The role of the Netherlands in offshore finance, Amsterdam

The Netherlands is the largest conduit in the world for foreign direct investment. This means that the Netherlands is used by multinationals to invest in other countries, and transfer profits across their corporate structures. For this, they generally use mailbox companies -- companies with no employees and managed by lawyers, with the sole purpose of serving as a vehicle for international business transactions. With Robin Fransman, Jan Fichtner and Rodrigo Fernandez.

Why the Netherlands? Firstly, the low taxes on international dividends, interest and royalties, so companies can transfer capital out of the Netherlands paying only a small bill. Secondly, the Netherlands has a large number of bilateral tax treaties, which further reduce the taxes, reduce the costs by allowing multinationals to centralize their investment structure in one country, and offer investors protection against changes in legislation. Finally, the Netherlands is located in the heart of Europe, has one of the best infrastructures in the world (including the largest port in Europe), and an educated and multilingual workforce.

As a result, there exist now more than 10,000 mailbox companies in the Netherlands funneling four trillion euros through the country, 5 times the GDP of the Netherlands. The benefits for the Netherlands are approximately 3,000 millions (6% of the total government revenue) and the creation of thousands of jobs in consultancy, law firms and accountants. Companies such as Google, Starbucks or Microsoft use the Netherlands as central pillars of their international corporate structure.

However, the effects of the Netherlands (and by extension other offshore financial centers) in the global economy are controversial. On the one hand, some argue that it is unjust, since companies have seen their taxes halved in the last twenty years, while taxes on individuals have increased. Moreover, it may harm developing countries, since offshore financial centers allow companies to transfer profits out of sight, eroding the ability of countries to tax the companies operating in the country. On the other hand, some claim that it increases overall welfare. What to think, and what to do?

About the speakers

Robin Fransman is a former Director of the Holland Financial Centre (HFC). Before that he worked in technical and commercial roles in the IT as an investment analyst at Van Lanschot Bankiers and as a supervisor at the Financial Markets Authority.

Jan Fichtner is a post-doctoral researcher at the University of Amsterdam. His research interests lie in International Political Economy, particularly Global Finance.

Rodrigo Fernandez is a post-doctoral researcher at KU Leuven, and a researcher at SOMO. He specializes in tax avoidance, tax havens and shadow banking.

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