January 23, 2013

How Companies Avoid Taxes: Dutch Tax Strategy

After a look at how Google (and others) avoid taxes with their Double Irish, Dutch Sandwich tax strategy here is a look at Yahoo, Dell, Merck and more doing the same.

Per Bloomberg
The Yahoo arrangement illustrates that the Netherlands, in the heart of a continent better known for social welfare than corporate welfare, has emerged as one of the most important tax havens for multinational companies.

Attracted by the Netherlands’ lenient policies and extensive network of tax treaties, companies such as Yahoo, Google Inc. (GOOG), Merck & Co. and Dell Inc. have moved profits through the country. Using techniques with nicknames such as the “Dutch Sandwich,” multinational companies routed 10.2 trillion euros in 2010 through 14,300 Dutch “special financial units,” according to the Dutch Central Bank. Such units often only exist on paper, as is allowed by law.

By routing profits through the Netherlands en route to island havens, companies receive an important benefit: They generally don’t have to pay taxes on payments leaving or entering the country.

the Netherlands’ role as a $13 trillion relay station on the global tax-avoiding network is prompting a backlash.

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