Money flows through Dutch letterboxes increase again
The Netherlands remain a hub for international money flows, despite government measures. Most of these financial flows do not lead to actual economic activities and therefore do not contribute to the Dutch economy. However, these financial flows can undermine the tax revenues of other countries.
The size of the Dutch economy is relatively small. Yet the Netherlands attracts the most foreign investment globally after the US. Although global agreements were made in 2015 to sharply reduce these flows, they have remained high in the Netherlands. Together with Luxembourg, the Netherlands still accounts for more than 50 per cent of all foreign direct investment in the European Union.
These “phantom investments” have no link to the real economy and are mostly structured through letterboxes – empty companies that are part of a multinational. These entities are the financial hub between other subsidiaries within the group and are designed to channel profits away to countries with low tax rates, for example.
Related income streams, consisting mainly of interest and dividends, have risen sharply in the last 3 years. The Dutch government has failed to live up to its original ambition to substantially reduce these flows via the Netherlands as well.
The huge growth in company profits in recent years does not translate into comparable growth in revenues for governments. Instead, the huge global financial flows through complicated tax structures are leading to income losses in a large number of countries. Countries in the global south are particularly hard hit by this. The UN has put tackling these financial flows high on the agenda for the upcoming negotiations on new international taxation agreements.
“Many of the measures taken by the Dutch government intended to tackle tax evasion are failing to achieve their goal, as they only cover a small portion of taxable financial flows. The Netherlands remains an international tax conduit,” said Arnold Merkies, coordinator of Tax Justice Netherlands.
Tackling tax evasion
“The persistently high figures should be a wake-up call: more concrete measures are needed to tackle tax evasion. For example, by introducing normal withholding taxes, like our neighbouring countries. After all, the vast majority of money flows do not go to countries to which withholding tax currently applies.”
To know why the flows through Dutch letterbox companies are, and remain, so high, more insight is needed into the origin and destination of the money flows. At present, figures are only regularly published for some of the companies.
The Netherlands remain a hub for international money flows, despite government measures. Most of these financial flows do not lead to actual economic activities and therefore do not contribute to the Dutch economy.
While we still have data for only a handful of countries, we've found that the ultrawealthy consistently avoid paying their fair share in taxes. In the Netherlands, for instance, the average taxpayer in 2016 gave 45 percent of earnings to the government, while billionaires paid just 17 percent.
Consequently you expect not to be visiting the Netherlands for work (meetings etc.) for more than 183 days per year. You are wondering if you will need to pay taxes in the Netherlands anyway. If you are on a Dutch pay roll and due to your domicile you are only taxable for days physically worked in NL.
Effectively, the Netherlands is a conduit country that helps to funnel profits from high-tax countries to tax havens. Particularly the Dutch Special Purpose Entities attract income, often as interest and royalty payments, and pass it on, effectively untaxed, to tax havens.
The 30 percent ruling is a tax exemption available for international employees who move to the Netherlands or expats who currently work in the Netherlands. You need the Dutch Tax Office's permission to apply for this tax exemption. To obtain this permission, both you and your employer should submit an application.
However, while countries with high levels of secrecy but also high rates of taxation, most notably the United States and Germany in the Financial Secrecy Index (FSI) rankings, can be featured in some tax haven lists, they are often omitted from lists for political reasons or through lack of subject matter knowledge.
Some of the most popular countries that offer the financial benefit of having no income tax are Bermuda, Monaco, the Bahamas, and the United Arab Emirates (UAE). There are a number of countries without the burden of income taxes, and many of them are very pleasant countries in which to live.
The European nation of Switzerland is considered to be an international tax haven due to low tax levels and privacy laws. Switzerland also has a history of favorable tax treaties, stable politics, and a wealth of advisors.
Does the Netherlands Have Free Public Healthcare? In short, no, healthcare in the Netherlands is not free. Everyone who lives or works in the country must take out private health insurance.
In 2021, 317 thousand people in the Netherlands had net assets worth at least one million euros. This means 4 percent of all Dutch households are millionaires. Of these, 9.3 thousand had 10 million euros or more.
The tax revenue funds public spending in the Netherlands, including healthcare, education, and social security benefits. In 2024, the Dutch government is projected to raise around €402.9 billion in taxes. Most of this will come from income tax, social security contributions, and Value Added Tax (VAT).
For the calculation of the 183 days, you include all days on which the employee was in the country of work, so also weekends and holidays. Part of a day is regarded as a full day. The employee is paid by or on behalf of an employer that is not established in the state where the employee works.
If you are considered a resident of the Netherlands, you must pay income tax. If your only source of income is from traditional employment in the Netherlands, you will not have to file a return.
How Many Days Can You Be in the U.S. Without Paying Taxes? The IRS considers you a U.S. resident if you were physically present in the U.S. on at least 31 days of the current year and 183 days during a three-year period. The three-year period consists of the current year and the prior two years.
Key takeaways. The Netherlands' 30% ruling is a tax benefit that enables Dutch employers to give highly skilled migrant employees 30% of their salary tax-free for up to five years.
Who is eligible for tax free shopping in the Netherlands? You can provide proof of identity showing that your residence or usual place of residence is outside the EU. You will take the products with you in your personal luggage within three months after the end of the month in which you made the purchase.
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Introduction: My name is Cheryll Lueilwitz, I am a sparkling, clean, super, lucky, joyous, outstanding, lucky person who loves writing and wants to share my knowledge and understanding with you.
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