You associate the Netherlands with Tulips and THC, not tax-evasion, but that’s exactly what some tech companies are using the country for. According to Bloomberg, Yahoo, Dell and Google have set up offices in Holland in order to take advantage of the country’s lenient tax laws and funnel millions and millions of dollars into off-shore subsidiaries.
How does it work? Firms creatively move funds through shell companies using nicknames, like “Dutch Sandwich”, for example. With that tactic, Bloomberg says last year Google was able to route $US10 million through a shell company in Bermuda via the Netherlands, which saved it $US2 billion in worldwide taxes. Dell leveraged a subsidiary called Dell Global BV to pay income taxes at a rate of one-tenth of 1 per cent on profits of $US2 billion in 2011. But it hasn’t even had an employee in Holland since 2009. And Yahoo cut its bill by $US42.8 million last year with similar strategies.
These sneaky plays cut companies’ tax bills but it also loses money for the Netherlands, which is none too pleased about it. It’s not illegal, but it’s not exactly fair. And there’s growing anger about tax dodging in the EU, especially in light of Europe’s sour economic state. The Dutch Parliament is debating tax laws this week, but EU-wide change doesn’t look promising, considering it would take unanimous approval from all 27 member states. Regardless, it’s not building tech companies any good will in Europe. [Bloomberg]
Picture: Shutterstock/Ivonne Wierink