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| Dutch Tax Services |
A Dutch tax inspector gave United States multinational Proctor &
Gamble permission to move 676 million dollars to the Cayman Islands
untaxed, Trouw reported on Tuesday based on its own investigation into
the so-called Paradise Papers. As a result, the Dutch treasury missed
out on 169 million dollars, or over 145 million euros, in taxes,
according to the newspaper.
The Paradise Papers is the collective name for 13.4 million documents
and emails about tax havens. The data was leaked to German
newspaper Süddeutsche Zeitung, who shared it with global media through
international journalist collective ICIJ.
According to Trouw, this decision, or so-called ruling, was made by a
local inspector at the Rotterdam office of the Tax Authority in 2008.
The inspector seems to have made the decision by himself, without
consulting anyone else. According to the Tax Authority's rules, rulings
involving such high amounts must first be submitted to a special team of
ruling specialists. The Tax Authority acknowledged to Trouw that this
ruling did not comply to the Authority's own rules. The spokesperson
could not explain why or how this happened, and did not know whether
local inspectors violated the rules in other arrangements with
multinationals.
Trouw has the document showing the arrangement with Proctor &
Gamble (P&G) in its possession. The American multinational is one of
the largest suppliers of household and healthcare products in the
world. In the Netherlands the company is known for brands like Oral-B,
Always, Pampers and Gilette.
Over the past few years, such Tax Authority rulings were frequently
subject to criticism, especially after the revelations of the and so-called with multinationals like .
The Tax Authority doesn't reveal the content of such agreements, which
means that the Tweede Kamer - the lower house of Dutch parliament -
can't check the agreements. Despite the criticism, several State
Secretaries did not scrap the rulings, as they make it more attractive
for foreign companies to settle in the Netherlands, according to NU.nl.
These rulings must, however, comply to strict conditions. Former
State Secretary Eric Wiebes of Finance sent a standard format of such
rulings to the Tweede Kamer earlier this year as an example. It showed
that rulings are subject to requirements like a description of the
company's global structure, a signature of a second inspector and a list
of conditions the company must comply with to keep the agreement from
being annulled.
Trouw showed the agreement with P&G to Jan van de Streek,
professor of Tax Law at Utrecht University. According to him, it looks
nothing like the example ruling Wiebes sent to the Tweede Kamer. This
agreement consists only of a two-page letter written on
PricewaterhouseCoopers stationary, which refers only to a telephone
conversation with the Rotterdam inspector. There is no sign of the other
required data, the list of conditions or the signature of a second
inspector.
Note EU-Digest: An interesting point is that in last weeks
Parliamentary debate, whereby PM Rutte outlined the plans of the new
Government the coming years, he passionately defended to continue the
Dutch Government policy of welcoming US multi-Nationals to the
Netherlands with open arms - because as he said "it creates jobs".
The truth of the matter is that even though there are several
multi-national companies located in the Netherlands, most of the
Multi-Nationals come to the Netherlands, mainly because the Netherlands
is known as a Tax Haven for Multi National Companies
As to the job creation in the Netherlands by US multi-Nationals
referred to by PM Rutte, obviously some jobs are created, but in reality
most jobs are the result of local small business activities and trade
related business developments within the EU.
Read more: Paradise Papers: Dutch tax inspector allows U.S. multinational to evade $169 mil. in taxes | NL Times
