The Netherlands: Dutch tax inspector allows U.S. multinational to evade $169 mil. in taxes - by Janene Pieters

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 Panama Papers and so-called sweetheart tax deals with multinationals like Starbucks. 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

EU Taxation Policies: US warns EU over Apple’s tax case

Is Apple cutting corners when paying taxes?

The US government has threatened the European Commission (EC) with retaliation if the body decides to proceed with its plan to demand millions of dollars in unpaid taxes from technology giant Apple.

The US Treasury Department issued a rare warning on Wednesday, August 24, accusing the Brussels-based body of becoming a “supranational tax authority” that poses a threat to international agreements concerning tax reform.

“The US Treasury Department continues to consider potential responses should the Commission continue its present course,” the Treasury said in its strongest language to date.

“A strongly preferred and mutually beneficial outcome would be a return to the system and practice of international tax cooperation that has long fostered cross-border investment between the United States and EU member states,” the warning added.

The European Union (EU) has been investigating a series of tax deals between Apple and Ireland which allow the iPhone maker to pay little or no tax on income earned across Europe.

The EC is expected to rule on the case next month. This is the biggest corporate tax avoidance investigation ever undertaken by the commission.

The EC is the executive body of the EU, responsible for implementing decisions, proposing legislation, upholding the EU treaties and managing the day-to-day business of the bloc.

According to investment bank JP Morgan, if Apple is forced to retroactively pay the Irish corporate tax rate of 12.5 percent on its pre-tax profits, the company might need to cash out as much as $19 billion.

A 2013 report by US Senate confirmed that Apple has paid little to no taxes on at least $74 billion of the profit it earned by exploiting Irish and American tax laws.

Tim Cook, who became Apple’s CEO after the death of its founder Steve Jobs five years ago, has denounced the case as “political crap.”

“There is no truth behind it,” he said. “Apple pays every tax dollar we owe.”

The EU estimates that tax avoidance by multinational corporations costs member states anywhere between $50 million to $78 billion a year in lost taxes.

In addition to Apple, other American companies like Amazon and Starbucks are also suspected of tax evasion.

Note EU-Digest: Hopefully the EU Commission does not cave-in for these US misguided threats and intimidations and tells the US Treasury Department where to shove this warning, which is protective of US corporate tax evaders.   

Read more: PressTV-US warns EU over Apple’s tax case

Netherlands and Luxembourgih: Starbucks, Fiat Decisions Seen in First Wave of EU Tax Cases - by Stephanie Bodoni Gaspard Sebag

Starbucks Corp. and a Fiat Chrysler Automobiles NV unit are set to be first in the firing line as European Union regulators issue a series of rulings over tax breaks for global companies, including Apple Inc.

The EU may issue decisions against Starbucks and Fiat as soon as next week following a two-year probe into how the companies may have gotten unfair tax treatment from Dutch and Luxembourgih authorities, people familiar with the cases said.

Speculation about the probes intensified.,this week as Margrethe Vestager, the EU’s competition chief, canceled a scheduled visit to China, citing pressing matters relating to her job.

Decisions on whether iPhone maker Apple and Amazon.com Inc. got sweetheart tax deals from Ireland and Luxembourg are expected at a later date, said the people who asked not to be identified because the decision isn’t public.

Read more: Starbucks, Fiat Decisions Seen in First Wave of EU Tax Cases - Bloomberg Business

Corporate Tax Evasion: Activists look to take bite out of McDonalds for EU tax avoidance - by Obert Hackwill

America’s fast food giant McDonalds is being accused of setting up an elaborate tax avoidance scheme.

Labour unions backed by the War on Want charity have asked the European Commission to expand an existing investigation into Fiat and Amazon to include the burger chain, and look into where more than a billion euros of unclaimed tax went between 2009 and 2013. They say revenues were routed through low-tax Luxembourg, making royalty payments to a subsidiary.

“More and more companies do it, it’s becoming almost impossible to supervise the companies, while millions of citizens have to pay their taxes everywhere,” says the European Union Public Services’ Federation’s Pablo Sanchez.

McDonalds insists its actions have respected existing legislation and that it has done nothing wrong. The fast-food firm adds its tax bill last year in France alone was over a billion euros.

Read more: Activists look to take bite out of McDonalds for EU tax avoidance | euronews, world news

Tax Evasion: France's Hollande slams Internet giants including Google on tax evasion

President Francois Hollande said Thursday that France would not continue to tolerate the tax optimisation strategies used by multinational Internet giants like Google.

"This is not acceptable and that is why, at both the European and the global level, we must ensure that tax optimisation... can be called into question," Hollande said on a visit to the offices of Internet sales company vente-privee.com in the Paris suburbs.

His comments follow reports that France is seeking one billion euros ($1.36 billion) in tax from Google over its fiscal strategies.

"Everyone must be in the same competitive situation, including on the fiscal level," Hollande said.

"When I go to the United States in a few days, we have agreed with President (Barack) Obama to make this effort on tax harmonisation," he said.

Hollande is making a state visit to the United States from February 10 to 12, during which he will meet with major tech firms including Google, Facebook and Twitter in Silicon Valley.

Magazine Le Point reported on Tuesday that Paris has decided to make the claim against Google, though neither the company nor tax authorities would confirm it.

France is one of a growing number of nations to pursue more aggressively what they see as abuse of tax and accounting rules that allows some multinational companies to pay less tax.

President Francois Hollande said Thursday that France would not continue to tolerate the tax optimisation strategies used by multinational Internet giants like Google.

Read more at: http://phys.org/news/2014-02-france-hollande-slams-internet-giants.html#jCp

Read more: France's Hollande slams Internet giants on tax

The Netherlands: Does the Netherlands risk losing foreign investment to Britain' if letter box companies are closed down?

The Netherlands may lose its advantage when it comes to attracting foreign investment because other countries such as Britain are making their tax regimes more attractive, says the Financieele Dagblad in one of their reports recently.

The paper bases its claim on interviews with lobby groups and tax advisers.

For example, Amcham, the American Chamber of Commerce in the Netherlands, has warned deputy finance minister Frans Weekers that American firms are regularly opting for London rather than the Netherlands, the paper says.

Both new firms and existing companies such as holdings are turning to Britain.

Amcham points out that while three-quarters of the US capital which comes into the Netherlands moves out again via letterbox companies, the money which remains is more than French, German and Belgian investments combined.

Note EU-Digest: In their report Het Financiele Dagblad seems to be lobbying  for Tax Evading companies and their advisers. They fail to report that Dutch laws are completely different from British laws when it concerns tax evasion and Letter-Box companies. Letter-Box companies which are closed down can only go to Britain or any other country in the EU unless they comply with local  tax laws. Let's hope the EU Commission does not fall asleep on this issue and ends the opportunities created for multi-nationals to evade taxes through legal loopholes in the EU.

Read more: DutchNews.nl - 'The Netherlands risks losing foreign investment to Britain'

The Netherlands - while poor segments of Dutch population suffer Government still legally allowing 20,000 letter-box companies to circumvent taxation

The Netherlands harboring  more than 20.000 letter box companies

A White House factsheet in 2009 reported. "Nearly one-third of all foreign profits reported by US corporations in 2003 came from just three small, low-tax countries: Bermuda, the Netherlands, and Ireland."

Like the Queen in Shakespeare's 'Hamlet' who protested that 'The lady doth protest too much, methinks,' the Dutch government hypocritically objected to the Netherlands being dubbed "a tax haven" and the White House agreed and deleted the line. 

The Dutch tax haven, has now more than  20,000 letter-box companies and in recent years even Facebook joined U2, the popular Irish rock group, to circumvent the tax system.. 

The Netherlands also hosts thousands of foreign financial vehicles. Bloomberg reports that a bookkeeper’s home office in Amsterdam also doubles as the headquarters for a Yahoo! Inc. offshore unit. 

It is a scandal that deficit-strapped Holland is raising retirement ages and taxes on the working classes while the Netherlands’ Government of PM Rutte and coalition partner Samson despite their vows to change the law continue to allow their country to be a €10.2trillion conduit on the global tax-avoiding network. 

 

Bloomberg says that attracted by the Netherlands’ lenient conservative policies and and an extensive network of tax treaties, companies such as Yahoo, Google, Merck & Co and Dell have moved profits through the Netherlands

Using techniques with nicknames such as the “Dutch Sandwich,” multinational companies routed €10.2trillion in 2010 through 14,300 Dutch “special financial units,” according to the Dutch Central Bank. Such units often only exist on paper, as is allowed by Dutch  law.

Google, IBM and Italian oil and gas group ENI head the list of companies using letter-box companies to cut their Dutch tax bills to between 0 and 5%, the Volkskrant daily said in an article.

According to theDutch  Financieele Dagblad , French state companies are also among those using the Netherlands to cut their tax bills.

In the meantime the Dutch Governmen has been dancing around the subject.  

Frans Weekers, Dutch deputy finance minister, said the controversy over the letterbox companies had damaged the Netherlands’ investment climate. “Over the past 10 years the trend has been for the number of letterbox companies in the Netherlands to keep growing. I want to turn that trend around,” Weekers told The Financial Times. “I see the Netherlands being portrayed in a bad light. I don’t want to be portrayed in a bad light."

Recently the Dutch government said tax treaties with Zambia and 22 other poor countries will be revised to allow the incorporation of anti-abuse clauses where necessary, but has not said a word about the major players which have letter box companies registered in the Netherlands and are involved in these tax evading schemes 

The European Commission has now said it will attempt to close a loophole that allows companies to cut their tax bill, a top official said on Monday, but the EU executive will first need to persuade member countries to back the change.

The commission wants rules to prevent companies setting up “letter-box subsidiaries” in countries solely to qualify for a softer tax regime and cut their bill.

Algirdas Semeta, the EU’s taxation commissioner, wants to insert an anti-abuse clause by the end of next year, allowing authorities to target artificial “parent-subsidiary” schemes that flout the spirit of the tax code.

“When our rules are abused to avoid paying any tax at all, then we need to adjust them,” he said. “Today’s proposal will ensure that the spirit, as well as the letter, of our law is respected.”

Semeta declined to name countries or companies that exploited the loophole but said that billions of euros were at stake.

EU-Digest