ACFE Insights Blog

The Netherlands: A Warm Investment Climate

Besides its stable political and economic environment, what makes the land of tulips and windmills so attractive to corporate giants such as Starbucks, Google and Amazon?

By Guest Blogger December 2022 Duration: 4-minute read
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By: Clarisse Persia, CFE

Amid the approval of the post-COVID-19 recovery plan, frugal Netherlands was the loudest voice in the European Council against the EUR 750 billion recovery plan to aid the worst-affected countries. The Tax Justice Network reported that in 2019, the European Union lost USD 10 billion in corporate tax to the Netherlands. But besides its stable political and economic environment, what makes the land of tulips and windmills so attractive to corporate giants such as Starbucks, Google and Amazon?


Using a Dutch private limited company (B.V.) as an intermediate holding company is very popular among corporations and private equity investments. Holding companies have many advantages. Holdings allow the spread of risk in case the operating company goes bankrupt by placing profit and other assets in the holding company.

However, the main reason for establishing Dutch holding companies is the applicable fiscal regime. The Dutch government website states that profits, capital gains and dividends of the operating company can be transferred tax-free to the holding company because of the participation exemption that encompasses that only the operating company must pay taxes over these amounts. This feature makes holding companies an attractive feature for foreign corporations.

Double Irish With a Dutch Sandwich

It was 2017 when Google moved USD 22.7 billion worth of revenues to Google Ireland Holdings in Bermuda through Google Netherlands Holdings B.V., a Dutch shell company. In 2019, media outlets referred to a tax avoidance technique known as the “Double Irish with a Dutch Sandwich,” which involves shifting profits to low or no-tax jurisdictions, first through an Irish company, then to a Dutch company that is used to transfer profits to a second Irish company headquartered in a tax haven.

Dutch tax law allows royalty payments to be moved to a tax haven without incurring a withholding tax, hence the Dutch “sandwich”. This allowed Google to avoid U.S. income taxes or European withholding taxes on its overseas profits. Tech giants exploit these loopholes because they can easily move profits by transferring intellectual property rights to subsidiaries overseas. Nevertheless, Ireland ended the arrangement in 2014, ending Google’s tax benefits in 2020.

Mailbox Companies

The Netherlands is one of the world’s largest sources of foreign direct investments through mailbox companies. According to a 2018 article by the Centre for Research on Multinational Corporations (SOMO), there are approximately 14,000 mailbox companies in the Netherlands, which are used by local subsidiaries of foreign multinationals and wealthy private individuals to lower their tax burden, by relocating their capital flows to tax havens.

A mailbox company usually has no real business activities, no employees and is managed by a trust office. In 2013, the Financial Times reported that almost 2,000 companies were registered at Postbox 990 in Amsterdam, an office block managed by Intertrust Group, which is one of the 144 licensed trust firms in the country, according to the Dutch register of trust offices. The Dutch Central Bank reported that between 2015 and 2019, USD 37 billion worth of income deriving from foreign direct investment ended up in low tax countries.

Positive Steps 

Despite the Netherlands’ reputation as a conduit country, the country is making positive steps in the fight against tax avoidance. In 2024, the Dutch finance ministry will introduce a new withholding tax on dividends paid to low tax countries, in addition to the withholding tax imposed on interest and royalties effective 1 January 2021.

Also, in an effort to increase ownership transparency, the bill on the ultimate beneficial owner (UBO) register entered into force on 27 September 2020 states Dutch legal entities must include their UBOs in the UBO register. However, foreign companies or their representative office or branch in the Netherlands are exempted from the obligation. This is especially relevant in the wake of Brexit, which will see several companies relocating to the Netherlands. At the time of writing, however, a major setback is posed by the Netherlands' temporary closure of the UBO register, following the November 2022 ruling by the European Court of Justice that ended public access to the UBO register on privacy grounds.


Even if tax avoidance does not constitute a criminal offense, nowadays, corporations can suffer severe reputational damage when the public learns that they engaged in tax avoidance strategies. This can result in decreased media reputation, lost sales and increasing advertising costs—not to mention the disruption caused by parliamentary inquiries or potential litigation.

As reiterated by British MP Margaret Hodge during a 2012 parliamentary hearing, alongside the duties to their shareholders, companies also have obligations towards societies in which they operate, from which they derive huge benefits, including the public services funded through the taxes paid. Therefore, companies must evaluate whether predatory tax practices outweigh public scrutiny and understand how they are exposed towards their customer base.