both the Netherlands (Case T-760/15 (The Netherlands v Commission)) and Starbucks (Case T-636/16 (Starbucks and Starbucks Manufacturing EMEA v Commission)) appealed the decision. For a more detailed discussion of these pending cases, see Kemmeren 2017.

European Commission (2014) State aid: Commission investigates transfer pricing arrangements on corporate taxation of Apple (Ireland), Starbucks (Netherlands) and Fiat Finance and Trade (Luxembourg), Press Release, 11 June 2014, IP/14/663.

See also, e.g., Evers et al. 2011, paras 2 and 5.

See also, e.g., Oxfam 2016, at 10–11.

In order to qualify, one of the conditions is that a taxpayer must hold at least a participation of 5% of the nominal paid-up capital of another company of which the capital is wholly or partly divided into stocks.

Article 13 CITA 1969.

See, e.g., Letter of State Secretary of Finance to Second Chamber of the Dutch Parliament of 20 June 2015, IZV/2015-314 U, at 1.

See, e.g., Ministerie van Financiën, Notitie Fiscaal Verdragsbeleid 2011, 11 February 2011, at 39.

See for more details, e.g., Kemmeren 2001, at 71–83.

Article 13 in conjunction with Articles 13aa and 23c CITA 1969. See also, e.g., Letter of State Secretary of Finance to Second Chamber of the Dutch Parliament of 2 November 2016, no. 2016-0000163149, at 3.

Article 13a CITA 1969.

Article 13(17) CITA 1969.

See, e.g., Meldgaard et al. 2015, at 120–121, and 123; and Oxfam Novib 2016, at 16.

See, e.g., Ministerie van Financiën, Notitie Fiscaal Verdragsbeleid 2011, 11 February 2011, at 47, and Letter of State Secretary of Finance to Second Chamber of the Dutch Parliament of 20 June 2015, IZV/2015-314 U, p. 2.

See, e.g., Article 12 of the OECD Model Tax Convention on Income and Capital (OECD Model); and the Commentary to this provision since the 1963 version until the most recent updated version of 2014.

See for more details, e.g., Kemmeren 2016, at 163–173 and 177–183.

See for more details, e.g., Kemmeren 2016, at 163–177.

See, e.g., International Monetary Fund 2014; and UNCTAD 2015, at 172–212.

See Article 1 in conjunction with Article 4 OECD Model. In general, the actual tax treaties include the same or similar provisions.

See, for the Netherlands, Article 2(4) CITA 1969, and for the United States, IRC § 7701(a)(3), (4), and (30).

See, e.g., limitation on benefits (LOB) rules, such as included Article 26 of the Convention between the Kingdom of the Netherlands and the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (18 December 1992, effective as of 1 January 1994), the beneficial owner condition as included in Article 10–12 OECD Model, and the application of (domestic) GAARs in a tax treaty context, sometimes explicitly allowed by tax treaties, as done in Art. 23 of the Convention between the Federal Republic of Germany and the Kingdom of the Netherlands for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (12 April 2012, effective as of 1 January 2016).

See, e.g., International Monetary Fund 2014, at 6 and 16. The report (at 17) makes the following observation in respect of the term tax haven: ‘The otherwise unhelpful and ill-defined term ‘tax haven’ is used in this paper only to refer to specific lists of jurisdictions used in the literature cited.’ See further: UNCTAD 2015, at 5, 8, 26, 41, 63, 68, 71, 73, 86, 93, 112, 115, 188–189, 192–193, and 198. It should be noted that this report (at 189) defines the term tax haven even without an element of tax in it: ‘Small jurisdictions whose economy is entirely, or almost entirely, dedicated to the provision of offshore financial services.’ At the same page it defines other offshore hubs as ‘[j]urisdictions (not identified as tax havens) offering SPEs or other entities that facilitate transit investment. Larger jurisdictions with substantial real economic activity that act as major global investment hubs for MNEs due to their favourable tax and investment conditions.’ The Netherlands is included in this category.

It should be noted that the CITA 1969 also includes a number of provisions which limit the deduction of interest. See, e.g., Articles 10a, 10b, 13 l and 15ad CITA 1969.

See, e.g., International Monetary Fund 2014 and UNCTAD 2015, which perceive the Netherlands to be used by non-residents to escape taxes.

See for further details Kemmeren 2001, at 257–301.

Compare, e.g., The Queen v Secretary of State for Transport, ex parte Factortame, CJEU, Judgment, Case C-221/89, ECLI:EU:C:1991:320, 25 July 1991 (Factortame II), para 21. See for further details, e.g., Kemmeren 2001, at 177–188.

See, e.g., Letter of State Secretary of Finance to Second Chamber of the Dutch Parliament of 4 November 2016, no. 2016-0000194729, at 5.

Otherwise a classical disparity may arise. However, in such a case, it is not because of the Dutch tax system that income may not be taxed in the territory where value is added, where the origin of the income is. International coordination, one of the essential elements in the BEPS actions, can prevent such a disparity.

See, e.g., Letter of Minister of Foreign Trade and Development Cooperation and State Secretary of Finance to Second Chamber of the Dutch Parliament of 18 June 2015, MINBUZA-2015.232574, at 2–3.

See, e.g., Meussen and Velthuizen 2002, at 4–10.

See, e.g., Letter of State Secretary of Finance to Second Chamber of the Dutch Parliament of 2 November 2016, no. 2016-0000163149, p. 4.

See Decree of 3 June 2014, DGB 2014/296, Stcrt. 2014, 15954, V-N 2014/32.2, para 3.2.

See Decrees of 3 June 2014, DGB 2014/3098, Stcrt. 2014, 15955, V-N 2014/32.3; 3 June 2014, DGB 2014/3099, Stcrt. 2014, 15956, V-N 2014/32.4; 3 June 2014, DGB 2014/3101, Stcrt. 2014, 15957, V-N 2014/32.5; and 3 June 2014, DGB 2014/3102, Stcrt. 2014, 15958, V-N 2014/32.6.

See, e.g., Hoge Raad (Dutch Supreme Court), Judgment, no. 18 230, 31 May 1978, Beslissingen in belastingzaken Nederlandse Belastingrechtspraak (BNB) 1978/252; Article 8b CITA 1969; and Decree of 3 June 2014, DGB 2014/3098, Stcrt. 2014, 15955, V-N 2014/32.3.

A financial service company is a resident taxpayer whose activities in a year are predominantly as a matter of law or of fact the direct or indirect reception and payment of interest, royalties, rent or lease instalments, under whatever name and in whatever form, from and to non-resident group companies.

See European Commission Press Release of 14 June 2014, IP/14/663, at 2.

See Commission Decision of 21 October 2015 on State aid SA.38374 (2014/C ex 2014/NN).

See pending cases T-760/15 (Netherlands v Commission) and T-636/16 (Starbucks and Starbucks Manufacturing EMEA v Commission).

See for further details, e.g., Kemmeren 2017.

See, e.g, Ministerie van Financiën, Notitie Fiscaal Verdragsbeleid 2011, 11 February 2011, at 63–64; and Letter of State Secretary of Finance to Second Chamber of the Dutch Parliament of 4 November 2016, at 2–4.

See, e.g., Wet internationale bijstandsverlening heffing belastingen 1986 (Act on International Administrative Assistance Concerning Levying of Taxes 1986; AIAA 1986).

Articles 29b-29 h CITA 1969.

See also legislative proposal Wet uitwisseling inlichtingen over rulings (Act on exchanging information on rulings), which implements Council Directive (EU) 2015/2376 of 8 December 2015 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation.

See Decrees of 3 June 2014 V-N 2014/32.5 and V-N 2014/32.6.

See Article 8(5) AIAA 1986 in conjunction with Article 3a Uitvoeringsbesluit internationale bijstandsverlening heffing belastingen 2011 (Implementation decree act on international administrative assistance concerning levying of taxes 2011).

Bratton WW, McCahery JA (2001) Tax Coordination and Tax Competition in the European Union: Evaluating the Code of Conduct on Business Taxation. Common Market Law Review 38(3):677–718

Castro LFM (2016) Brazil/Netherlands: Dutch Holding Companies Included in Brazilian Grey List: Controlled Foreign Company, Thin Capitalization and Consolidation Rules Not Applicable for 2015. Bulletin for International Taxation 70(11)

European Commission (2015) A Fair and Efficient Corporate Tax System in the European Union: 5 Key Areas for Action, COM(2015) 302 final

Evers M, De Graaf ACGAC, Stevens AJA (2011) Zembla-uitzending ‘Nederland belastingparadijs’ nader beschouwd. Maandblad Belastingbeschouwingen 2011(2):60–65

Henry JS (2012) The Price of Offshore Revisited, New Estimates for Missing Global Private Wealth, Income, Inequality, and Lost Taxes. Tax Justice Network

International Monetary Fund (2014) Spillovers in International Corporate Taxation. IMF Policy Paper

Kemmeren ECCM (2001) Principle of Origin in Tax Conventions: A Rethinking of Models. Dissertation, Tilburg University. http://webwijs.uvt.nl/publications/304239_ext.pdf. Accessed 24 January 2017

Kemmeren ECCM (2005) Tax Competition and Compatibility with EU (State Aid) Rules: Balancing On What is Allowed and What is Not. Conference paper, Conference on International Markets and Corporate Governance, Washington DC, October 2005, pp 1–29

Kemmeren ECCM (2016) Legitimacy of Tax Claims of Developing Countries on Interest and Royalties of MNEs. In: Jochum H, Essers P, Lang M, Winkeljohann N, Wiman B (eds) Practical Problems in European and International Tax Law, Essays in Honour of Manfred Mössner. IBFD, Amsterdam

Kemmeren ECCM (2017) The Netherlands: Fiscal unity, Groupe Steria’s per-element approach and currency losses relating to a non-resident subsidiary (C-399/16(X NV)); Starbucks and State aid (T-760/15 and T-636/16) In: Lang M et al (eds) CJEU - Recent Developments in Direct Taxation 2016. Series on International Tax Law, Linde Publishers Vienna, Austria:148–167

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Konrad KA, Stolper T (2015) Coordination and the Fight Against Tax Havens. CEPR Discussion Paper No. DP10519. http://ssrn.com/abstract=2588422. Accessed 23 January 2017

Meldgaard H, Bundgaard J, Weber KD, Floristean A (2015) Study on Structures of Aggressive Tax Planning and Indicators, Final Report. Taxation Papers, European Commission’s Directorate-General for Taxation and Customs Union, Working Paper N. 61 – 2015, European Commission, Brussels

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Ngoy JM (2001) The Paradox of Tax Havens: Consequences of the Subjective Approach. Journal of International Taxation 12:34, January 2001

OECD (1998) Harmful Tax Competition: An Emerging Global Issue. OECD

OECD (2000) The Application of the Permanent Establishment Definition in the Context of Electronic Commerce: Proposed Clarification of the Commentary on Article 5 of the OECD Model Tax Convention, Revised Draft for Comments. OECD

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Titel: The Netherlands: A Tax Haven?
verfasst von: Eric C.C.M. Kemmeren
Verlag: T.M.C. Asser Press
Buch: Netherlands Yearbook of International Law 2016
Print ISBN: 978-94-6265-206-4

Electronic ISBN: 978-94-6265-207-1

Copyright-Jahr: 2017
DOI: https://doi.org/10.1007/978-94-6265-207-1_15