Netherlands Tired of Being Used as a Tax Haven
A Dutch parliamentary committee met on Wednesday to talk about their role in helping corporations reduce their tax burden. Technology companies in particular have been facing scrutiny for the practice of funneling their profits through foreign subsidiaries to avoid U.S. corporate tax recently—all of this while the U.S. cuts back spending on things like teachers, police, and firemen because of a projected trillion dollar deficit—and the Netherlands now joins Ireland, France, and the United Kingdom in evaluating their role in that practice.
Using a technique called the “Dutch Sandwich,” companies like Google, Yahoo, and Dell routed 10.2 trillion euros through the Netherlands in 2010. Yahoo alone saved $42.8 million using the technique in 2011, and Dell attributed three quarters of their worldwide income to a Dutch subsidiary with no employees in 2009. The companies, of course, are eager to note that they are not breaking any laws. Ed Groot, a member of the Dutch Labor Party, told Bloomberg “we should not be a tax haven,” saying companies using them as such “spoil the name of Holland.” The funny thing about all this cash that’s supposedly kept anywhere but the U.S., according to the Wall Street Journal, is that most of it actually is in the U.S.
A number of European Commission proposals seek to remedy these common tax-avoidance strategies but they require unanimous approval from all 27 member states, which a member of the EU parliament likened to waiting for Godot. Meanwhile, Silicon Valley companies have been lobbying for the U.S. government to allow a tax holiday for repatriating their foreign earnings at a reduced tax rate.