News item | 11-12-2024 | 10:05
The measures taken by the Netherlands in the fight against tax avoidance are paying off. A set of recent measures, the effects of which have been mapped out for the first time, contribute effectively to reducing tax avoidance. For example, companies have transferred €5 billion less profit to other business units because of the measure. Tax deferral via “CV/BV structures” is also effectively tackled.
Tjebbe van Oostenbruggen, State Secretary for Finance: “It is good news that the new measures against tax avoidance are also having an effect. Tax avoidance undermines tax morale and damages the Dutch reputation. International measures appear to be the most effective, and we will actively work towards this in the coming years.”
In recent years, measures have been taken both nationally and internationally to combat tax avoidance. The government monitors these measures every year. This year’s monitor measured the effect of a number of more recent measures for the first time.
An example of this is the earnings stripping measure (ATAD1). The measure has ensured that companies have transferred fewer profits to other business units through interest payments. This proves to be effective in preventing tax avoidance. It is estimated that this amounts to €5 billion in less interest.
In addition, the EU directive ATAD2 also appears to be effective, which ensures that companies can no longer abuse the different tax rules between countries. For example, ATAD2 tackled the “CV/BV structure”. This corporate structure allowed companies to defer taxation for a long period of time on their profits made outside their home country. The data shows that American companies are making fewer commercial profits in the Netherlands. This is an indication that companies have abandoned the CV/BV structure.
Based on the updated figures from the Dutch Bank (DNB), it appears that the decline in interest, royalty and dividend flows from the Netherlands to low-tax countries compared to 2019 is permanent. This money flow has fallen in four years from €37 billion in 2019 to almost €7 billion in 2023.
The effects of all measures cannot yet be fully visualized. Such as withholding tax on dividends to low-tax countries and the Anti-Mismatches Act when applying the commercial principle. The government will therefore continue to monitor the effects of tackling tax avoidance annually.
European and international developments
At European level, the fight against tax avoidance continues. For example, with the FASTER directive, which gives EU member states options to refuse withholding tax refund procedures if there appears to be abuse. In addition, the automatic exchange of data for proper taxation (DAC) is increasingly being expanded, such as for cryptocurrencies.
Within the OECD/Inclusive Framework, the Netherlands has worked with a large number of countries on the revision of the international tax system and this has led to the introduction of the Minimum Tax Act 2024. The Netherlands also remains committed to introducing another part of the OECD/Inclusive Framework. Inclusive Framework agreements that concern the distribution of more taxing rights to countries where consumers and users of the largest multinational companies are located.