An interesting move from the Dutch government

Eric Wiebes of the Ministry of Finance has
written a letter to multinationals who wish to settle in the Netherlands. He
warns them not to have high expectations of generous tax benefits. “Please
take sober state support into account.” Wiebes wrote to the
multinationals. “Due to the strict control by the European Commission, we
are limited in our capabilities. The tax benefits can therefore be quite
disappointing.” The letter is distributed in mailboxes on the Zuidas in
Amsterdam.

Wiebes says he wants to use the letter to
clarify. “It is not a pleasant message, but companies need to know where they
stand. If they do need to pay taxes, they better hear it now than in a few
years, when they have spent it all on bonuses, cheat software and nasty coffee
flavors.” The lower House is pleased with the letter, however some
politicians find the tone somewhat detached: “It looks a bit like Wiebes wants
to send the message that shelf companies are not welcome here. That can never
be the intention.”

As you probably noticed this article isn’t based on facts. It was
written on the Dutch website De Speld a while ago. This is a satirical online
news magazine. They respond to regional, national and international news with a
wink. This article points at the news items of November which told that The
Netherlands gave illicit state support to Starbucks. The European Commission is
researching a few fiscal deals between multinationals and countries. About a
month ago they released their research into Starbucks. It turned out that
Starbucks paid far less tax than you might expect looking at their profits. A
preliminary calculation showed that Starbucks paid 1.2 million euro income tax
over three years, while The Netherlands was supposed to receive between 20 and
30 million euro’s. Starbucks lowered their profits by selling beans from one
affiliate to the other for a high price which reduced the profits and therefore
tax on profits. Besides that Starbucks paid the so called
royalty’s to a mailbox company of Starbucks in Great Britain. Those royalties
are costs for the use of intellectual property. Those royalties didn’t reflect
the market value and were therefore illicit. The Commission concluded that
there had been illicit state support from The Netherlands

Last Friday Wiebes announced they are going to appeal against this
decision of the European Commission. Wiebes states that the deals with
Starbucks are in line with the guidelines of the OECD (Organization for
Economic Co-operation and Development). According to him, Brussels did not
convincingly demonstrate that the Tax Authorities of the Netherlands diverged
from the statutory rules, and that there is existence of State aid. The
decision of the European Commission didn’t match the guidelines from the OECD,
which creates indistinctness and uncertainty. He states that the state wants
clarity and jurisprudence and therefore appeals to the decision. Wiebes leaves
a special note that he fully endorses the international fight against tax
evasion by multinationals. Unfortunately this message isn’t from the
speld.nl. 

Credits: www.somo.nl

At first I was surprised that there isn’t really a risk in providing
illicit state support for countries which make those deals with the
multinationals. “The worst case scenario” for the countries is that the
European Commission finds out and the multinationals still need to pay tax they
owe the government. However this appeal from Wiebes surprised me even more.
Wiebes does support the international fight against tax evasion however he
appeals against the decision of the European Commission.

Is the need for clarity and jurisprudence
indeed for real or is our government acting a bit hypocritally? Room for
thought I would say.

Andrea Brouwer

Andrea is currently interning with the Even it
Up! Campaign at Oxfam Novib. Her sharp mind mind combined with her skill to
make concise and assertive arguments is an apt asset for working on a complex
and inaccessible topic such as tax. You can write to her at andrea.brouwer@oxfamnovib.nl.

References:

http://www.volkskrant.nl/economie/europese-commissie-nederland-moet-zich-schamen-voor-Starbucks-deal~a4167911/

http://www.volkskrant.nl/economie/-nederland-gaf-tientallen-miljoenen-verboden-staatssteun-aan-Starbucks~a4167278/

http://www.nu.nl/ondernemen/4173195/kabinet-in-beroep-Starbucks-uitspraak.html

http://speld.nl/2015/10/23/staatssecretaris-waarschuwt-bedrijven-voor-sobere-staatssteun/

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s