Minder vrijblijvend, meer resultaat

“Minder vrijblijvend,
meer resultaat”
Reader
Expertbijeenkomst over
maatschappelijk verantwoord ondernemen
Donderdag 14 december 2006
14.00 - 17.15 uur
Museum voor Communicatie, Den Haag
Organisatie: MVO Platform
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Inhoudsopgave
Minder vrijblijvend, meer resultaat
Reader expertbijeenkomst 14 december 2006
Inhoudsopgave
3*)
Leeswijzer
4
Inleiding
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Programma
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1 Tot wat voor problemen leiden uitsluitend vrijwillige regels?
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2 Milieudefensie
- workshop Meldpunt Maatschappelijk Onaanvaardbare Transacties
- rapport 'Meldpunt Maatschappelijk Onaanvaardbare Transacties'
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3 Amnesty International
- workshop VN Normen
- rapport 'The UN Human Rights Norms For Business: Towards Legal
Accountability'
4 Stichting Onderzoek Multinationale Ondernemingen (SOMO)
- workshop Belastingontwijking door multinationals in Nederland
- rapport 'The Netherlands: A Tax Haven'
- artikelen verschenen n.a.v. publocatie rapport
'The Netherlands: A Tax Haven'
10 - 17
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19 - 54
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57 -139
140 - 143
*De paginanummers refereren aan het nummer dat midden boven op de pagina te vinden is
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Leeswijzer
Deze reader is samengesteld voor de expertbijeenkomst ‘Minder vrijblijvend, meer resultaat’. De
bijeenkomst bestaat uit twee korte plenaire gedeeltes en drie workshops over verschillende
deelaspecten van maatschappelijk verantwoord ondernemen.
In de inleiding wordt een schets gegeven van de meningen van maatschappelijke organisaties en van
de politiek.
Daarna vindt u het programma van de expertbijeenkomst.
Hoofdstuk 1 behandelt de problematiek rond MVO, waarom zijn bindende regels nodig?
Hoofdstuk 2, 3 en 4 behandelen ieder een oplossingsrichting, behorend bij een workshop. Het gaat
dan om een ‘Meldpunt Maatschappelijk Onaanvaardbare Transacties’, VN Normen en aanbevelingen
om belastingontwijking door multinationals onmogelijk te maken.
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Inleiding
Voor u ligt de reader die samengesteld is voor de expertbijeenkomst ‘Minder vrijblijvend, meer
resultaat’, die op 14 december 2006 in Den Haag gehouden wordt.
De titel van de bijeenkomst slaat terug op een uitspraak van staatssecretaris Karien van Gennip. Zij zei
over maatschappelijk verantwoord ondernemen (MVO) van bedrijven dat het vrijwillig moest zijn, maar
niet vrijblijvend.
Maatschappelijke organisaties zijn het niet eens met het idee dat MVO alleen maar vrijwillig zou
mogen zijn. De organisaties ondersteunen verschillende vrijwillige MVO-initiatieven door bedrijven,
maar zien ook dat deze initiatieven in veel gevallen niet toereikend zijn.. Multinationals die gebruik
maken van sweatshops om hun kleding te laten maken, handel met dubieuze regimes in
conflictgebieden of de kap van tropische bossen voor de soja in het Nederlandse veevoer zijn hier
voorbeelden van.
De maatschappelijke organisaties pleiten voor een actieve opstelling van de politiek op het gebied
van MVO. Zij vinden dat de politiek bindende regels moet opleggen aan bedrijven, waarin duidelijk is
waar bedrijven zich precies aan moeten houden. De workshops gaan over wat voor soort bindende
regels nodig zijn.
MVO staat tegenwoordig hoog op de politieke agenda, maar het is niet duidelijk wat er precies onder
verstaan wordt. Daarom organiseren Milieudefensie, Amnesty International, SOMO en Oxfam Novib
namens het MVO-Platform1 een bijeenkomst met experts om over deelonderwerpen van MVO van
gedachten te wisselen.
Drie verschillende workshops zullen drie zeer verschillende onderwerpen behandelen. De grenzen
worden verkend voor een meldpunt waar mensen maatschappelijk onaanvaardbare transacties door
banken kunnen melden, er wordt gesproken over een universele mensenrechtenstandaard voor
bedrijven en belastingontwijking door multinationals wordt onder de loep genomen.
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Het MVO-Platform bestaat uit 35 maatschappelijke organisaties die zich bezighouden met MVO
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‘Minder vrijblijvend, meer resultaat’
Programma expertbijeenkomst
Donderdag 14 december 2006
14.00 – 17.15 uur, aansluitend borrel
Museum voor Communicatie, Zeestraat 82, Den Haag
Doel van de bijeenkomst:
De voorstellen voor een Meldpunt Maatschappelijk Onaanvaardbare Transacties (MMOT); VN Normen
voor Multinationale Ondernemingen; en aanpassing van het belastingstelsel bediscussiëren en waar
mogelijk verbeteren. De uitkomsten van de expertbijeenkomst zullen gebruikt worden voor verdere
ontwikkeling van oplossingen voor tekortkomingen van vrijwillig MVO.
Voor wie?
Ambtenaren, wetenschappelijke bureaus van de politieke partijen, wetenschappers, banken, en politici
die speciale interesse hebben in dit onderwerp.
Dagvoorzitter:
Marlies Filbri (Senior beleidsmedewerker MVO, Oxfam Novib)
Vorm:
Vergadering met experts in de vorm van diverse workshops, elk met een oplossingsrichting.
Agenda:
14.00 – 14.15 u
Plenair - Introductie door dagvoorzitter Marlies Filbri
Inleiding door Lia van Wijk, campagneleider Globalisering, Milieudefensie
14.15 – 15.15 u
1. Workshop ‘Meldpunt Maatschappelijk Onaanvaardbare Transacties‘ Milieudefensie
15.15 – 15.30 u
Pauze
15.30 – 16.45 uur
Parallelle workshops:
2. Workshop 'VN Normen' - Amnesty International
3. Workshop ‘Nederland: een belastingparadijs voor multinationals?' - SOMO
16.45 – 17.15 uur
Plenair: conclusies en afsluiting door Marlies Filbri
17.15 – 18.00 uur
Borrel
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1
Tot wat voor problemen leiden uitsluitend vrijwillige regels?
Op dit moment bestaat er uitsluitend vrijwillige regelgeving voor maatschappelijk verantwoord
ondernemen (MVO). De overheid en het bedrijfsleven hebben diverse vrijwillige initiatieven ontplooid.
De Nederlandse overheid onderschrijft de vrijwillige OESO-richtlijnen en ondersteunt het Global
Compact. Het Ministerie van Economische Zaken ondersteunt het bedrijfsleven met advies en
faciliteiten en MVO Nederland werd opgericht om het midden- en kleinbedrijf te helpen bij
maatschappelijk ondernemen. Veel bedrijven nemen zelf maatregelen om over te gaan tot
maatschappelijk verantwoord ondernemen, waarbij ze onder andere gedragscodes formuleren.Maar
bij het uitsluitend uitgaan van vrijwillige regelgeving, doen zich een aantal problemen voor.
ABN AMRO en het olieproject in Tsjaad en Kameroen (Milieudefensie)
ABN AMRO financiert, als onderdeel van een bankenconsortium, de 1100 kilometer lange pijpleiding
van Tsjaad naar Kameroen, dwars door het regenwoud. Een samenhangende sociale en milieurapportage is nooit uitgevoerd, terwijl de (potentiële) milieu-effecten enorm zijn. Daarnaast zijn er problemen op sociaal gebied. De compensatie aan boeren die hun land verloren bij de aanleg van de
pijpleiding, is volstrekt onvoldoende. Tsjaad is een zeer instabiel en corrupt land, met veel schendingen van mensenrechten. De afspraak van de Tsjadische regering met de financiers was, dat de oliedollars gebruikt zouden worden voor armoedebestrijding. De regering verbrak die belofte echter al
voordat het project officieel goedgekeurd was. Ze kocht voor de 4,5 miljoen dollar die ze van de oliemaatschappijen ontving, wapens om te vechten tegen opstandelingen in het noorden van het land.
Internetcensuur (Amnesty International)
Internet heeft ogenschijnlijk onbegrensde mogelijkheden om te informeren, een mening wereldkundig te kunnen maken en global communities te laten ontstaan. In landen waar afwijkende meningen
niet getolereerd worden, zoals China, Vietnam, Israël, Iran, en Cuba, wordt het vrije verkeer van informatie via internet in en uit het land in hoge mate beperkt. Gebruikers van het net worden basis mensenrechten onthouden, zoals recht op privacy, vrijheid van mening en meningsuiting, en vrijheid van
informatie. Amnesty heeft onlangs een rapport 2uitgebracht dat belicht hoe internetbedrijven zoals
Yahoo!, Microsoft and Google de Chinese autoriteiten helpen met de controle van informatie op internet waardoor de vrijheden van de gebruikers worden beperkt. Deze activiteiten zijn niet in overeenstemming met internationale normen en zijn ook in strijd met de uitgangsprincipes die de bedrijven zelf hebben vastgesteld in hun gedragscode.
Belastingontwijking door multinationals (SOMO)
Veel buitenlandse bedrijven vestigen zich in Nederland om gebruik te kunnen maken van gunstige
fiscale regelingen. Vaak bestaat een vestiging van een buitenlandse multinational uit niet meer dan
een ‘brievenbusbedrijf’ dat financiële stromen via Nederland doorsluist naar andere landen. Een
goed voorbeeld hiervan is Trafigura. Trafigura was onlangs in het nieuws voor het dumpen van giftig
afval in Ivoorkust. Op papier één van de grootste bedrijven van Nederland met een omzet van ruim
20 miljard per jaar, maar in werkelijkheid niets meer dan een brievenbus in Amstelveen. De belastingconstructies multinationals in Nederland gebruiken, gaan vaak ten koste van zowel rijke als arme landen, die hierdoor belastinginkomsten mislopen.
Allereerst is onduidelijk wat maatschappelijk verantwoord ondernemen precies inhoudt. Dit zie je terug in de vele vormen van gedragscodes die bedrijven opstellen. Zo kunnen ze er uitzien als een lijstje
van tien punten waarop ‘het bedrijf gaat letten’. Maar het kan ook een lijvig document zijn met daaraan gekoppeld een monitoring-systeem, waarvoor de bedrijfsvoering volkomen moet worden aangepast.
Maatschappelijke organisaties krijgen vaak de vraag van bedrijven: “Wat verstaan jullie onder maatschappelijk verantwoord ondernemen en hoe ziet dat er in de praktijk uit?” Om daar een antwoord op
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Amnesty International, Undermining Freedom of Expression in China. The role of yahoo!, Microsoft and Google, 2006. See
http://irrepressible.info/static/pdf/FOE-in-china-2006-lores.pdf.
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te geven hebben de maatschappelijke organisaties van het MVO platform het MVO referentiekader3
opgesteld. De organisaties willen dat de overheid een eenduidige definitie geeft van maatschappelijk
verantwoord ondernemen, waaruit duidelijk wordt waar bedrijven zich aan moeten houden als ze
maatschappelijk verantwoord willen ondernemen.
Een tweede probleem is dat bedrijven zonder meer hun eigen regels kunnen overtreden. Er zijn geen
mogelijkheden tot sancties, het bedrijf is dus vrij om te doen wat het wil.
Vaak wordt gezegd dat maatschappelijke organisaties en burgers de bedrijven ter verantwoording zullen roepen, maar daar kleven vier problemen aan. Ten eerste zijn de mogelijkheden van burgers en
maatschappelijke organisaties beperkt. Zij zullen niet alle bedrijven kunnen controleren. Ten tweede
zijn veel bedrijven, waaronder business-to-business bedrijven, ongevoelig voor kritiek van NGO's. Ten
derde zijn er, door gebrek aan transparantie, ook heel veel zaken die de NGO´s niet zullen weten. En
tenslotte hebben burgers en maatschappelijke organisaties vaak geen mogelijkheden om de zaken die
hen wel ter ore komen, te onderzoeken, zoals bijvoorbeeld in Birma of China.
Ook voelen bedrijven zich niet verantwoordelijk voor de hele productketen. Ketenverantwoordelijkheid speelt in vrijwel geen enkele gedragscode de rol die het verdient. Ketenverantwoordelijkheid wil
zeggen dat de maatschappelijke verantwoordelijkheid van ondernemingen zich uitstrekt over alle
(toe)leveranciers, (onder) aannemers, licentiehouders, samenwerkingsverbanden van een bedrijf en iedereen die werk voor het bedrijf verricht, ongeacht de formele relatie, de aard van het product of
dienst of de geografische locatie.
Door het gebrek aan ketenverantwoordelijkheid worden in Nederland dagelijks producten
verhandeld, waarvoor in Zuidelijke landen bijvoorbeeld mensenrechten geschonden zijn of
het milieu ernstig vervuild is. Westerse landen wentelen zo hun problemen af op ontwikkelingslanden.
Bovendien kennen gedragscodes vrijwel nooit de plicht tot overleg met de lokale bevolking (een deel
van de stakeholders). Het komt regelmatig voor dat de lokale bevolkingaanspraak maakt op een bepaald gebied waar het bedrijf zich wil vestigen . Het bedrijf kan daarbij de bevolking compleet negeren. En als de lokale bevolking het niet met een besluit van het bedrijf eens is, is er zelden een klachtenmechanisme. Alleen overheden kunnen, door wetgeving, hier paal en perk aan stellen.
Een vierde probleem is de oneerlijke concurrentie. Maatschappelijk verantwoord ondernemen is vaak,
maar niet altijd, duurder dan produceren zonder de fatsoensnormen in acht te nemen. Dat betekent
dat de producten die op een eerlijke en duurzame manier zijn geproduceerd, duurder verkocht moeten worden dan de overige producten. De goedwillende ondernemers zijn hiervan de dupe. Alleen de
overheid kan zorgen voor een gelijk speelveld, level-playing-field.
Daarnaast misbruiken sommige bedrijven vrijwillige regels om zich een groen en sociaal
imago aan te meten. Ze komen naar buiten met fraai geformuleerde gedragscodes en
glossy milieujaarverslagen, en doen verder niets. Hiermee brengen ze ook bedrijven die wel goede intenties hebben in diskrediet.
Tenslotte doen lang niet alle bedrijven mee, waarmee alweer de goeden onder de kwaden
moeten lijden. Veel van de problemen blijven bestaan, waarop vervolgens een hele sector
aangesproken kan worden. In het volgende hoofdstuk staan acht voorbeelden van maatschappelijk
onverantwoord ondernemen door bedrijven.
Uit de hoeveelheid en de aard van de problemen blijkt dat vrijwillige regelgeving voor MVO onvoldoende is. Daarom vinden de maatschappelijke organisaties dat er bindende regels voor bedrijven
moeten komen.
In drie workshops doen Milieudefensie, Amnesty International en SOMO voorstellen voor zulke regelgeving. Per voorstel wordt uitgewerkt wat het probleem is en hoe de oplossing er uit kan zien. De
voorstellen vindt u in de volgende hoofdstukken.
3
Voor de tekst van het MVO Referentiekader zie www.mvo-platform.nl
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2. Workshop 'Meldpunt Maatschappelijk Onaanvaardbare Transacties' Milieudefensie
Onderwerp: Het instellen van een meldpunt waar mensen klachten kunnen indienen over financiering
van maatschappelijk onaanvaardbare transacties door banken.
Doel: Het voeren van een open debat over het voorstel van Milieudefensie en het bespreken van
mogelijkheden en onmogelijkheden.
In Nederland hebben we een flink aantal zeer grote financiële instellingen. ABN AMRO, Rabobank,
ING, Fortis, om er een paar te noemen. Zij investeren enorme bedragen, ook in zuidelijke landen.
En niet altijd in maatschappelijk verantwoorde projecten of bedrijven die maatschappelijk
verantwoord ondernemen. Het investeringsgedrag van banken beïnvloedt alle overige sectoren.
Een paar voorbeelden:
ABN AMRO financiert een oliepijpleiding van Azerbeidzjan, via Georgië naar Turkije, met speciale contracten die boven alle andere wetten van die landen gaan (inclusief milieuwetten), op de grondwet na.
Dit brengt Turkije in de problemen met de afspraken die het land heeft met de Europese Unie.
De Rabobank financiert sojabedrijven die tropische bossen kappen ten behoeve van de aanplant van
soja. Een deel van die soja komt in Nederland terecht voor verwerking in veevoer.
Om een oplossing te bieden voor de hierboven geschetste problemen stelt Milieudefensie een ‘Meldpunt Maatschappelijk Onaanvaardbare Transacties’ voor, waar mensen een klacht in kunnen dienen
over financiële transacties van een bedrijf.
Een dergelijk meldpunt is haalbaar binnen de Nederlandse wetgeving. De PvdA en de ChristenUnie
hebben het meldpunt ook in hun verkiezingsprogramma's opgenomen.
Tijdens het verkiezingsdebat dat het MVO-platform op 3 november organiseerde hield Diederik
Samsom (PvdA) een hartstochtelijk pleidooi om dit meldpunt na de verkiezingen op te richten.
In de workshop zal een voorstel behandeld worden, over hoe zo’n meldpunt er uit kan zien. Het
voorstel is uitgewerkt door Jan Willem van Gelder van Profundo, die tijdens de workshop het voorstel
ook toe zal lichten (zie volgende pagina).
Spreker: Jan Willem van Gelder (Profundo)
Jan Willem van Gelder is ontwikkelingseconoom en oprichter van economisch onderzoeksbureau
Profundo. In opdracht van milieu- en ontwikkelingsorganisaties en overheden analyseert Profundo
mondiale handels- en financieringsstromen in sectoren als bosbouw, agribusiness, pulp en papier, olie
en gas, en mijnbouw. Daarnaast toetst Profundo bestaand overheidsbeleid gericht op het bevorderen
van maatschappelijk verantwoord ondernemen aan de praktijk, en ontwikkelt het voorstellen voor een
effectiever beleid.
Voorzitter: Marlies Filbri
Er zal gediscussieerd worden over de volgende stellingen:
1.
Het is goed voor banken als er een MMOT komt, want het creëert een level-playing-field.
2.
Het MMOT kan alleen maar goed functioneren als het sanctiemogelijkheden heeft.
3.
Een geloofwaardig MMOT is 100% transparant, dat wil zeggen: geeft volledig inzicht in
gemaakte inhoudelijke afwegingen en het achterliggende feitenmateriaal.
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Meldpunt Maatschappelijk Onaanvaardbare Transacties
-een voorstelNotitie door Jan Willem van Gelder (Profundo)
in opdracht van Milieudefensie
© oktober 2006, Milieudefensie
campagne Globalisering & Milieu
Postbus 19199
1000 GD Amsterdam
www.milieudefensie.nl/globalisering
INHOUDSOPGAVE
1. Waarom een Meldpunt Maatschappelijk Onaanvaardbare Transacties?
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2. Voorbeelden van maatschappelijk onaanvaardbare Transacties
- Destructieve sojateelt in Brazilië
- Verwoestende oliepalmplantages in Zuidoost-Azië
- Omstreden Bakoe-Tbilisi-Ceyhan (BTC) oliepijpleiding
- Wantoestanden bij mijnbouw in India
- Wapenproductie
- Productie van oorlogsschepen
- Misstanden in de kledingindustrie
- Bedreigde walvissen bij olieproject in Sakhalin
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3. Nederlandse en internationale beleidsontwikkelingen
- Wetgeving in Nederland
- Wetgeving in Europa
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4. Opzet en werkwijze van een MMOT
- Doel
- Opzet
- Juridische Basis
- Toetsingskader
- Procedure
- Uitspraken
- Openbaarheid
- Sancties
- Middelen
- Naam
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5. Eindnoten
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1. Waarom een Meldpunt Maatschappelijk Onaanvaardbare Transacties?
In de afgelopen decennia zijn veel financiële instellingen uit Nederland uitgegroeid tot mondiaal
opererende financiële conglomeraten. Een groeiend aantal klanten van deze financiële instellingen is
actief in landen met een zwakkere overheid, onduidelijke regelgeving en gebrekkige handhaving –
soms in een omgeving van corruptie en gebrekkige markttransparantie. Onvermijdelijk betekent dit
dat Nederlandse financiële instellingen met meer - en andere - risico’s geconfronteerd worden dan bij
financieringen binnen Nederland gebruikelijk is.
Regelmatig raken Nederlandse financiële instellingen betrokken bij de financiering van
bedrijven in sectoren als landbouw, bosbouw en papierindustrie, kledingindustrie, elektronica,
mijnbouw en olie- en gaswinning. Deze bedrijven brengen, in een aantal situaties, ernstige schade toe
aan mens en milieu: lozingen van schadelijke stoffen, ontbossing, bedreiging van biodiversiteit,
landrechtenconflicten, schending van arbeidsrechten en dergelijke.
Hoewel geen enkele financiële instelling bij dergelijke ernstige sociale- en milieuproblemen betrokken
wil raken, schiet de standaardrisicoanalyse van financiële instellingen - die grotendeels gebaseerd is
op financiële kengetallen en een papieren controle van de vereiste vergunningen - in sommige
gevallen klaarblijkelijk tekort. Maatschappelijke organisaties, zoals Milieudefensie, vinden daarom dat
financiële instellingen veel meer moeten doen om te voorkomen dat ze via hun financieringen en
beleggingen betrokken raken bij - en zelfs medeverantwoordelijk worden voor - dergelijke sociale en
milieuproblemen. Daarvoor zijn vier goede redenen te noemen:
• Financiële instellingen laten zich in toenemende mate voorstaan op hun maatschappelijk
verantwoorde handelen en/of hun duurzaamheidsbeleid. Zo ontwikkelde een aantal banken in 1993
de Equator Principles, een lijst met sociale en milieurichtlijnen voor investeringen. Dergelijk beleid
is betekenisloos als financiële instellingen zich niet maximaal inspannen om hun betrokkenheid te
beperken bij de financiering van illegale en maatschappelijk onaanvaardbare activiteiten met
negatieve milieu- en sociaal-economische effecten.
• De Nederlandse wetgeving - zowel de bestaande Wet toezicht kredietwezen 1992 als de nieuwe
Wet op het financieel toezicht (Wft) die in 2007 in werking moet treden - eist van financiële
instellingen dat zij zich verre houden van de financiering van “maatschappelijke onaanvaardbare” of
“onbetamelijke” activiteiten (zie verder paragraaf 3).
• Financiële instellingen hebben zelf ook belang bij het voorkomen van maatschappelijk
onaanvaardbare financieringen. Zo lopen ze mogelijk een direct kredietrisico als bijvoorbeeld een
klant zijn leningen niet meer kan betalen omdat de productie door de intrekking van een
vergunning of door een landrechtenconflict is stilgelegd. Ook loopt de financiele instelling indirect
een reputatierisico dat de laatste jaren sterk is toegenomen.
• Tenslotte is er nog het bredere maatschappelijke belang van het handhaven van het
maatschappelijk vertrouwen in financiële instellingen. Indirect loopt ook de financiële sector als
geheel een reputatierisico als bepaalde financiële instellingen publiekelijk verantwoordelijk worden
gesteld voor de financiering van activiteiten die onnodige schade aan mens en milieu toebrengen.
Om deze redenen zijn duidelijke criteria, regels en procedures nodig om te voorkomen dat financiële
instellingen via hun financieringen en beleggingen betrokken raken bij ernstige sociale en
milieuproblemen. De huidige onduidelijkheid is onwenselijk, zowel voor de banken, als voor
maatschappelijke organisaties en andere betrokkenen. Voor Nederlandse banken is het van groot
belang om goed te weten welke eisen aan hen gesteld (zullen) worden en hoe ze die uitdagingen die
ze in het veld tegen komen, een effectieve plaats kunnen geven in hun risicobeheersing.
Voor Nederland, een bankenland bij uitstek, is het erg belangrijk te overdenken hoe de overheid de
sector kan stimuleren ook op dit terrein innovatief en grensverleggend te opereren en zodoende
ervoor te zorgen dat de sector niet, onbedoeld of onbewust, onaanvaardbare risico’s neemt.
2
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Daarom stelt Milieudefensie voor om naast het Meldpunt Ongebruikelijke Transacties (MOT), waar
banken en andere financiële instellingen nu al ongebruikelijke transacties moeten melden, een
Meldpunt Maatschappelijk Onaanvaardbare Transacties (MMOT) in te stellen.
Maatschappelijke organisaties en personen die betrokken zijn bij de gefinancierde activiteit
kunnen bij het MMOT cases aandragen van wat in hun ogen maatschappelijk onaanvaardbare
financieringen door Nederlandse banken (in Nederland en het buitenland) zijn. De cases worden dan
door het MMOT onderzocht in een formele procedure die tot een uitspraak leidt. Deze uitspraak is
dan richtinggevend voor alle financiële instellingen in Nederland.
Een dergelijke openbare aanpak stimuleert een breder debat over welke vormen van
financiering maatschappelijk onaanvaardbaar zijn en wat banken zouden moeten doen om te
voorkomen dat ze daarbij betrokken raken. Voordeel van deze benadering is dat gaandeweg regels
ontwikkeld worden die gestoeld zijn op de dagelijkse praktijk van financiële instellingen en tevens op
een breed maatschappelijk debat. Een dergelijk proces kan daarom leiden tot een aantal criteria en
regels die zowel praktisch toepasbaar zijn als maatschappelijk breed gedragen.
2. Voorbeelden van maatschappelijk onaanvaardbare transacties
Over wat maatschappelijk onaanvaardbare transacties zijn, kunnen de meningen verschillen. Ter
illustratie van wat verschillende maatschappelijke organisaties hieronder verstaan, worden hier enkele
recente financieringen door Nederlandse banken beschreven die mogelijk aan een MMOT voorgelegd
zouden kunnen worden.
Destructieve sojateelt in Brazilië
Rabobank, ING Bank, Fortis Bank en ABN AMRO Bank zijn betrokken bij de financiering van de grote
handelaars die de Braziliaanse sojahandel domineren: ADM, Bunge, Cargill, Dreyfus en Maggi. De
snelle uitbreiding van de sojateelt in Brazilië leidt tot grootschalige ontbossing in het cerrado- en
Amazone-gebied en tal van milieu- en sociale problemen. De Nederlandse Sojacoalitie, waarin onder
meer WNF, Cordaid, Greenpeace en Milieudefensie vertegenwoordigt zijn, spreekt de betrokken
banken hier op aan.
Verwoestende oliepalmplantages in Zuidoost-Azië
Rabobank, ABN AMRO Bank en ING Bank en financieren de aanleg van oliepalmplantages in
Zuidoost- Azië. De sterke groei van de oliepalmsector in Zuidoost-Azië heeft ingrijpende gevolgen
voor mens en milieu: in veel gevallen wordt tropisch regenwoud gekapt om plantages aan te leggen
en worden lokale gemeenschappen die in en van deze bossen leven van hun land verdreven.
Nederlandse NGO’s zoals WNF, Milieudefensie en Oxfam Novib spreken de betrokken banken hier op
aan.
Omstreden Bakoe-Tbilisi-Ceyhan (BTC) oliepijpleiding
ABN AMRO Bank en ING Bank zijn betrokken bij de financiering van de zeer omstreden Bakoe-TbilisiCeyhan (BTC) oliepijpleiding, die ruwe olie vervoert van de Kaspische Zee bij Azerbeidzjan, via
Georgië, naar de zuidkust van Turkije aan de Middellandse Zee. Ten behoeve van de oliepijpleiding
hebben de betrokken bedrijven onder leiding van BP speciale contracten getekend met Turkije,
Azerbeidzjan en Georgië. Samen met buitenlandse NGO’s wijst Milieudefensie erop dat die contracten
gaan boven alle andere wetten van die landen (inclusief milieuwetten), behalve de grondwet. In ieder
geval het Turkse contract is in strijd met de internationale en Europese verplichtingen van Turkije op
het gebied van milieu en mensenrechten. Het contract is tevens in strijd met de verdragen die Turkije
met Europa heeft gesloten om toetreding tot de Europese Unie mogelijk te maken.
Wantoestanden bij mijnbouw in India
ABN AMRO Bank is financieel nauw betrokken bij het Brits-Indiase mijnbouwbedrijf Vedanta Resources
dat door NGO’s in India een scala van misdragingen op financieel, sociaal en milieugebied wordt
3
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1
verweten . De Landelijke India Werkgroep heeft hierover herhaaldelijk vragen gesteld aan ABN AMRO.
Wapenproductie
De Belgische organisatie Netwerk Vlaanderen spreekt banken die in België actief zijn (waaronder ING
Bank en Fortis Bank) al enkele jaren aan op hun betrokkenheid bij de financiering van
wapenproducenten en van bedrijven die betrokken zijn bij mensenrechtenschendingen. Hoewel deze
banken inmiddels beleid op deze terreinen hebben ontwikkeld, komt Netwerk Vlaanderen regelmatig
met nieuwe voorbeelden.
Productie van oorlogsschepen
ING Bank en Rabobank financieren de export van korvetten door de scheepswerf De Schelde naar
Indonesië. De Campagne tegen Wapenhandel verzet zich tegen de (financiering van) deze leveranties,
omdat de korvetten gebruikt zullen worden tegen de eigen bevolking in regio’s die naar meer
autonomie streven (zoals Atjeh en Papua).
Misstanden in de kledingindustrie
De Indiase toeleveranciers van de Nederlandse jeansfabrikant G-Star, FFI en Jeans Knit, maken zich
volgens de Schone Kleren Kampagne en de Landelijke India Werkgroep schuldig aan intimidatie en
mishandeling van de vooral vrouwelijke werknemers. G-Star wordt gefinancierd door ABN AMRO bank
en Rabobank.
Bedreigde walvissen bij olieproject in Sakhalin
Op het Russische schiereiland Sakhalin ontwikkelt de Nederlandse oliemaatschappij Shell het SakhalinII olie- en gaswinningsproject. Verschillende Nederlandse en buitenlandse NGO’s maken zich grote
zorgen over dit project, omdat het leefgebied van de zeldzame Westerse grijze walvis wordt bedreigd,
evenals de leefgebieden van bedreigde vis- en vogelsoorten op het schiereiland. Zeven private
banken, waaronder ABN AMRO, dingen mee naar het mandaat om financiering voor dit project te
arrangeren.
3. Nederlandse en internationale beleidsontwikkelingen
Het voorstel voor een Meldpunt Maatschappelijk Onaanvaardbare Transacties (MMOT) is in de eerste
plaats gestoeld op de bestaande en nieuwe Nederlandse wetgeving ten aanzien van de financiële
sector. Daarnaast sluit het MMOT aan bij relevante ontwikkelingen op mondiale en Europese schaal op
het gebied van regulering van de financiële sector.
Wetgeving in Nederland
De bestaande Wet toezicht kredietwezen 1992 (Wtk) moet in 2007, samen met een aantal andere
wetten op het gebied van de financiële sector, vervangen worden door de nieuwe Wet op het
financieel toezicht (Wft)2. Net als eerder in de Wtk wordt ook in de nieuwe Wft aandacht besteed aan
de “integere bedrijfsvoering” waar financiële instellingen voor moeten zorgen.
De artikelen 2:38 en 2:45 van de Wft schrijven voor dat banken en verzekeraars een “adequaat
beleid” moeten voeren en “de bedrijfsvoering zodanig moet inrichten” dat “een beheerste en
integere uitoefening” van hun bedrijf wordt gewaarborgd. In de artikelen 4:11 en 4:14 worden
dezelfde eisen gesteld aan beleggingsinstellingen. Volgens de Wft betekent dit onder meer dat
financiële instellingen zich niet moeten bezighouden met:
• relaties met cliënten die het vertrouwen in de financiële onderneming of in de financiële markten
kunnen schaden; en
• andere handelingen door de financiële onderneming of haar werknemers die op een dusdanige
wijze ingaan tegen hetgeen volgens het ongeschreven recht in het maatschappelijk verkeer
betaamt, dat hierdoor het vertrouwen in de financiële onderneming of in de financiële markten
4
14
3
ernstig kan worden geschaad .
Deze bepalingen horen zowel bij het zogenaamde gedragstoezicht als bij het prudentiële toezicht, wat
betekent dat de Autoriteit Financiële Markten (gedragstoezicht) en De Nederlandsche Bank
(prudentiële toezicht) nauw moeten samenwerken bij de nadere regels voor dit onderwerp.
Er wordt nu door het Ministerie van Financiën druk gewerkt aan de nadere uitwerking van de
Wft in elf Algemene Maatregelen van Bestuur (AMvB). Een daarvan is het Besluit prudentiële regels,
dat ingaat op de integere bedrijfsvoering. In dit Besluit zouden de functie, positie en bevoegdheden
van het MMOT geregeld kunnen worden. Een concept van dit besluit is in mei 2006 naar de Tweede
Kamer gestuurd, maar nog niet behandeld4. In dit Besluit zouden de functie, positie en bevoegdheden
van het MMOT geregeld kunnen worden.
Wetgeving in Europa
Het idee voor een MMOT sluit echter ook aan bij een beleidsmatige ontwikkeling die op Europees en
mondiaal niveau gaande is. Deze stimuleert financiële instellingen tot een verfijndere èn bredere
risico-analyse van hun financieringsbeslissingen. Hoewel niet altijd expliciet, stimuleert deze
ontwikkeling financiële instellingen impliciet ook om meer aandacht te besteden aan de analyse van
sociale en milieurisico’s5. De belangrijkste beleidsontwikkelingen in dit kader zijn:
Basel Capital Accord II
Het Basel Capital Accord II werd in juni 2004 door het Basel Committee on Banking Supervision
afgerond en wordt ondersteund door de bancaire toezichthouders van de G-10.6 Doel van het Basel
Capital Accord is te voorkomen dat banken in moeilijkheden komen als binnen- of buitenlandse
klanten hun leningen niet terugbetalen. Daartoe worden afspraken gemaakt over de hoeveelheid
eigen vermogen die banken voor iedere lening achter de hand moeten houden om niet-terugbetaling
op te vangen. Banken streven ernaar hun eigen vermogen zo min mogelijk aan te spreken, omdat
eigen vermogen een hoger rendement moet opleveren dan vreemd vermogen. Om dat rendement te
realiseren moet de bank aan zijn klanten een hoger rentepercentage vragen, en daarmee prijst de
bank zich uit de markt.
Het risico is bij de ene klant echter grote dan bij de andere. Het eerste Basel Capital Accord uit 1988
bevat een vrij simpele, grove indeling van verschillende klanten, waarop banken moesten baseren
hoeveel eigen vermogen ze achter de hand moesten houden. In het nieuwe Basel Capital Accord II
mogen grote, internationale banken overstappen op de zogenaamde Internal Ratings-Based (IRB)
beoordeling van kredietrisico’s. Dat wil zeggen dat banken zelf per klant het risico van nietterugbetaling mogen beoordelen en de daaruit voortvloeiende hoeveelheid eigen vermogen die
achter de hand gehouden moet worden. Banken streven ernaar hun eigen vermogen zo min mogelijk
aan te spreken en zullen dus veel aandacht geven aan een adequate beoordeling van hun
kredietrisico’s. Volgens het Basel Capital Accord II moeten de toezichthouders controleren dat banken
daarbij een “integrale beoordeling van risico’s” maken. Wat daaronder precies verstaan wordt kan op
nationaal niveau nader worden ingevuld, waarbij een adequate beoordeling van sociale en
milieurisico’s benadrukt kan worden7.
Capital Requirements Directive
Binnen de Europese Unie is in oktober 2005 overeenstemming bereikt over de Capital Requirements
Directive, waarmee het Basel Capital Accord II is omgezet in Europese regelgeving. Deze richtlijn
moet in principe vanaf 2007 in nationale wetgeving zijn vertaald, waarbij de IRB beoordeling van
kredietrisico’s in 2008 moet worden ingevoerd voor grote, internationale banken8. Het Nederlandse
ministerie van Financiën heeft nog geen wetsontwerp ingediend om deze richtlijn in nationale
wetgeving te vertalen, maar naar verwachting zal dat wel binnenkort gebeuren.
In navolging van het Basel Capital Accord II vraagt ook het Capital Requirements Directive banken om
een “integrale beoordeling van risico’s”, zonder aan te geven hoe dat moet. Om in deze leemte te
voorzien kan de Nederlandse wetgever een MMOT instellen door middel van de invoeringswet voor
het Capital Requirements Directive.
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15
Wat echter nog grotendeels ontbreekt in de internationale beleidsvorming zijn duidelijke richtlijnen
voor financiële instellingen die betrokken raken bij “cliënten die het vertrouwen in de financiële
onderneming of in de financiële markten kunnen schaden”. Er ontbreekt een concrete uitwerking van
het financiële toezichtbeleid in de richting van duurzaamheid en het vermijden van betrokkenheid bij
illegale activiteiten. Ook de “integrale risicobeoordeling” die het Basel Capital Accord II nastreeft,
moet nog nader worden ingevuld ten aanzien van sociale en milieurisico’s. Het MMOT kan daarbij een
belangrijke rol spelen.
4. Opzet en werkwijze van een MMOT
De voorstellen van Milieudefensie ten aanzien van opzet en werkwijze van een Meldpunt
Maatschappelijk Onaanvaardbare Transacties (MMOT) worden hier beschreven en toegelicht. Daarbij
is onder meer lering getrokken uit de sterke en zwakke punten van de procedure bij een klacht bij het
Nationaal Contactpunt Multinationale Ondernemingen dat de toepassing van de OESO-Richtlijnen in
Nederland bevordert9.
Doel
Het MMOT heeft als doel om banken te stimuleren om zoveel mogelijk te voorkomen dat ze
betrokken raken bij de financiering van bedrijven en projecten die grote sociale of milieuproblemen
veroorzaken. Om deze preventieve werking te versterken is het van groot belang dat ten aanzien van
de voorgelegde cases duidelijke uitspraken worden gedaan en dat waar nodig sancties opgelegd
kunnen worden.
Opzet
Het toezicht op de integere bedrijfsvoering van financiële instellingen is een gezamenlijke
verantwoordelijkheid van de twee toezichthouders DNB en AFM. Het MMOT kan opgezet worden als
de gezamenlijke ombudsman van beide toezichthouders, zodat het MMOT onafhankelijk kan
opereren. Dat betekent dat het MMOT een aparte status moet krijgen, met een goed omschreven
mandaat en eigen verantwoordelijkheden. Om zijn taak goed te kunnen uitoefenen moet het MMOT
uitgerust worden met voldoende kennis van de financiële sector en expertise op sociaal- en
milieugebied. Belangrijk is dat het MMOT ook een zelfstandige onderzoeksbevoegdheid krijgt om
feiten te verifiëren.
Juridische basis
Het MMOT moet gebaseerd worden op de nieuwe Wet op het financieel toezicht (Wft). In een
uitvoeringsbesluit of regeling moeten positie, mandaat, verantwoordelijkheden en werkwijze worden
vastgelegd.
Toetsingskader
Om te toetsen welke financieringen maatschappelijk onaanvaardbaar zijn, kan het MMOT zich baseren
op het MVO Referentiekader van het Nederlandse MVO-Platform. Dit referentiekader brengt in kaart
welke door Nederland ondertekende internationale verdragen en andere afspraken tot
maatschappelijke verplichtingen en verantwoordelijkheden voor Nederlandse bedrijven leiden.
Voorbeelden zijn de Universele Verklaring van de Rechten van de Mens, de verdragen van de
Internationale Arbeidsorganisatie (ILO) en tal van milieuverdragen. Maar ook op het gebied van
consumentenbescherming, gezondheid, eerlijke concurrentie en bestrijding van corruptie zijn
inmiddels richtlijnen ontwikkeld die gevolgen moeten hebben voor het gedrag van bedrijven10.
Procedure
Het voorleggen van een case aan het MMOT moet schriftelijk gebeuren door een NGO of individu dat
betrokken is bij de activiteiten van het bedrijf of het project dat gefinancierd wordt. Het MMOT
onderzoekt de case en vraagt om een schriftelijke reactie van de betreffende bank(en). Banken zijn
verplicht de benodigde informatie aan te leveren. Binnen een aantal weken beslist het MMOT op
basis van voorafgestelde criteria of het om een serieuze case gaat die verder in behandeling wordt
6
16
genomen. In dat geval kan een hoorzitting ingelast worden waar betrokkenen, NGOs en de
betreffende bank(en) hun visie kunnen geven. Eventueel laat het MMOT veldonderzoek uitvoeren om
bepaalde feiten te verifiëren.
Standaard moet de procedure binnen een half jaar uitmonden in een uitspraak. Bij gecompliceerde
zaken kan, met redenen omkleed, de procedure verlengd worden tot maximaal 1 jaar.
Uitspraken
Iedere case die voorgelegd wordt aan het MMOT moet uitmonden in een duidelijke
conclusie/uitspraak van het MMOT over de maatschappelijke aanvaardbaarheid van de betreffende
financiering. Deze uitspraak moet onderbouwd zijn met argumenten en moet richtinggevend zijn voor
toekomstige, vergelijkbare financieringen.
Openbaarheid
De conclusies/uitspraken van het MMOT worden openbaar gemaakt om banken te stimuleren om te
voorkomen dat ze betrokken raken bij maatschappelijk onaanvaardbare financieringen. Hoorzittingen
en schriftelijke discussies zijn in principe ook openbaar, tenzij er zwaarwegende argumenten zijn om de
procedure achter gesloten deuren te laten plaatsvinden.
Sancties
Wanneer het MMOT tot de conclusie komt dat een bepaalde financiering maatschappelijk
onaanvaardbaar was, leidt dit tot een waarschuwing aan het adres van de betreffende bank(en). De
bank wordt daarin gemaand de interne kredietbeoordeling zodanig aan te passen dat voorkomen
wordt dat opnieuw maatschappelijk onaanvaardbare financieringen plaatsvinden. Wanneer het MMOT
een bank driemaal een dergelijke waarschuwing heeft gegeven, volgt automatisch tijdelijke intrekking
van de vergunning van de bank - totdat deze een beter kredietbeoordelingssysteem heeft opgezet.
Middelen
Het MMOT moet beschikken over voldoende middelen om de aangedragen cases snel en adequaat
te kunnen behandelen, om onderzoek te kunnen doen en om externe expertise in te kunnen huren.
Naam
De naam Meldpunt Maatschappelijk Onaanvaardbare Transacties (MMOT) is een werknaam die
wellicht nog kan worden aangepast.
7
17
1
2
3
4
5
6
7
8
9
10
Vedanta Resources Plc Counter Report 2005 - Ravages through India, Nostromo Research and India Resource
Center, London, Juli 2005.
De werknaam Meldpunt Maatschappelijk Onaanvaardbare Transacties (MMOT) is gebaseerd op de formulering in
het bestaande artikel 22a van de Wet toezicht kredietwezen 1992 (Wtk). Deze wet wordt echter in 2007 vervangen
door de nieuwe Wet op het financieel toezicht (Wft), die een iets andere formulering kent. De werknaam van het
MMOT zou daaraan aangepast kunnen worden.
Regels met betrekking tot de financiële markten en het toezicht daarop (Wet op het financieel toezicht) - Vierde
Nota Van Wijziging, Vergaderjaar 2005–2006 - Kamerstuk 29 708 nr. 19, Tweede Kamer der Staten-Generaal, Den
Haag, 20 oktober 2005.
Besluit van (datum), houdende prudentiële regels voor financiële ondernemingen die werkzaam zijn op de financiële
markten (Besluit prudentiële regels Wft), Ministerie van Financiën, Den Haag, 24 mei 2006.
Preventing the financing of illegal activities outside the EU by European financial institutions, Onderzoek met
Wolfgang Richert (AIDEnvironment) in opdracht van het Ministerie van Volkshuisvesting, Ruimtelijke Ordening en
Milieubeheer (VROM), Mei 2005.
G10 central bank governors and heads of supervision endorse the publication of the revised capital framework,
Persbericht Basel Committee on Banking Supervision, Basel, 26 juni 2004.
International Convergence of Capital Measurement and Capital Standards - A Revised Framework, Basel Committee
on Banking Supervision, Basel, Juni 2004.
Charlie McCreevy, Commissioner for Internal Market and Services, welcomes the agreement reached in Council on
the Capital Requirements Directive, Persbericht Europese Commissie, Brussel, 11 oktober 2005.
Zie de website Nationaal Contactpunt Multinationale Ondernemingen (www.oesorichtlijnen.nl).
Website MVO-Platform (www.mvo-platform.nl), Bezocht in september 2006.
18
2. Workshop 'De VN normen en het belang van een universele
mensenrechtenstandaard voor multinationale ondernemingen' - Amnesty
International
Onderwerp: Een universele mensenrechtenstandaard voor bedrijven naar aanleiding van concrete
voorbeelden van bedrijven die (in)direct bijdragen aan mensenrechtenschendingen. Het eerste deel van
de workshop richt zich op internetcensuur.
Doel: Aantonen dat er een dringende behoefte is aan een universele mensenrechtenstandaard voor
bedrijven en informeren over de VN normen, het huidige VN proces op het gebied van mensenrechten
en bedrijven en over de rol die de Nederlandse regering daarbij kan spelen.
In sommige landen leiden investeringen van ICT (Informatie- en Communicatietechnologie) bedrijven
tot betrokkenheid bij mensenrechtenschendingen. In landen waar afwijkende meningen niet
getolereerd worden, zoals China, Vietnam, Israël, Iran, en Cuba, wordt het vrije verkeer van informatie
via internet in en uit het land in hoge mate beperkt. Behalve dat het internet talloze mogelijkheden tot
informatie biedt, kan het zelf een instrument van censuur worden. Amnesty heeft onlangs een rapport
uitgebracht dat belicht hoe internetbedrijven zoals Yahoo!, Microsoft and Google in China de
autoriteiten helpen met de controle van informatie op internet. Deze activiteiten zijn niet in
overeenstemming met internationale normen en zijn ook in strijd met de uitgangsprincipes die de
bedrijven zelf hebben vastgesteld in hun gedragscode.
Enige jaren geleden zijn de VN-normen voor bedrijven opgesteld die expliciet verplichtingen van
bedrijven t.a.v. mensenrechten uiteenzet. De VN-normen zetten o.a. uiteen dat bedrijven:
naast de geldende wetten van het betrokken land, zij zich ook moeten houden aan de regels van
internationaal recht en dat bedrijven dienen bij te dragen aan de economische, sociale en culturele
ontwikkeling van álle mensen waarin mensenrechten en fundamentele vrijheden volledig gerealiseerd
kunnen worden. Amnesty wil dat bedrijven zoals Yahoo!,Google en Microsoft zich committeren aan een
internationale mensenrechtenstandaard voor bedrijven, zoals de genoemde VN-normen. Met name op
dat laatste punt kan de Nederlandse regering bijdrage leveren. Wij vragen de Nederlandse regering
het huidige MVO-beleid te herzien. In het huidige MVO-beleid staan de OESO richtlijnen centraal.
Deze kunnen niet het hoofd bieden aan problemen zoals die zich nu voordoen in China op het gebied
van internetcensuur. Enerzijds door het vrijwillige karakter van de richtlijnen. De OESO richtlijnen
bieden geen bescherming van het zogenaamde “free riders principle”. Zo wordt het dilemma genoemd
dat ontstaat wanneer bedrijven die zich terugtrekken uit bepaalde activiteiten op basis van morele
overwegingen met lede ogen moeten toezien dat andere bedrijven zonder MVO-beleid deze
activiteiten zonder enige repercussie overnemen. Anderzijds doordat de inhoud van de OESOrichtlijnen op het gebied van mensenrechten miniem is, waardoor het niet duidelijk wordt wat nu
precies de mensenrechtenverantwoordelijkheden van bedrijven zijn.
In de workshop wil Amnesty n.a.v. een aantal actuele voorbeelden van internetcensuur in China het
belang van een internationale mensenrechtenstandaard voor bedrijven bespreken. Allereerst kijken we
op welke wijze de Nederlandse overheid multinationale ondernemingen verantwoordelijk kan houden
voor (in)directe betrokkenheid bij mensenrechtenschendingen. Vervolgens kijken we naar het huidige
proces in de VN waar een speciaal vertegenwoordiger is aangesteld op het gebied van mensenrechten
en bedrijven.
Sprekers: Marleen van Ruijven (stafmedewerker economische relaties, Amnesty International) e.a.
Na haar studie Vrouwen Studies en Internationale Betrekkingen aan de Universiteit van Amsterdam,
heeft Van Ruijven een certificaatsjaar International Political Economy gevolgd. Vanaf 2001 is zij
Stafmedewerker Mensenrechten en Bedrijfsleven bij Amnesty International. In deze functie draagt zij
verantwoordelijkheid voor de uitvoering van beleid van Amnesty op het gebied van mensenrechten en
bedrijven. Haar hoofdtaak bestaat uit het aansturen van het ronde tafeloverleg met 15 Nederlandse
multinationals.
Voorzitter: Kees van Tilburg, voorzitter ronde tafel overleg Amnesty en multinationale ondernemingen.
19
The UN Human Rights Norms For Business:
Towards Legal Accountability
20
First published in 2004 by
Amnesty International Publications
International Secretariat
Peter Benenson House
1 Easton Street
London WC1X 0DW
United Kingdom
www.amnesty.org
© Copyright
Amnesty International Publications 2004
ISBN: 0-86210-350-9
AI Index: IOR 42/002/2004
Original language: English
All rights reserved. No part of this publication
may be reproduced, stored in a retrieval system,
or transmitted, in any form or by any means,
electronic, mechanical, photocopying, recording
and/or otherwise without the prior permission
of the publishers.
21
The UN Human Rights Norms For Business:
Towards Legal Accountability
Contents
Introduction....................................................................................................................4
Why do we need the UN Human Rights Norms for Business?...........................................5
How were the UN Human Rights Norms for Business prepared? ......................................6
What is the legal status of the UN Human Rights Norms for Business?............................6
What issues do the UN Human Rights Norms for Business cover?....................................7
Positive and negative obligations on businesses............................................................8
Scope of the UN Human Rights Norms for Business....................................................8
Which businesses are covered by the UN Norms? ........................................................8
What are the key substantive provisions?.........................................................................9
Non-discrimination .....................................................................................................9
Protection of civilians and laws of war ........................................................................9
Use of security forces .................................................................................................9
Workers’ rights ..........................................................................................................9
Corruption, consumer protection and human rights....................................................10
Economic, social and cultural rights .........................................................................10
Human rights and the environment............................................................................11
Indigenous peoples’ rights.........................................................................................11
What implementation and enforcement mechanisms are provided by the
UN Human Rights Norms for Business? ........................................................................11
Why is a legal approach preferable? Do we need more regulation?.................................12
Will complying with the UN Norms add costs to companies? .........................................12
Will the UN Norms add to bureaucracy?.......................................................................13
Are the UN Norms too generic? ....................................................................................13
Will the UN Norms place unrealistic obligations on business?........................................13
Will the UN Norms make companies responsible for what governments should
be doing?......................................................................................................................14
Will the UN Norms delay the creation of binding regulations or undercut
current standards?........................................................................................................14
What is the relationship between the UN Human Rights Norms for Business
and the Global Compact? ..............................................................................................14
Conclusion ....................................................................................................................15
Recommendations .........................................................................................................15
To governments ........................................................................................................15
To companies and business associations .....................................................................16
To the World Bank, regional banks and other financial institutions ............................16
To the UN and OECD................................................................................................16
To non-governmental organizations and advocates .....................................................16
Endnotes ......................................................................................................................17
International human rights standards relevant to business..............................................18
Commentary on the Norms on the Responsibilities of Transnational Corporations
and Other Business Enterprises with Regard to Human Rights .......................................20
22
Introduction
Human rights organizations have addressed concerns to businesses for a number of
years. Recognizing that economic globalization has expanded the reach of corporate
power, advocates have struggled to ensure that companies, no less than other significant
actors, are brought within the framework of international human rights rules. A
significant step in this direction was taken in August 2003 by the UN Sub-Commission
on the Promotion and Protection of Human Rights when it approved the UN Norms on
the Responsibilities of Transnational Corporations and Other Business Enterprises with
Regard to Human Rights.1
This booklet provides an introduction to the UN Human Rights Norms for Business. It
answers a number of questions about the UN Norms and their legal status, and includes
an overview of their development, background on the drafting process, and a description
of the content and legal status of the UN Norms. The text of the UN Norms and their
Commentary are reproduced on pages 20-35.
In Amnesty International’s view, governments, advocates and companies should support
the UN Human Rights Norms for Business as offering an authoritative and
comprehensive statement of the responsibilities of companies in relation to human rights.
The UN Norms provide clarity and credibility amidst many competing voluntary codes
that too often lack international legitimacy, and provide far less detail on human rights
issues. AI supports efforts to strengthen the legal basis for the UN Norms, and calls on
governments, companies and advocates to disseminate and apply the UN Norms.
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Why do we need the UN Human Rights Norms for Business?
The nature and scale of the most recent wave of economic globalization has created a
world that is more interdependent than ever before. Since the end of the Cold War there
has been an explosion in international trade and financial relationships and a
corresponding expansion in the power of large transnational corporations and financial
institutions. Capital, labour, technology, and other resources are increasingly directed
toward or away from investment destinations based mainly on economic factors. A
growing number of businesses operate across boundaries in ways that exceed the
regulatory capacities of any one national system. Economically powerful actors may
dramatically influence policy – whether for good or ill – and thereby impact on the
human rights of millions of people.
There is a well-established body of international human rights rules, dating back over half
a century. The UN Charter of 1945 and the Universal Declaration of Human Rights
(UDHR) of 1948 spelt out a number of important human rights obligations. In many
instances, these obligations have now become customary international law, binding on all
states. While primarily addressed to states, the Universal Declaration also calls on ‘every
organ of society’ to respect, promote, and secure human rights – laying the foundation for
obligations which apply not only to states but also to non-state actors including private
businesses. Additional treaties elaborating the obligations in the UDHR followed. The
growing acceptance of international human rights laws and standards made it inevitable
that companies would face the question of their responsibilities towards human rights.
While the activities of businesses provide employment for countless millions, a variety of
daily business practices may negatively affect human rights. Companies may violate
human rights through their employment practices, or through the manner in which their
production processes impact on workers, communities and the environment. Companies
may also be implicated in abuses through their association with repressive governments
or political authorities.
Scrutiny of the activities of global businesses led many companies to adopt codes of
conduct during the 1980s and 1990s, and an emerging movement on corporate social
responsibility led to numerous voluntary codes. However, voluntary codes of conduct,
while a welcome signal of corporate commitment, have proved insufficient. Many codes
are very vague in regard to human rights commitments. As far as AI is aware, fewer than
50 companies even refer explicitly to human rights in their codes. Whether unique to the
company, or adopted sector-wide, voluntary codes too often lack international
legitimacy.2 This has resulted in calls for a more detailed, comprehensive, and effective
instrument. The UN Human Rights Norms for Business took shape in this context.
‘The good news is that there are now tools to help companies with this task. For example,
the UN Sub-Commission on the promotion and protection of human rights has recently
adopted a set of human rights norms for business, that pull together in one document
international human rights standards that are relevant to business – relating to labour
issues, health and environmental issues, discrimination issues, security issues, etc.’
Mary Robinson. Director, Ethical Globalization Initiative.
Formerly UN High Commissioner for Human Rights.
The UN Human Rights Norms for Business set out, in a single, succinct statement, a
comprehensive list of the human rights obligations of companies. They highlight best
practice and various modes of monitoring and enforcement. In addition to setting a
standard that business can measure itself against, the UN Norms are also a useful
benchmark against which national legislation can be judged (to determine if
governments are living up to their obligations to protect rights by ensuring that
appropriate regulatory frameworks are in place). The UN Norms are also an important
reference and campaigning tool for non-governmental organizations (NGOs) and
grassroots activists.
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How were the UN Human Rights Norms for Business prepared?
The UN Human Rights Norms for Business were adopted by the UN Sub-Commission
on the Promotion and Protection of Human Rights. The Sub-Commission is a body of
independent human rights experts within the UN system. The experts are elected from
all regions of the world by the UN Commission on Human Rights, which oversees the
Sub-Commission’s work. The Sub-Commission has drafted a number of human rights
documents that have eventually developed into treaties or other UN standards, including
the International Convention on the Elimination of All Forms of Racial Discrimination,
the UN Declaration on the Human Rights of Non-Nationals, and others.3
In 1997, the Sub-Commission prepared a study on the connection between transnational
corporations and human rights. The following year a Working Group on the Working
Methods and Activities of Transnational Corporations consisting of five SubCommission experts was established and in 1999 it began the process of preparing a
draft Code of Conduct for companies. Prior laws and codes were researched and an
extensive consultation process carried out. The consultation process solicited broad
input and heard testimony from relevant stakeholders, including many businesses as well
as unions, human rights organizations and other NGOs. After four years’ work, the
Working Group forwarded the draft UN Human Rights Norms for Business to the SubCommission, which unanimously adopted them in August 2003.
The UN Norms include a ‘Commentary’ which provides useful, authoritative guidance
on the meaning of specific terms, the scope of particular provisions, and the legal basis
for different obligations (with references to other international standards). When
adopting the UN Norms, the Sub-Commission also welcomed the Commentary.4
‘The Business Leaders Initiative on Human Rights programme is committed to testing
the value of [the UN Norms] as a driver for change, and contributing to the work of
existing networks and associations committed to promoting human rights in business.’
The Business Leaders Initiative on Human Rights
(ABB, Barclays, MTV Europe, National Grid Transco, Novartis, Novo Nordisk,
The Body Shop International)
What is the legal status of the UN Human Rights Norms for Business?
The UN Norms are not a formal treaty, which states ratify and thereby assume binding
legal obligations. On the other hand, the UN Norms are clearly more authoritative than
the many codes of conduct adopted by companies, and are a significant advance over
other existing standards. For a number of reasons, the UN Norms are likely to have
some legal effect:
• International law is not static, and is in a constant process of development. To the
extent that the UN Norms command attention and respect, and are used by advocates
and companies, they will take on greater force. If national and international tribunals
and courts begin to make reference to and apply the UN Norms, their legal effect will
increase.
• Unlike codes of conduct (whether adopted by individual companies or sector-wide),
the UN Norms result from a formal, UN-authorized, and consultative process. The
process leading to the UN Norms is similar to that resulting in other ‘soft law’
standards, some of which are now seen as part of customary international law.
• In their tone and approach, the UN Human Rights Norms for Business are selfconsciously normative. Unlike the Organization for Economic Cooperation and
Development (OECD) Guidelines for Multinational Enterprises, and the International
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Labour Organization (ILO) Tripartite Declaration of Principles, the UN Norms are
not limited by clauses emphasizing their non-regulatory nature.
• All of the substantive human rights provisions in the UN Norms are drawn from
existing international law and standards. The novelty of the UN Norms is to apply these
– within the limits of businesses’ impact and influence – to private enterprises, but even
in doing so to draw on a wide range of international practice (including the practice of
companies themselves). The UN Norms, in other words, are well-grounded in law.
Some argue that international law applies only between states, or that human rights
obligations apply only to states, and that the UN Norms cannot create legal obligations
for companies. This view can no longer be credibly maintained. While the major human
rights treaties place obligations on states in the first instance, the substantive obligations
those states are bound to enforce include ensuring respect for human rights – not least
by non-state actors such as enterprises and individuals. For example, the ILO
Conventions follow the formal structure whereby states ensure compliance by
companies. However, it is recognized that they place substantive duties such as nondiscrimination and respecting freedom of association directly on companies.
There is growing acceptance that international human rights treaties create obligations
– at least indirectly – on companies.5 For those conventions drafted so as to place liability
directly on businesses the issue is beyond doubt.6
It is true that because most international human rights treaties were drafted with
primary attention to the obligations of states (as opposed to businesses or individuals),
the scope of those obligations when applied to companies may appear somewhat
uncertain in some contexts. The allocation of responsibilities between government and
businesses is evolving and developing, and so is the allocation of responsibilities between
enterprises and the individuals running them. All that can be said with certainty is that
there is a clear trend to extend human rights obligations beyond states, including to
individuals (for international crimes), armed groups, international organizations, and
private enterprises.7 The UN Norms must be seen as part of this development.
‘By setting forth in clear fashion the responsibilities of business leaders and managers
confronting these issues, and contemplating mechanisms of monitoring and
enforcement, the UN Human Rights Norms and Commentary provide a meaningful first
step toward greater corporate accountability.’
Human Rights Watch
The Sub-Commission resolution adopting the UN Human Rights Norms for Business
transmitted them to the Commission on Human Rights for information and
consideration. Amnesty International hopes that the Commission will support the UN
Norms, thus strengthening their legal effect (as the Commission is a formal UN body,
composed of governments). Action by the Commission on Human Rights is not,
however, a prerequisite for the legitimacy of the UN Norms.
What issues do the UN Human Rights Norms for Business cover?
The UN Human Rights Norms for Business set forth basic, minimal business obligations
regarding human rights. They reaffirm that states still bear the primary responsibility for
promoting and protecting human rights, but recognize that transnational corporations
and other businesses, as organs of society (and collections of individuals), carry
responsibilities as well. The first operative paragraph states that the responsibilities
apply to businesses ‘within their respective spheres of activity and influence’. This
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principle determines how all the succeeding paragraphs may be read and applied. That
is, any duties companies have pursuant to the UN Norms are limited by the reach of
their activity and influence.
Positive and negative obligations on businesses
Within their spheres of activity and influence (which vary between large and small
enterprises), the UN Human Rights Norms for Business require companies to ‘promote,
secure the fulfilment of, respect, ensure respect of and protect human rights recognized
in international as well as national law.’ At a minimum, this requires businesses to
refrain from activities that directly or indirectly violate human rights, or benefit from
human rights violations, and to use due diligence to do no harm.
The UN Norms also include the affirmative obligation to promote and work for the full
protection of all human rights. The Commentary to the Norms requires businesses to use
their influence to help promote and ensure respect for human rights.
To achieve both the negative obligations (to avoid complicity in violations in order to
respect human rights) and the positive ones (to promote human rights), businesses can
no longer be wilfully ignorant of the circumstances in which they operate; they must
become much more aware of and sensitive to those circumstances, and much more
engaged in taking actions to influence human rights positively.
Scope of the UN Human Rights Norms for Business
The UN Norms invoke a number of laws and standards that businesses should
‘recognize and respect’. These include not only ‘applicable’ international norms, national
laws and regulations, but also more abstract notions including ‘the rule of law’, the
‘public interest’, and ‘development objectives, social, economic, and cultural policies
including transparency, accountability, and prohibition of corruption.’
These less precise notions generally attempt to focus corporations on public interests,
above and beyond private interests. The Commentary clarifies that within their
resources, businesses should encourage social progress and development by expanding
economic opportunities, especially in developing and least developed countries.
‘The development of an international normative framework to guide corporate behaviour
is a natural step in the development and constitution of a global international society.’
Centro de Derechos Humanos y Ambiente (Centre for Human Rights and the Environment)
Argentina
Which businesses are covered by the UN Norms?
The UN Norms apply to ‘transnational corporations’ and ‘other business enterprises’
and the definitions provided are intentionally broad. A transnational corporation is
defined as an economic entity operating in two or more countries. Other business
enterprises, including purely domestic enterprises, are also covered in addition to
transnational corporations. This prevents transnational corporations being able to avoid
the application of the UN Norms by reorganizing their operations as strictly domestic
entities, conducting business through independent contracts. In addition to this broad
language, the UN Norms confirm explicitly that they should be presumed to apply if the
business enterprise has any relation with a transnational corporation, if the impact of its
activities is not entirely local, or the activities are so serious that they affect the right to
security of life and person.
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What are the key substantive provisions?
Non-discrimination
The prohibition of discrimination is a fundamental human rights principle, and it is
included prominently in the UN Human Rights Norms for Business. Non-discrimination
provides an example of both the negative obligation to refrain from violations and the
affirmative obligation to promote human rights. Businesses are required not to
discriminate on grounds unrelated to the job (for example, race, colour, sex, language,
religion or political opinion) and as well to promote equal opportunities. The
Commentary clarifies that this non-discrimination obligation extends, for example, to
health status (for example HIV/AIDS or disability), sexual orientation, pregnancy, or
marital status. Physical or verbal abuse in the workplace is similarly prohibited, with
businesses obliged to ensure that such abuse will not be tolerated.
Protection of civilians and laws of war
The UN Human Rights Norms for Business make clear that businesses will have to
ensure that they do not aid or abet human rights violations, nor benefit from war crimes
such as plunder and pillage, crimes against humanity, genocide, torture, forced labour,
hostage-taking, or other violations of international human rights or humanitarian law.
These have been among the most serious violations in recent years. Moreover, concerns
about human rights violations committed in conflict are intensifying. The UN Norms
require businesses to exercise due diligence regarding the source or potential uses of
goods or services, and in some instances to forego business opportunities in order to
avoid complicity in, or encouragement of, human rights violations.
For example, the Commentary makes clear that this provision would require businesses
supplying arms, or security products or services to ‘take stringent measures’ to prevent
use in connection with human rights violations, which would presumably include due
diligence to ensure that their customers are not known human rights violators; that
appropriate direction and training is provided, and the like. The Commentary also
indicates a prohibition on the production and sale of weapons declared illegal under
international law, as well as trade known to lead to human rights violations.
Use of security forces
One of the recurring patterns of companies’ human rights abuses has stemmed from
violations committed by security forces which have neglected local and international
human rights standards. This includes, but is not limited to, situations in which
extractive, energy, or other businesses have required the services of state security forces
who have used excessive force against peacefully protesting indigenous communities or
striking workers. Greater attention to these issues is essential, as is compliance with
international instruments and due diligence procedures, and prior and ongoing
consultation with affected communities. Businesses using security forces should establish
policies to ensure that security-related employees or contractors are not known human
rights violators; to provide adequate training in human rights procedures to security
forces; and to incorporate human rights obligations in security contracts.
Workers’ rights
Labour rights are an area where companies are likely to have a direct impact on the
protection of human rights. The UN Norms and Commentary reiterate, on the one hand,
the prohibitions on forced or compulsory labour and against exploitation of children,
and on the other hand, the mandates for safe and healthy working conditions,
remuneration that ensures an adequate standard of living, freedom of association, and
the right to collective bargaining. The Commentary to the paragraph explains that
workers shall have the opportunity to leave employment, and that businesses shall take
action against debt bondage and contemporary forms of slavery (such as human
trafficking). Prison labour is allowed only in accordance with international law, after
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conviction in a court of law and under public supervision. Except for light work – the
definition of which emphasizes work that is not harmful to the health or development
of the child – child labour prior to age 15 or the end of compulsory schooling is
presumed to be exploitative.
‘…The norms provide a new instrument to oblige companies to fulfil a very broad set of
human rights guaranteed in different international Declarations and Conventions. The
responsibility would cover the whole supply chain of companies and the employers,
understood in a broad sense, would be considered liable for the offences made’
WCL (World Confederation of Labour)
There might be some controversy over the provision obliging ‘remuneration that ensures
an adequate standard of living’ – a living wage. Some economists as well as some
businesses argue that any floor established for compensation unjustifiably interferes with
the free market, creates inefficiencies, and in the end will reduce the number of jobs. But
the UN Norms do not attempt to establish an international minimum wage. All they
require is fair compensation under local standards. A job that fails to pay such fair
compensation is exploitative, and a violation of human rights.8
Corruption, consumer protection and human rights
Corruption by governmental officials undermines the rule of law, diverts resources that
could be used to fulfil human rights commitments, and reinforces poverty and inequality.
The UN Norms concisely restate international standards against corruption and bribery.
The UN Norms also reaffirm obligations of fair and honest business practices according
to consumer protection laws and standards. The UN Norms state that this includes a
duty to refrain from producing or marketing harmful or even potentially harmful
products. The Commentary clarifies that this is to be understood ‘in the context of
reasonable usage and custom’.
Economic, social and cultural rights
One result of the ideological divisions of the Cold War was that when the provisions of
the Universal Declaration of Human Rights were elaborated, they were split between two
treaties: the International Covenant on Civil and Political Rights and the International
Covenant on Economic, Social, and Cultural Rights. After the Cold War, it again became
possible to view human rights obligations as interdependent. Without protecting basic
subsistence rights (such as food, water or shelter), it is difficult to exercise civil and
political rights (such as free speech, fair trials or electoral participation). Conversely, the
exercise of civil and political rights is often essential to overcoming discrimination and
obtaining protection for economic, social and cultural rights.
The UN Human Rights Norms for Business oblige businesses to respect all human
rights, and to ‘contribute to their realization’. Some UN treaty bodies have already
stated authoritatively that their treaties apply directly to businesses in areas including
privacy,9 food,10 water,11 and health.12 The UN Norms similarly emphasize that businesses
should do what they can ‘within their respective spheres of activity and influence’ to
uphold the rights to adequate food, drinking water, the highest attainable standard of
physical and mental health, housing and education. They also forthrightly support the
right to development and the rights of indigenous peoples. The right to development is
described as entitling ‘every … person and all peoples to participate in, contribute to and
enjoy economic, social, cultural and political development in which all human rights and
fundamental freedoms can be fully realized.’ Businesses globally can play a particularly
important role in this regard.
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Human rights and the environment
Pursuant to the UN Norms, businesses are obliged to comply with international and
national laws, policies, and regulations on preserving the environment. This includes
complying with the precautionary principle and conducting their activities so as to
contribute to the wider goal of sustainable development.
The precautionary principle – to err on the side of caution and refrain from actions
indicating unacceptable human rights or environmental risks – may conflict with some
businesses’ interpretation of an entrepreneurial, risk-taking culture. For example, those
companies that do not accept the emerging scientific consensus about climate change
will not be receptive to the Commentary’s provision that the lack of ‘full scientific
certainty’ should not be used as a reason to delay remedial measures. On the other hand,
there is growing acceptance of the precautionary principle, even if its precise meaning is
ambiguous, and many companies have stated their commitment to it (for example, in the
Global Compact).
‘The UN Norms On Transnational Business set an important precedent in the struggle
to make corporations accountable and liable for their actions everywhere and anywhere
in this planet.’
Greenpeace
Indigenous peoples’ rights
Numerous provisions of the UN Norms provide safeguards that are important for
indigenous people, not least the strong guarantee of non-discrimination and the
inclusion of a general commitment to respect cultural rights. The Commentary calls on
companies to respect the rights of indigenous communities to own their lands and other
natural resources, and their cultural and intellectual property. It specifies that companies
should respect the principle of free, prior and informed consent of communities to be
affected by development projects. The Commentary also states that companies should
not forcibly evict communities ‘without having had recourse to, and access to,
appropriate forms of legal or other protection pursuant to international human rights
law.’ Companies should engage in periodic assessment of their compliance with the UN
Norms taking into account comments from indigenous communities.
What implementation and enforcement mechanisms are provided by
the UN Human Rights Norms for Business?
In addition to setting out the human rights obligations of companies, the UN Norms also
give attention to implementation and enforcement.
The first mode of implementation relies on the business itself creating a more human
rights oriented culture. Companies should:
• adopt internal operational rules complying with the UN Norms (for example, a
human rights policy);
• incorporate the UN Norms in contracts and dealings with others;
• train all concerned;
• (over time) deal only with suppliers and other businesses which follow the UN
Norms;
• ensure monitoring throughout the supply chain;
• establish confidential ‘hotlines’ and worker complaint mechanisms; and,
• periodically conduct self-evaluation, report compliance and implement remedial
plans.
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Second, the Norms contemplate that their application could be assessed through external
monitoring and verification, for example by existing UN human rights mechanisms.
Other bodies such as unions, non-governmental organizations, ethical investment
initiatives and industry groups would be encouraged to use the UN Norms as the basis
for monitoring, dialogue, lobbying and campaigning activities with businesses.
‘These norms have been put together by people representing various backgrounds
including companies. They clarify companies’ social obligations already existing under
international law and offer a comprehensive tool and a practical answer to both
questions of what are exactly the priorities which companies should have in terms of
human rights, right to work and environment and what are the aspects of companies’
social management that institutional investors will take into account in their choice of
investments.
In particular the objective of these Norms is to take a first step towards a common
legislation which would define the same rules of the game for everyone. In this respect,
they should be a priority for the UN.’
Batirente, a financial institution managing the pension assets of different groups of workers in
Québec, Canada
The third method of enforcement is through the state and individuals and organizations
using state enforcement mechanisms. This includes publicizing the UN Norms, using them
as a model for business activities, and the traditional means of passing, strengthening, and
enforcing laws and regulations implementing them, and of course enforcing them in
national and international courts and tribunals. Businesses must pay for any damage they
cause, and both lawyers and clients can urge national and international courts and
tribunals to use the UN Norms to apply damages and criminal sanctions.
Why is a legal approach preferable? Do we need more regulation?
The most basic objection to the UN Norms is grounded in a resistance to normative or
legal frameworks and a belief that voluntary approaches are preferable as they more
easily obtain the necessary commitment from companies. This argument ignores the
inability of voluntary approaches to reduce persistent abuses and achieve compliance
with generally agreed substantive norms. It also ignores the historical reality that some
form of legal framework is often necessary to restrain abuses.
Most importantly, perhaps, the argument against regulation ignores the fact that
voluntary approaches work best for the well-intentioned. Despite the interest in
corporate social responsibility, the overwhelming majority of companies have no human
rights policy at all, and only a few companies are prepared to make explicit
commitments in this area. The UN Norms level the playing field – and particularly if
they are a basis for renewed attention by governments to their own responsibilities.
Will complying with the UN Norms add costs to companies?
Some companies and governments object to regulation (of any sort) because they believe
compliance will cost too much. In this specific context, there has been an objection to
the Commentary provision that, within their ‘resources and capabilities’, businesses
should study the human rights and environmental impacts of their activities. Such a
human rights impact statement is increasingly recognized, however, as a prudent and
necessary component of risk-assessment. Others have objected to the Commentary’s call
for companies to make environmental and human health reports publicly accessible –
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some object to the general call for enhanced transparency and disclosure. Although this
challenges the traditional confidentiality in which decisions are made, people have a
right to participate in decisions that affect them, and they can only do so if they have
access to relevant information. It ought also to be clear that transparency will contribute,
in the long term, to better business.
Will the UN Norms add to bureaucracy?
Resistance for fear of bureaucratic regulation is misguided in other respects. First, the UN
Norms do not call for onerous or bureaucratic regulation. Second, intelligent laws not
only restrain abuses, they can also fulfil an important role in promoting better practices.
Indeed, this is historically a key function of international human rights standards –
setting benchmarks for national law and acting as a catalyst for progressive reform.
No serious business would argue that laws are never useful; companies depend, in fact,
on regulation in many areas in order to operate. The question, therefore, is about the
extent and scope of laws. Amnesty International believes that the UN Norms fill an
important gap, and do not impose unreasonable demands on companies. Reflecting
input not only from human rights and environmental experts and organizations, but also
the business sector and unions, the UN Norms balance a normative framework with an
acknowledgement of the role business can play in economic development and promotion
of human rights.
Are the UN Norms too generic?
One argument against the UN Norms is that they adopt a ‘one-size-fits-all’ approach.
This is untrue. The UN Norms are explicit that they apply within the sphere of influence
and control of the respective business, and that they need to be operationally tailored by
company policies (within the boundaries established by the UN Norms) to reflect the
values of a given business. The UN Norms are also explicitly variable depending on
resource and capability limitations. However, the value of the UN Norms lies in their
universality, and, because they comprise an international standard, of necessity they
adopt a general approach.
Those who complain about the lack of specificity of the UN Norms, therefore, are missing
the point. The UN Norms offer a statement of principles, not a detailed regulatory
framework. The UN Norms do not tell companies whether particular investments, in
particular countries, or specific business decisions are undesirable – no law of general
application could do so. The UN Norms do, however, provide the key points – from a
human rights perspective – that need to be considered in making such decisions.
‘The UN Norms illuminate the role expected of corporations in today's inter-connected
world. They aim to reconcile the claims of shareholders and the rights of stakeholders.
Equipped with these comprehensive standards, companies can combine financial
efficiency with social responsibility.’
OECD Watch
Will the UN Norms place unrealistic obligations on business?
Some opponents argue that the UN Norms place unrealistic expectations on businesses to
‘bite the hand that feeds them’ by requiring them to criticize host governments. Because the
UN Norms call on businesses to take affirmative steps to fulfil their human rights
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obligations, they will undoubtedly require some firms to act or speak up for human rights,
privately or publicly. However, companies cannot be silent witnesses to widespread human
rights violations, nor can they hide behind the shield of ‘respecting cultural relativism’
where violations are concerned. The UN Norms do recognize that less powerful businesses
need more leeway in interpreting these obligations than the more powerful.
Will the UN Norms make companies responsible for what governments
should be doing?
Another argument used against the UN Norms is that they attempt to ‘replace
government with business’ by obligating business to provide essential goods or services
(such as housing, food, health care or education) that are government responsibilities.
This argument is misleading, because the UN Norms clearly distinguish between the
primarily responsibilities of governments and the secondary responsibilities of business
within their respective sphere of influence.
Will the UN Norms delay the creation of binding regulations or undercut
current standards?
The UN Norms have also been criticized by some – including certain NGOs – on the
grounds that they fall short of creating binding legal obligations and that a binding,
international treaty on this issue is needed. Leaving aside the very real difficulties in
achieving such a treaty in the short-term, the UN Norms are a key contribution to
developing international legal norms in relation to business and human rights. If this
development is to include an international treaty, the UN Norms will assist in laying its
foundations.
For those who fear that the current status of the UN Norms may undermine existing
international legal obligations, it is important to draw attention to the ‘savings clause’,
which is intended to ensure that businesses ‘pursue the course of conduct that is the most
protective of human rights’. This clause provides that the UN Norms do not diminish,
restrict, or adversely affect national human rights obligations, more protective human
rights norms, or business obligations in fields other than human rights.
The UN Norms are clearly intended to reinforce the approach that is most protective of
human rights, whether that is found in international law, national law, or other sources,
now or in the future. The UN Norms make a valuable contribution in clarifying the
widespread scope and type of international human rights laws pertaining to global
business, and the fact that despite their dramatic improvement over present practice, they
are still expressed as ‘minimum’ standards which businesses are encouraged to exceed.
What is the relationship between the UN Human Rights Norms for
Business and the Global Compact?
The Global Compact states nine general principles, two of which relate to human rights.
The UN Human Rights Norms for Business go into much greater detail, and reference
key international instruments that provide much more significant guidance to
transnational and other businesses confronting these issues, as well as the individuals
and groups affected by and monitoring compliance.
‘The Draft Norms have already initiated significant educational efforts and we are looking
forward to seeing how these efforts could contribute positively to the Global Compact.’
Global Compact Office
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In Amnesty International’s view, the UN Norms are essential for understanding the scope
of the general human rights provisions in the Global Compact. Amnesty International
believes that the Global Compact office should formally indicate that the UN Norms are
an authoritative guide to Principles 1 and 2 of the Global Compact.
Conclusion
The UN Human Rights Norms for Business are the first authoritative and
comprehensive set of global business standards bearing the UN imprimatur – a powerful
symbol of legitimacy and universality. They mark a clear step forward from voluntary
codes of conduct towards establishing clear legal obligations in this area.
‘We welcome the UN Human Rights Norms and Commentary as a valuable road-map for
companies, guiding them through the thicket of human rights challenges before them.’
International Business Leaders Forum
Companies ought to respect human rights, avoid being complicit in human rights abuses,
and, within their sphere of influence, do what they can to promote human rights
principles. On this there is widespread agreement. The UN Human Rights Norms for
Business provide a set of universal principles that set out in further detail what these
commitments mean in practice. There is, therefore, a strong moral argument for
supporting them.
There is also a strong business case in favour of the UN Norms. Businesses which respect
ethics and law, and which have prudent risk management policies, have better prospects
of surviving and prospering over the long run than those that do not. As the UN Norms
are used and their legal authority continues to grow, they will place businesses on a more
level playing field. The UN Norms are a practical device to help reveal risk-management
issues and ensure that they are confronted and addressed.
The time has come for a stronger international framework for corporate accountability,
and the UN Human Rights Norms for Business are a significant contribution to this. By
bringing together in one place all the major international human rights, labour rights,
and environmental laws and standards pertaining to global business, and by surveying
key international instruments and best practice, the UN Norms provide helpful guidance
and leadership opportunities for businesses willing to comply with their legal and ethical
responsibilities. They also provide a useful tool for advocates who are engaging
businesses on human rights issues.13
Recommendations
Amnesty International urges the widest possible use and dissemination of the UN
Human Rights Norms for Business. We believe they will be of interest and practical
benefit to all those concerned to ensure companies respect human rights and use their
influence in ways that promote human rights.
We offer the following recommendations.
To governments
• Use the UN Human Rights Norms for Business as a benchmark to ensure domestic
legislation is adequate, and to inform the interpretation of the concept of due
diligence by domestic courts.
• Establish the necessary legal and administrative framework for ensuring that
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transnational corporations and other business enterprises abide by the UN Human
Rights Norms for Business.
To companies and business associations
• Adopt, disseminate and implement a code of conduct which complies with the UN
Human Rights Norms for Business.
• Prepare and implement operational guidelines to apply the UN Human Rights Norms
for Business.
• Apply the UN Human Rights Norms for Business in contracts and other dealings with
contractors, sub-contractors and any other associates.
• Organize training seminars and workshops for staff and facilitate similar events with
associates and within industry associations to raise awareness of the UN Human
Rights Norms for Business.
To the World Bank, regional banks and other financial institutions
• Evaluate companies in which you invest by using the UN Human Rights Norms for
Business as a benchmark.
• Use the UN Human Rights Norms for Business in the development of criteria to assess
the human rights impact of potential projects.
To the UN and OECD
• The UN Commission on Human Rights should support the UN Norms, including
through a resolution welcoming their adoption. It should assist in efforts to
disseminate the UN Norms to all governments.
• The Office of the Global Compact should issue a strong statement of support for the
UN Human Rights Norms for Business, and indicate that the UN Norms are to be
used as a reference for understanding Compact Principles 1 and 2 (on human rights).
• The Office of the Global Compact should disseminate the UN Human Rights Norms
for Business through its networks.
• The OECD should indicate that the UN Human Rights Norms for Business are to be
used as a reference for understanding the scope of the human rights clause in the
OECD Guidelines for Multinational Enterprises.
To non-governmental organizations and advocates
• Use the UN Human Rights Norms for Business in your monitoring, campaigning and
lobbying activities and in your dialogues with companies, governments and other
bodies.
• Support the further dissemination and development of the UN Human Rights Norms
for Business.
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Endnotes
1
2
3
4
5
6
7
8
9
10
11
12
13
Available at www.business-humanrights.org
Voluntary, company-specific codes of conduct are distinct from the International Labour
Organization’s Tripartite Declaration of Principles concerning Multinational Enterprises and
Social Policy, www.ilo.org, or the Guidelines for Multinational Enterprises developed by the
Organisation for Economic Cooperation and Development, www.oecd.org
For example, the Sub-Commission did the first draft on Article 27 (rights of minorities) of the
International covenant on Civil and Political Rights, G.A. res. 2200A (XXI), 21 U.N. GAOR
Supp. (No. 16) at 52, U.N. Doc. A/6316 (1966), 999 U.N.T.S. 171, entered into force Mar.
23, 1976. Also, the International Convention on the Elimination of All Forms of Racial
Discrimination, 660 U.N.T.S. 195, entered into force Jan. 4, 1969. The Declaration o n the
Protection of All Persons from Enforced Disappearances, G.A. res. 47/133, 47 U.N. GAOR
Supp. (No. 49) at 207, U.N. Doc. A/47/49 (1992) adopted by General Assembly resolution
47/133 of 18 December 1992. And the Declaration on the Human Rights of Individuals Who
are not Nationals of the Country in which They Live, G.A. res. 40/144, annex, 40 U.N.
GAOR Supp. (No. 53) at 252, U.N. Doc. A/40/53 (1985).
Available at www.business-humanrights.org
See Beyond Voluntarism: Human rights and the developing international legal obligations of
companies, International Council on Human Rights Policy, 2002.
These include, for example, the International Convention on Civil Liability for Oil Pollution
Damage, 1969, and the Convention on Civil Liability for damage resulting from activities
dangerous to the environment, 1993.
In addition to state obligations to ensure respect for customary international law norms (for
example the prohibition of genocide, torture, or slavery), all major human rights and
humanitarian law treaties call on states to ensure that non-state actors respect the human
rights obligations therein.
See for example, the International Covenant on Economic, Social, and Cultural Rights, Art.11
(right to adequate standard of living).
Human Rights Committee, General Comment 16 (Twenty-third session, 1988).
Committee on Economic, Social and Cultural Rights, General Comment 12, Right to
adequate food, UN Doc. E/C.12/1999/5.
Committee on Economic, Social and Cultural Rights, General Comment 15, The right to
water, UN Doc. E/C.12/2002/11.
Committee on Economic, Social and Cultural Rights, General Comment 14, The right to the
highest attainable standard of health, UN Doc. E/C.12/2000/4.
Hundreds of non-governmental organizations have already joined Amnesty International in
endorsing the Norms. For further information, in addition to Amnesty International’s website
(www.amnesty.org), see also www.business-humanrights.org, the website of the Business and
Human Rights Resource Centre (an independent organization working in partnership with
Amnesty International and leading academic institutions).
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36
International human rights
standards relevant to business
Universal Declaration o
The Universal Declaration of Human Rights calls on
their part in securing the observance of human ri
responsibility to promote and protect human rights,
for promoting and securing those human ri
International human rights treaties containing internat
International
Covenant on Civil and
Political Rights (1966)
(Right to life, freedom
from slavery and forced
labour, nondiscrimination, freedom
of expression and
assembly, and others…)
International
Convention on the
Elimination of All
Forms of Racial
Discrimination (1966)
Convention on the
Elimination of All
Forms of Discrimination
Against Women (1979)
Regional human rights treaties containing internation
European Convention for the
Protection of Human Rights and
Fundamental Freedoms (1950)
African Charter on Human and
People’s Rights (1981)
European Social Charter (1961)
Specific international conventions, principles and codes that business must respect
UN Basic Principles on the Use of Force and Firearms by Law Enforcement Officials
(1990); UN Code of Conduct for Law Enforcement Officials (1979); Convention on Combating
Bribery of Foreign Public Officials in International Business Transactions of the OECD (2001);
Rio Declaration on the Environment and Development (1992); World Summit on Sustainable
Development Plan of Development (2002); International Code of Marketing of Breast-milk
Substitutes (1981); ILO Convention No. 87 Concerning the Freedom of Association and
Protection of the Right to Organise; ILO Declaration on Fundamental Principles and the Rights
at Work (1998); ILO Convention No. 169 on Indigenous and Tribal Peoples (1989); and others…
The application to business
UN Norms on the Responsibilities of Trans
Enterprises with Regard
The UN Norms were written to be consistent with i
conventions, principles and declarations. They relate
ties of b
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37
of Human Rights (1948)
n ‘every individual and every organ of society’ to play
ights. Even though nation states have the primary
companies, as organs of society, are also responsible
ights set forth in the Universal Declaration.
ionally recognised standards that business must respect
Convention Against
Torture and Other
Cruel, Degrading
Treatment or
Punishment (1984)
Convention on the
Rights of the Child
(1989)
International
Covenant on Economic,
Social and Cultural
Rights (1966)
(Right to work,
fair wages, safe and
healthy conditions,
join labour unions,
health, education,
and others…)
nally recognised standards that business must respect
American Convention on Human
Rights (1969)
Arab Charter on Human Rights
(1994)
Additional Protocol to the
American Convention on Human
Rights in the Area of Economic,
Social and Cultural Rights
(1988)
Commitments specific to business containing human rights standards
UN Global Compact (2000); OECD Guidelines on Multinational Enterprises (2000);
ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and
Social Policy (1977); and others…
s of all the above standards
snational Corporations and Other Business
to Human Rights (2003)
nternational, regional and multilateral agreements,
these standards to specific human rights responsibilibusiness.
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38
Commentary on the Norms on the Responsibilities of Transnational
Corporations and Other Business Enterprises with Regard to Human Rights
U.N. Doc. E/CN.4/Sub.2/2003/38/Rev.2 (2003)
Preamble
Bearing in mind the principles and obligations under the Charter of the United Nations, in
particular the preamble and Articles 1, 2, 55, and 56, inter alia to promote universal respect for,
and observance of, human rights and fundamental freedoms,
Recalling that the Universal Declaration of Human Rights proclaims a common standard of
achievement for all peoples and all nations, to the end that Governments, other organs of society
and individuals shall strive, by teaching and education, to promote respect for human rights and
freedoms, and, by progressive measures, to secure universal and effective recognition and
observance, including of equal rights of women and men and the promotion of social progress and
better standards of life in larger freedom,
Recognizing that even though States have the primary responsibility to promote, secure the
fulfillment of, respect, ensure respect of and protect human rights, transnational corporations and
other business enterprises, as organs of society, are also responsible for promoting and securing the
human rights set forth in the Universal Declaration of Human Rights,
Realizing that transnational corporations and other business enterprises, their officers and persons
working for them are also obligated to respect generally recognized responsibilities and norms
contained in United Nations treaties and other international instruments such as the Convention
on the Prevention and Punishment of the Crime of Genocide; the Convention against Torture and
Other Cruel, Inhuman or Degrading Treatment or Punishment; the Slavery Convention and the
Supplementary Convention on the Abolition of Slavery, the Slave Trade, and Institutions and
Practices Similar to Slavery; the International Convention on the Elimination of All Forms of
Racial Discrimination; the Convention on the Elimination of All Forms of Discrimination against
Women; the International Covenant on Economic, Social and Cultural Rights; the International
Covenant on Civil and Political Rights; the Convention on the Rights of the Child; the
International Convention on the Protection of the Rights of All Migrant Workers and Members of
Their Families; the four Geneva Conventions of 12 August 1949 and two Additional Protocols
thereto for the protection of victims of war; the Declaration on the Right and Responsibility of
Individuals, Groups and Organs of Society to Promote and Protect Universally Recognized Human
Rights and Fundamental Freedoms; the Rome Statute of the International Criminal Court; the
United Nations Convention against Transnational Organized Crime; the Convention on Biological
Diversity; the International Convention on Civil Liability for Oil Pollution Damage; the
Convention on Civil Liability for Damage Resulting from Activities Dangerous to the
Environment; the Declaration on the Right to Development; the Rio Declaration on the
Environment and Development; the Plan of Implementation of the World Summit on Sustainable
Development; the United Nations Millennium Declaration; the Universal Declaration on the
Human Genome and Human Rights; the International Code of Marketing of Breast-milk
Substitutes adopted by the World Health Assembly; the Ethical Criteria for Medical Drug
Promotion and the “Health for All in the Twenty-First Century” policy of the World Health
Organization; the Convention against Discrimination in Education of the United Nations
Educational, Scientific, and Cultural Organization; conventions and recommendations of the
International Labour Organization; the Convention and Protocol relating to the Status of
Refugees; the African Charter on Human and Peoples’ Rights; the American Convention on
Human Rights; the European Convention for the Protection of Human Rights and Fundamental
Freedoms; the Charter of Fundamental Rights of the European Union; the Convention on
Combating Bribery of Foreign Public Officials in International Business Transactions of the
Organisation for Economic Cooperation and Development; and other instruments,
Taking into account the standards set forth in the Tripartite Declaration of Principles Concerning
Multinational Enterprises and Social Policy and the Declaration on Fundamental Principles and
Rights at Work of the International Labour Organization,
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Aware of the Guidelines for Multinational Enterprises and the Committee on International
Investment and Multinational Enterprises of the Organisation for Economic Cooperation and
Development,
Aware also of the United Nations Global Compact initiative which challenges business leaders to
“embrace and enact” nine basic principles with respect to human rights, including labour rights
and the environment,
Conscious of the fact that the Governing Body Subcommittee on Multinational Enterprises and
Social Policy, the Committee of Experts on the Application of Standards, as well as Committee on
Freedom of Association of the International Labour Organization have named business enterprises
implicated in States’ failure to comply with Conventions No. 87 concerning the Freedom of
Association and Protection of the Right to Organize and No. 98 concerning the Application of the
Principles of the Right to Organize and Bargain Collectively, and seeking to supplement and assist
their efforts to encourage transnational corporations and other business enterprises to protect
human rights,
Conscious also of the Commentary on the Norms on the responsibilities of transnational
corporations and other business enterprises with regard to human rights, and finding it a useful
interpretation and elaboration of the standards contained in the Norms,
Taking note of global trends which have increased the influence of transnational corporations and
other business enterprises on the economies of most countries and in international economic
relations, and of the growing number of other business enterprises which operate across national
boundaries in a variety of arrangements resulting in economic activities beyond the actual
capacities of any one national system,
Noting that transnational corporations and other business enterprises have the capacity to foster
economic well-being, development, technological improvement and wealth, as well as the capacity
to cause harmful impacts on the human rights and lives of individuals through their core business
practices and operations, including employment practices, environmental policies, relationships
with suppliers and consumers, interactions with Governments and other activities,
Noting also that new international human rights issues and concerns are continually emerging and
that transnational corporations and other business enterprises often are involved in these issues and
concerns, such that further standard-setting and implementation are required at this time and in
the future,
Acknowledging the universality, indivisibility, interdependence and interrelatedness of human
rights, including the right to development, which entitles every human person and all peoples to
participate in, contribute to and enjoy economic, social, cultural and political development in
which all human rights and fundamental freedoms can be fully realized,
Reaffirming that transnational corporations and other business enterprises, their officers –
including managers, members of corporate boards or directors and other executives – and persons
working for them have, inter alia, human rights obligations and responsibilities and that these
human rights norms will contribute to the making and development of international law as to
those responsibilities and obligations,
Solemnly proclaims these Norms on the Responsibilities of Transnational Corporations and Other
Business Enterprises with Regard to Human Rights and urges that every effort be made so that they
become generally known and respected.
A. General obligations
1. States have the primary responsibility to promote, secure the fulfillment of, respect, ensure
respect of and protect human rights recognized in international as well as national law, including
ensuring that transnational corporations and other business enterprises respect human rights.
Within their respective spheres of activity and influence, transnational corporations and other
business enterprises have the obligation to promote, secure the fulfillment of, respect, ensure
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respect of and protect human rights recognized in international as well as national law, including
the rights and interests of indigenous peoples and other vulnerable groups.
Commentary
(a) This paragraph reflects the primary approach of the Norms and the remainder of the
Norms shall be read in the light of this paragraph. The obligation of transnational
corporations and other business enterprises under these Norms applies equally to activities
occurring in the home country or territory of the transnational corporation or other business
enterprise, and in any country in which the business is engaged in activities.
(b) Transnational corporations and other business enterprises shall have the responsibility to
use due diligence in ensuring that their activities do not contribute directly or indirectly to
human abuses, and that they do not directly or indirectly benefit from abuses of which they
were aware or ought to have been aware. Transnational corporations and other business
enterprises shall further refrain from activities that would undermine the rule of law as well
as governmental and other efforts to promote and ensure respect for human rights, and shall
use their influence in order to help promote and ensure respect for human rights.
Transnational corporations and other business enterprises shall inform themselves of the
human rights impact of their principal activities and major proposed activities so that they can
further avoid complicity in human rights abuses. The Norms may not be used by States as an
excuse for failing to take action to protect human rights, for example, through the
enforcement of existing laws.
B. Right to equal opportunity and non-discriminatory treatment
2. Transnational corporations and other business enterprises shall ensure equality of opportunity
and treatment, as provided in the relevant international instruments and national legislation as well
as international human rights law, for the purpose of eliminating discrimination based on race,
colour, sex, language, religion, political opinion, national or social origin, social status, indigenous
status, disability, age – except for children, who may be given greater protection – or other status
of the individual unrelated to the inherent requirements to perform the job or of complying with
special measures designed to overcome past discrimination against certain groups.
Commentary
(a) Transnational corporations and other business enterprises shall treat each worker with
equality, respect and dignity. Examples of the other sorts of status on the basis of which
discrimination should be eliminated are health status (including HIV/AIDS, disability),
marital status, capacity to bear children, pregnancy and sexual orientation. No worker shall
be subject to direct or indirect physical, sexual, racial, psychological, verbal, or any other
discriminatory form of harassment or abuse as defined above. No worker shall be subject to
intimidation or degrading treatment or be disciplined without fair procedures. Transnational
corporations and other business enterprises shall establish a work environment in which it is
clear that such discrimination will not be tolerated. These responsibilities shall be carried out
in accordance with the Code of Practice on HIV/AIDS and the World of Work and the Code
of Practice on Managing Disability in the Workplace of the International Labour Convention
(ILO) and other relevant international instruments.
(b) Discrimination means any distinction, exclusion, or preference made on the above-stated
bases, which has the effect of nullifying or impairing equality of opportunity or treatment in
employment or occupation. All policies of transnational corporations and other business
enterprises, including, but not limited to, those relating to recruitment, hiring, discharge, pay,
promotion and training, shall be non-discriminatory.
(c) Particular attention should be devoted to the consequences of business activities that may
affect the rights of women and particularly in regard to conditions of work.
(d) Transnational corporations and other business enterprises shall treat other stakeholders, such
as indigenous peoples and communities, with respect and dignity, and on a basis of equality.
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C. Right to security of persons
3. Transnational corporations and other business enterprises shall not engage in nor benefit from
war crimes, crimes against humanity, genocide, torture, forced disappearance, forced or
compulsory labour, hostage-taking, extrajudicial, summary or arbitrary executions, other
violations of humanitarian law and other international crimes against the human person as defined
by international law, in particular human rights and humanitarian law.
Commentary
(a) Transnational corporations and other business enterprises which produce and/or supply
military, security, or police products/services shall take stringent measures to prevent those
products and services from being used to commit human rights or humanitarian law
violations and to comply with evolving best practices in this regard.
(b) Transnational corporations and other business enterprises shall not produce or sell
weapons that have been declared illegal under international law. Transnational corporations
and other business enterprises shall not engage in trade that is known to lead to human rights
or humanitarian law violations.
4. Security arrangements for transnational corporations and other business enterprises shall
observe international human rights norms as well as the laws and professional standards of the
country or countries in which they operate.
Commentary
(a) Transnational corporations and other business enterprises, their officers, workers,
contractors, subcontractors, suppliers, licensees and distributors, and natural or other legal
persons that enter into any agreement with the transnational corporation or business
enterprise shall observe international human rights norms, particularly as set forth in the
Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or
Punishment; the Rome Statute of the International Criminal Court; the United Nations Basic
Principles on the Use of Force and Firearms by Law Enforcement Officials; the United
Nations Code of Conduct for Law Enforcement Officials; and emerging best practices
developed by the industry, civil society and Governments.
(b) Business security arrangements shall be used only for preventive or defensive services and
they shall not be used for activities that are exclusively the responsibility of the State military
or law enforcement services. Security personnel shall only use force when strictly necessary
and only to the extent proportional to the threat.
(c) Security personnel shall not violate the rights of individuals while exercising the rights to
freedom of association and peaceful assembly, to engage in collective bargaining, or to enjoy other
related rights of workers and employers, such as are recognized by the International Bill of
Human Rights and the Declaration on Fundamental Principles and Rights at Work of the ILO.
(d) Transnational corporations and other business enterprises shall establish policies to
prohibit the hiring of individuals, private militias and paramilitary groups, or working with
units of State security forces or contract security firms that are known to have been
responsible for human rights or humanitarian law violations. Transnational corporations and
other business enterprises shall engage with due diligence in investigations of potential
security guards or other security providers before they are hired and ensure that guards in
their employ are adequately trained, guided by and follow relevant international limitations
with regard, for example, to the use of force and firearms. If a transnational corporation or
other business enterprise contracts with a State security force or a private security firm, the
relevant provisions of these Norms (paragraphs 3 and 4 as well as the related commentary)
shall be incorporated into the contract and at least those provisions should be made available
upon request to stakeholders in order to ensure compliance.
(e) Transnational corporations and other business enterprises using public security forces shall
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consult regularly with host Governments and, where appropriate, non-governmental
organizations and communities concerning the impact of their security arrangements on local
communities. Transnational corporations and other business enterprises shall communicate
their policies regarding ethical conduct and human rights, and express their desire that
security be provided in a manner consistent with those policies by personnel with adequate
and effective training.
D. Rights of workers
5. Transnational corporations and other business enterprises shall not use forced or compulsory
labour as forbidden by the relevant international instruments and national legislation as well as
international human rights and humanitarian law.
Commentary
(a) Transnational corporations and other business enterprises shall not use forced or
compulsory labour, as forbidden in the ILO Forced Labour Convention, 1930 (No. 29) and
the Abolition of Forced Labour Convention, 1957 (No. 105) and other relevant international
human rights instruments. Workers shall be recruited, paid, and provided with just and
favourable conditions of work. They shall take all feasible measures to prevent workers falling
into debt bondage and other contemporary forms of slavery.
(b) Workers shall have the option to leave employment and the employer shall facilitate such
departure by providing all the necessary documentation and assistance.
(c) Employers shall have resort to prison labour only in the conditions spelled out in ILO
Convention No. 29, which allows such labour only as a consequence of a conviction in a
court of law provided that the work or service is carried out under the supervision and control
of a public authority and that the person concerned is not hired out to or placed at the
disposal of private individuals, companies or associations.
6. Transnational corporations and other business enterprises shall respect the rights of children to
be protected from economic exploitation as forbidden by the relevant international instruments
and national legislation as well as international human rights and humanitarian law.
Commentary
(a) Economic exploitation of children includes employment or work in any occupation before
a child completes compulsory schooling and, except for light work, before the child reaches
15 years of age or the end of compulsory schooling. Economic exploitation also includes the
employment of children in a manner that is harmful to their health or development, will
prevent children from attending school or performing school-related responsibilities, or
otherwise is not consistent with human rights standards such as the Minimum Age
Convention (No. 138) and Recommendation (No. 146), the Worst Forms of Child Labour
Convention (No. 182) and Recommendation (No. 190) and the Convention on the Rights of
the Child. Economic exploitation does not include work done by children in schools for
general, vocational, or technical education or in other training institutions.
(b) Transnational corporations and other business enterprises shall not employ any person
under the age of 18 in any type of work that by its nature or circumstances is hazardous,
interferes with the child’s education, or is carried out in a way likely to jeopardize the health,
safety, or morals of young persons.
(c) Transnational corporations and other business enterprises may employ persons aged 13 to
15 years in light work if national laws or regulations permit. Light work is defined as work
which is not likely to be harmful to the health or development of the child, and will not prejudice
school attendance, participation in vocational orientation, training programmes approved by
competent authority, or the child’s capacity to benefit from the instruction received.
(d) Transnational corporations and other business enterprises shall consult with Governments
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on the design and implementation of national action programmes to eliminate the worst
forms of child labour consistent with ILO Convention No.182. Transnational corporations
and other business enterprises using child labour shall create and implement a plan to
eliminate child labour. Such a plan shall assess what will happen to children when they are no
longer employed in the business and include measures such as withdrawing children from the
workplace in tandem with the provision of suitable opportunities for schooling, vocational
training and other social protection for the children and their families, for example by
employing the parents or older siblings or engaging in other measures consistent with ILO
Recommendations Nos. 146 and 190.
7. Transnational corporations and other business enterprises shall provide a safe and healthy
working environment as set forth in relevant international instruments and national legislation as
well as international human rights and humanitarian law.
Commentary
(a) Transnational corporations and other business enterprises bear responsibility for the
occupational health and safety of their workers and shall provide a working environment in
accordance with the national requirements of the countries in which they are located and with
international standards such as those found in the International Covenant on Economic,
Social and Cultural Rights; ILO Conventions Nos. 110 (Plantations, 1958) 115 (Radiation
Protection Convention, 1960), 119 (Guarding of Machinery Convention, 1963), 120
(Hygiene (Commerce and Offices) Convention, 1964), 127 (Maximum Weight Convention,
1967), 136 (Benzene Convention, 1971), 139 (Occupational Cancer Convention, 1974), 147
(Merchant Shipping, 1976), 148 (Working Environment (Air Pollution, Noise and Vibration)
Convention, 1977), 155 (Occupational Safety and Health Convention, 1981), 161
(Occupational Health Services Convention, 1985), 162 (Asbestos Convention, 1986), 167
(Safety and Health in Construction Convention, 1988), 170 (Chemicals Convention, 1990),
174 (Prevention of Major Industrial Accidents Convention, 1993), 176 (Safety and Health in
Mines Convention, 1995), 183 (Maternity Protection, 2000) and other relevant
recommendations; as well as ensuring their application under ILO Conventions Nos. 81
(Labour Inspection Convention, 1947), 129 (Labour Inspection (Agriculture) Convention,
1969), 135 (Workers’ Representatives Convention, 1971), and their successor conventions.
Such a safe and healthy work environment for women and men shall aid in the prevention of
accidents and injuries arising out of, linked with, or occurring within the course of work.
Transnational corporations and other business enterprises shall also take into account the
particular needs of migrant workers as set forth in the Migrant Workers (Supplementary
Provisions) Convention, 1975 (No. 143) and the International Convention on the Protection
of the Rights of All Migrant Workers and Members of Their Families.
(b) Consistent with paragraph 15 (a), transnational corporations and other business
enterprises shall make available information about the health and safety standards relevant to
their local activities. The information shall also include arrangements for training in safe
working practices and details on the effects of all substances used in manufacturing processes.
In particular, and additionally consistent with paragraph 15 (e), transnational corporations
and other business enterprises shall make known any special hazards that tasks or conditions
of work involve and the related measures available to protect the workers.
(c) Transnational corporations and other business enterprises shall provide, where necessary,
measures to deal with emergencies and accidents, including first-aid arrangements. They also
shall provide, at their expense, personal protective clothing and equipment when necessary.
Further, they shall incur expenses for occupational health and safety measures.
(d) Transnational corporations and other business enterprises shall consult and cooperate
fully with health, safety and labour authorities, workers’ representatives and their
organizations and established safety and health organizations on matters of occupational
health and safety. They shall cooperate in the work of international organizations concerned
with the preparation and adoption of international safety and health standards. Where
appropriate, matters relating to safety and health should be incorporated in agreements with
the representatives of the workers and their organizations. Transnational corporations and
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other business enterprises shall examine the causes of safety and health hazards in their
industry and work to implement improvements and solutions to those conditions, including
the provision of safe equipment at least consistent with industry standards. Further, they shall
monitor the working environment and the health of workers liable to exposure to specified
hazards and risks. Transnational corporations and other business enterprises shall investigate
work-related accidents, keep records of incidents stating their cause and remedial measures
taken to prevent similar accidents, ensure the provision of remedies for the injured, and
otherwise act in accordance with paragraph 16 (e).
(e) Consistent with paragraph 16 (e), transnational corporations and other business
enterprises shall also: (i) respect the right of workers to remove themselves from work
situations in which there is a reasonable basis for concern about present, imminent and
serious danger to life or health; (ii) not subject them to consequences as a result; and further
(iii) not require them to return to work situations as long as the condition continues.
(f) Transnational corporations and other business enterprises shall not require any worker to
work more than 48 hours per week or more than 10 hours in one day. Voluntary overtime for
workers shall not exceed 12 hours per week and shall not be expected on a regular basis.
Compensation for such overtime shall be at a rate higher than the normal rate. Each worker
shall be given at least one day off in every seven-day period. These protections may be
adjusted to meet the different needs of management personnel; construction, exploration and
similar workers who work for short periods (e.g. a week or two) followed by a comparable
period of rest; and professionals who have clearly indicated their personal desire to work
more hours.
8. Transnational corporations and other business enterprises shall provide workers with
remuneration that ensures an adequate standard of living for them and their families. Such
remuneration shall take due account of their needs for adequate living conditions with a view
towards progressive improvement.
Commentary
(a) Transnational corporations and other business enterprises shall provide workers with fair
and reasonable remuneration for work done or to be done, freely agreed upon or fixed by
national laws or regulations (whichever is higher), payable regularly and at short intervals in
legal tender, so as to ensure an adequate standard of living for workers and their families.
Operations in the least developed countries shall take particular care to provide just wages.
Wages shall be paid, consistent with international standards such as the Protection of Wages
Convention, 1949 (No. 95). Wages are a contractual obligation of employers that are to be
honoured even into insolvency in accordance with Workers’ Claims (Employer’s Insolvency)
Convention, 1992 (No. 173).
(b) Transnational corporations and other business enterprises shall not deduct from a
worker’s wages already earned as a disciplinary measure, nor shall any deduction from wages
be permitted under conditions or to an extent other than as prescribed by national laws or
regulations, or fixed by a collective agreement or arbitration award. Transnational
corporations and other business enterprises shall also avoid taking actions to undermine the
value of employee benefits, including pensions, deferred compensation and health care.
(c) Transnational corporations and other business enterprises shall keep detailed written
records on each worker’s hours of work and wages paid. Workers shall be informed in an
appropriate and easily understandable manner before they enter employment and when any
changes take place as to the conditions in respect of wages, salaries and additional
emoluments under which they are employed. At the time of each payment of wages, workers
shall receive a wage statement informing them of such particulars relating to the pay period
concerned as the gross amount of wages earned, any deduction which may have been made,
including the reasons therefore, and the net amount of wages due.
(d) Transnational corporations and other business enterprises shall not limit in any manner
the freedom of workers to dispose of their wages, nor shall they exert any coercion on
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workers to make use of company stores or services, where such stores exist. In cases in which
the partial payment of wages in the form of allowances in kind is authorized by national laws
or regulations, collective agreements, or arbitration awards, transnational corporations and
other business enterprises shall ensure that such allowances are appropriate for the personal
use and benefit of workers and their families and that the value attributed to such allowances
is fair and reasonable.
(e) In determining a wage policy and rates of remuneration, transnational corporations and
other business enterprises shall ensure the application of the principle of equal remuneration
for work of equal value and the principle of equality of opportunity and treatment in respect
of employment and occupation, in accordance with international standards such as the Equal
Remuneration Convention, 1951 (No. 100), The Discrimination in Employment and
Occupation Convention, 1958 (No. 111) and the Workers with Family Responsibilities
Convention, 1981 (No. 156).
9. Transnational corporations and other business enterprises shall ensure freedom of association
and effective recognition of the right to collective bargaining by protecting the right to establish
and, subject only to the rules of the organization concerned, to join organizations of their own
choosing without distinction, previous authorization, or interference, for the protection of their
employment interests and for other collective bargaining purposes as provided in national
legislation and the relevant conventions of the International Labour Organization.
Commentary
(a) Transnational corporations and other business enterprises shall respect workers’ and
employers’ freedom of association consistent with the Freedom of Association and Protection
of the Right to Organize Convention, 1948 (No. 87) and other international human rights
law. They shall respect the rights of workers’ organizations to function independently and
without interference, including with respect to the right of workers’ organizations to draw up
their constitutions and rules, to elect their representatives, to organize their administration
and activities and to formulate their programmes. Further, they shall refrain from
discriminating against workers by reason of trade union membership or participation in trade
union activities, and shall refrain from any interference that restricts these rights or impedes
their lawful exercise. They shall ensure that the existence of workers’ representatives does not
undermine the position of the union established consistent with international standards, and
that workers’ representatives are entitled to bargain collectively only where there is no such
union in the company. Where appropriate in the local circumstances, multinational
enterprises shall support representative employers’ organizations.
(b) Transnational corporations and other business enterprises shall recognize workers’
organizations for the purpose of collective bargaining consistent with the Right to Organize
and Collective Bargaining Convention, 1949 (No. 98) and other international human rights
law. They shall respect the right of workers to strike, to submit grievances, including
grievances as to compliance with these Norms, to fair and impartial persons who have the
authority to redress any abuses found, and to be protected from suffering prejudice for using
those procedures, consistent with the norms contained in the Collective Bargaining
Convention, 1981 (No. 154).
(c) Transnational corporations and other business enterprises shall enable representatives of
their workers to conduct negotiations on their terms and conditions of employment with
representatives of management who are authorized to make decisions about the issues under
negotiation. They shall further give workers and their representatives access to information,
facilities and other resources, and ensure internal communications, consistent with
international standards such as the Workers’ Representatives Convention, 1971 (No. 135)
and the Communications within the Undertaking Recommendation, 1967 (No. 129) that are
relevant and necessary for their representatives to conduct negotiations effectively and
without unnecessary harm to legitimate interests of employers.
(d) Transnational corporations and other business enterprises shall abide by provisions in
collective bargaining agreements that provide for the settlement of disputes arising over their
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interpretation and application and also by decisions of tribunals or other mechanisms
empowered to make determinations on such matters. Transnational corporations and other
business enterprises jointly with the representatives and organizations of workers shall seek
to establish voluntary conciliation machinery, appropriate to national conditions, which may
include provisions for voluntary arbitration, to assist in the prevention and settlement of
industrial disputes between employers and workers.
(e) Transnational corporations and other business enterprises shall take particular care to
protect the rights of workers from procedures in countries that do not fully implement
international standards regarding freedom of association, the right to organize and the right
to bargain collectively.
E. Respect for national sovereignty and human rights
10. Transnational corporations and other business enterprises shall recognize and respect
applicable norms of international law, national laws and regulations, as well as administrative
practices, the rule of law, the public interest, development objectives, social, economic and cultural
policies including transparency, accountability and prohibition of corruption, and authority of the
countries in which the enterprises operate.
Commentary
(a) Transnational corporations and other business enterprises, within the limits of their
resources and capabilities, shall encourage social progress and development by expanding
economic opportunities – particularly in developing countries and, most importantly, in the
least developed countries.
(b) Transnational corporations and other business enterprises shall respect the right to
development, which all peoples are entitled to participate in and contribute to, and the right
to enjoy economic, social, cultural and political development in which all human rights and
fundamental freedoms can be fully realized and in which sustainable development can be
achieved so as to protect the rights of future generations.
(c) Transnational corporations and other business enterprises shall respect the rights of local
communities affected by their activities and the rights of indigenous peoples and communities
consistent with international human rights standards such as the Indigenous and Tribal
Peoples Convention, 1989 (No. 169). They shall particularly respect the rights of indigenous
peoples and similar communities to own, occupy, develop, control, protect and use their
lands, other natural resources, and cultural and intellectual property. They shall also respect
the principle of free, prior and informed consent of the indigenous peoples and communities
to be affected by their development projects. Indigenous peoples and communities shall not
be deprived of their own means of subsistence, nor shall they be removed from lands which
they occupy in a manner inconsistent with Convention No. 169. Further, they shall avoid
endangering the health, environment, culture and institutions of indigenous peoples and
communities in the context of projects, including road building in or near indigenous peoples
and communities. Transnational corporations and other business enterprises shall use
particular care in situations in which indigenous lands, resources, or rights thereto have not
been adequately demarcated or defined.
(d) Transnational corporations and other business enterprises shall respect, protect and apply
intellectual property rights in a manner that contributes to the promotion of technological
innovation and to the transfer and dissemination of technology, to the mutual advantage of
producers and users of technological knowledge, in a manner conducive to social and economic
welfare, such as the protection of public health, and to a balance of rights and obligations.
11. Transnational corporations and other business enterprises shall not offer, promise, give, accept,
condone, knowingly benefit from, or demand a bribe or other improper advantage, nor shall they
be solicited or expected to give a bribe or other improper advantage to any Government, public
official, candidate for elective post, any member of the armed forces or security forces, or any other
individual or organization. Transnational corporations and other business enterprises shall refrain
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from any activity which supports, solicits, or encourages States or any other entities to abuse
human rights. They shall further seek to ensure that the goods and services they provide will not
be used to abuse human rights.
Commentary
(a) Transnational corporations and other business enterprises shall enhance the transparency
of their activities in regard to payments made to Governments and public officials; openly
fight against bribery, extortion and other forms of corruption; and cooperate with State
authorities responsible for combating corruption.
(b) Transnational corporations and other business enterprises shall not receive payment,
reimbursement, or other benefit in the form of natural resources without the approval of the
recognized Government of the State of origin of such resources.
(c) Transnational corporations and other business enterprises shall assure that the information
in their financial statements fairly presents in all material respects the financial condition,
results of operations and cash flows of the business.
12. Transnational corporations and other business enterprises shall respect economic, social and
cultural rights as well as civil and political rights and contribute to their realization, in particular
the rights to development, adequate food and drinking water, the highest attainable standard of
physical and mental health, adequate housing, privacy, education, freedom of thought, conscience,
and religion and freedom of opinion and expression, and shall refrain from actions which obstruct
or impede the realization of those rights.
Commentary
(a) Transnational corporations and other business enterprises shall observe standards that
promote the availability, accessibility, acceptability and quality of the right to health, for
example as identified in article 12 of the International Covenant on Economic, Social and
Cultural Rights, general comment No. 14 on the right to the highest attainable standard of
health adopted by the Committee on Economic, Social and Cultural Rights and the relevant
standards established by the World Health Organization.
(b) Transnational corporations and other business enterprises shall observe standards which
promote the availability of food in a quantity and of a quality sufficient to satisfy the dietary
needs of individuals, free from adverse substances, acceptable within a given culture,
accessible in ways that are sustainable and do not interfere with the enjoyment of other
human rights, and are otherwise in accordance with international standards such as article 11
of the International Covenant on Economic, Social and Cultural Rights and general comment
No. 12 on the right to adequate food adopted by the Committee on Economic, Social and
Cultural Rights. Transnational corporations and other business enterprises shall further
observe standards which protect the right to water and are otherwise in accordance with
general comment No. 15 adopted by the Committee on Economic, Social and Cultural Rights
on the right to water.
(c) Transnational corporations and other business enterprises shall further observe standards
which protect the right to adequate housing and are otherwise in accordance with article 11
of the International Covenant on Economic, Social and Cultural Rights and general comment
No. 7 adopted by the Committee on Economic, Social and Cultural Rights on the right to
adequate housing: forced evictions. Transnational corporations and other business enterprises
shall not forcibly evict individuals, families and/or communities against their will from their
homes and/or land which they occupy without having had recourse to, and access to,
appropriate forms of legal or other protection pursuant to international human rights law.
(d) Transnational corporations and other business enterprises shall observe standards that
protect other economic, social and cultural rights and are otherwise in accordance with the
International Covenant on Economic, Social and Cultural Rights and the relevant general
comments adopted by the Committee on Economic, Social and Cultural Rights, paying
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particular attention to the implementation of norms stated in paragraphs 16 (g) and (i).
(e) Transnational corporations and other business enterprises shall observe standards that
protect civil and political rights and are otherwise in accordance with the International
Covenant on Civil and Political Rights and the relevant general comments adopted by the
Human Rights Committee.
F. Obligations with regard to consumer protection
13. Transnational corporations and other business enterprises shall act in accordance with fair
business, marketing and advertising practices and shall take all necessary steps to ensure the safety
and quality of the goods and services they provide, including observance of the precautionary
principle. Nor shall they produce, distribute, market, or advertise harmful or potentially harmful
products for use by consumers.
Commentary
(a) Transnational corporations and other business enterprises shall adhere to the relevant
international standards of business practice regarding competition and anti-trust matters,
such as The Set of Multilaterally Agreed Equitable Principles and Rules for the Control of
Restrictive Business Practices of the United Nations Conference on Trade and Development.
A transnational corporation or other business enterprise shall encourage the development
and maintenance of fair, transparent and open competition by not entering into arrangements
with competing businesses to directly or indirectly fix prices, divide territories, or create
monopoly positions.
(b) Transnational corporations and other business enterprises shall observe relevant
international standards for the protection of consumers, such as the United Nations
Guidelines for Consumer Protection, and relevant international standards for the promotion
of specific products, such as the International Code of Marketing of Breast-milk Substitutes
adopted by the World Health Assembly and the Ethical Criteria for Medical Drug Promotion
of the World Health Organization. Transnational corporations and other business enterprises
shall ensure that all marketing claims are independently verifiable, satisfy reasonable and
relevant legal levels of truthfulness, and are not misleading. Further, they shall not target
children when advertising potentially harmful products.
(c) Transnational corporations and other business enterprises shall ensure that all goods and
services they produce, distribute, or market are capable of use for the purposes claimed, safe
for intended and reasonably foreseeable uses, do not endanger the life or health of consumers,
and are regularly monitored and tested to ensure compliance with these standards, in the
context of reasonable usage and custom. They shall adhere to relevant international standards
so as to avoid variations in the quality of products that would have detrimental effects on
consumers, especially in States lacking specific regulations on product quality. They shall
further respect the precautionary principle when dealing, for example, with preliminary risk
assessments that may indicate unacceptable effects on health or the environment. Further, they
shall not use the lack of full scientific certainty as a reason to delay the introduction of costeffective measures intended to prevent such effects.
(d) Any information provided by a transnational corporation or other business enterprise with
regard to the purchase, use, content, maintenance, storage and disposal of its products and
services shall be provided in a clear, comprehensible and prominently visible manner and in
the language officially recognized by the country in which such products or services are
provided. Transnational corporations and other business enterprises, when appropriate, shall
also provide information regarding the appropriate recycling, reusability and disposal of its
products and services.
(e) Consistent with paragraph 15 (e), where a product is potentially harmful to the consumer,
transnational corporations and other business enterprises shall disclose all appropriate
information on the contents and possible hazardous effects of the products they produce
through proper labeling, informative and accurate advertising and other appropriate
methods. In particular, they shall warn if death or serious injury is probable from a defect,
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use, or misuse. Transnational corporations and other business enterprises shall supply
appropriate information of potentially harmful products to the relevant authorities. This
information shall include the characteristics of products or services that may cause injury to
the health and safety of consumers, workers, or others, and information regarding
restrictions, warnings and other regulatory measures imposed by several countries as to these
products or services on the grounds of health and safety protection.
G. Obligations with regard to environmental protection
14. Transnational corporations and other business enterprises shall carry out their activities in
accordance with national laws, regulations, administrative practices and policies relating to the
preservation of the environment of the countries in which they operate, as well as in accordance
with relevant international agreements, principles, objectives, responsibilities and standards with
regard to the environment as well as human rights, public health and safety, bioethics and the
precautionary principle, and shall generally conduct their activities in a manner contributing to the
wider goal of sustainable development.
Commentary
(a) Transnational corporations and other business enterprises shall respect the right to a clean
and healthy environment in the light of the relationship between the environment and human
rights; concerns for intergenerational equity; internationally recognized environmental
standards, for example with regard to air pollution, water pollution, land use, biodiversity
and hazardous wastes; and the wider goal of sustainable development, that is, development
that meets the needs of the present without compromising the ability of future generations to
meet their own needs.
(b) Transnational corporations and other business enterprises shall be responsible for the
environmental and human health impact of all of their activities, including any products or
services they introduce into commerce, such as packaging, transportation and by-products of
the manufacturing process.
(c) Consistent with paragraph 16 (i), in decision-making processes and on a periodic basis
(preferably annually or biannually), transnational corporations and other business enterprises
shall assess the impact of their activities on the environment and human health including
impacts from siting decisions, natural resource extraction activities, the production and sale
of products or services, and the generation, storage, transport and disposal of hazardous and
toxic substances. Transnational corporations and other business enterprises shall ensure that
the burden of negative environmental consequences shall not fall on vulnerable racial, ethnic
and socio-economic groups.
(d) Assessments shall, inter alia, address particularly the impact of proposed activities
on certain groups, such as children, older persons, indigenous peoples and communities
(particularly in regard to their land and natural resources), and/or women. Transnational
corporations and other business enterprises shall distribute such reports in a timely manner
and in a manner that is accessible to the United Nations Environmental Programme, the ILO,
other interested international bodies, the national Government hosting each company, the
national Government where the business maintains its principal office and other affected
groups. The reports shall be accessible to the general public.
(e) Transnational corporations and other business enterprises shall respect the prevention
principle, for example by preventing and/or mitigating deleterious impacts identified in any
assessment. They shall also respect the precautionary principle when dealing, for example,
with preliminary risk assessments that may indicate unacceptable effects on health or the
environment. Further, they shall not use the lack of full scientific certainty as a reason to delay
the introduction of cost-effective measures intended to prevent such effects.
(f) Upon the expiration of the useful life of their products or services, transnational
corporations and other business enterprises shall ensure effective means of collecting or
arranging for the collection of the remains of the product or services for recycling, reuse
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and/or environmentally responsible disposal.
(g) Transnational corporations and other business enterprises shall take appropriate measures
in their activities to reduce the risk of accidents and damage to the environment by adopting
best management practices and technologies. In particular, they shall use best management
practices and appropriate technologies and enable their component entities to meet these
environmental objectives through the sharing of technology, knowledge and assistance, as
well as through environmental management systems, sustainability reporting, and reporting
of anticipated or actual releases of hazardous and toxic substances. In addition, they shall
educate and train workers to ensure their compliance with these objectives.
H. General provisions of implementation
15. As an initial step towards implementing these Norms, each transnational corporation or other
business enterprise shall adopt, disseminate and implement internal rules of operation in
compliance with the Norms. Further, they shall periodically report on and take other measures
fully to implement the Norms and to provide at least for the prompt implementation of the
protections set forth in the Norms. Each transnational corporation or other business enterprise
shall apply and incorporate these Norms in their contracts or other arrangements and dealings
with contractors, subcontractors, suppliers, licensees, distributors, or natural or other legal persons
that enter into any agreement with the transnational corporation or business enterprise in order to
ensure respect for and implementation of the Norms.
Commentary
(a) Each transnational corporation or other business enterprise shall disseminate its internal
rules of operation or similar measures, as well as implementation procedures, and make them
available to all relevant stakeholders. The internal rules of operation or similar measures shall
be communicated in oral and written form in the language of workers, trade unions,
contractors, subcontractors, suppliers, licensees, distributors, natural or other legal persons
that enter into contracts with the transnational corporation or other business enterprise,
customers and other stakeholders in the transnational corporation or other business enterprise.
(b) Once internal rules of operation or similar measures have been adopted and disseminated,
transnational corporations and other business enterprises shall – to the extent of their
resources and capabilities – provide effective training for their managers as well as workers
and their representatives in practices relevant to the Norms.
(c) Transnational corporations and other business enterprises shall ensure that they only do
business with (including purchasing from and selling to) contractors, subcontractors,
suppliers, licensees, distributors, and natural or other legal persons that follow these or
substantially similar Norms. Transnational corporations and other business enterprises using
or considering entering into business relationships with contractors, subcontractors, suppliers,
licensees, distributors, or natural or other legal persons that do not comply with the Norms
shall initially work with them to reform or decrease violations, but if they will not change, the
enterprise shall cease doing business with them.
(d) Transnational corporations and other business enterprises shall enhance the transparency
of their activities by disclosing timely, relevant, regular and reliable information regarding
their activities, structure, financial situation and performance. They shall also make known
the location of their offices, subsidiaries and factories, so as to facilitate measures to ensure
that the enterprises, products and services are being produced under conditions that respect
these Norms.
(e) Transnational corporations and other business enterprises shall inform in a timely manner
everyone who may be affected by conditions caused by the enterprises that might endanger
health, safety, or the environment.
(f) Each transnational corporation or other business shall endeavour to improve continually
its further implementation of these Norms.
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16. Transnational corporations and other business enterprises shall be subject to periodic
monitoring and verification by United Nations, other international and national mechanisms
already in existence or yet to be created, regarding application of the Norms. This monitoring shall
be transparent and independent and take into account input from stakeholders (including nongovernmental organizations) and as a result of complaints of violations of these Norms. Further,
transnational corporations and other business enterprises shall conduct periodic evaluations
concerning the impact of their own activities on human rights under these Norms.
Commentary
(a) These Norms shall be monitored and implemented through amplification and
interpretation of intergovernmental, regional, national and local standards with regard to the
conduct of transnational corporations and other business enterprises.
(b) United Nations human rights treaty bodies should monitor implementation of these
Norms through the creation of additional reporting requirements for States and the adoption
of general comments and recommendations interpreting treaty obligations. The United
Nations and its specialized agencies should also monitor implementation by using the Norms
as the basis for procurement determinations concerning products and services to be purchased
and with which transnational corporations and other business enterprises develop
partnerships in the field. Country rapporteurs and thematic procedures of the United Nations,
Commission on Human Rights should monitor implementation by using the Norms and other
relevant international standards for raising concerns about actions by transnational
corporations and other business enterprises within their respective mandates. The
Commission on Human Rights should consider establishing a group of experts, a special
rapporteur, or working group of the Commission to receive information and take effective
action when enterprises fail to comply with the Norms. The Sub-Commission on the
Promotion and Protection of Human Rights and its relevant working group should also
monitor compliance with the Norms and developing best practices by receiving information
from non-governmental organizations, unions, individuals and others, and then by allowing
transnational corporations or other business enterprises an opportunity to respond. Further,
the Sub-Commission, its working group and other United Nations bodies are invited to
develop additional techniques for implementing and monitoring these Norms and other
effective mechanisms and to ensure access is given to NGOs, unions, individuals and others.
(c) Trade unions are encouraged to use the Norms as a basis for negotiating agreements with
transnational corporations and other business enterprises and monitoring compliance of these
entities. NGOs are also encouraged to use the Norms as the basis for their expectations of the
conduct of the transnational corporation or other business enterprise and monitoring
compliance. Further, monitoring could take place by using the Norms as the basis for
benchmarks of ethical investment initiatives and for other benchmarks of compliance. The
Norms shall also be monitored through industry groups.
(d) Transnational corporations and other business enterprises shall ensure that the monitoring
process is transparent, for example by making available to relevant stakeholders the
workplaces observed, remediation efforts undertaken and other results of monitoring. They
shall further ensure that any monitoring seeks to obtain and incorporate input from relevant
stakeholders. Further, they shall ensure such monitoring by their contractors, subcontractors,
suppliers, licensees, distributors, and any other natural or legal persons with whom they have
entered into any agreement, to the extent possible.
(e) Transnational corporations and other business enterprises shall provide legitimate and
confidential avenues through which workers can file complaints with regard to violations of
these Norms. To the extent possible, they shall make known to the complainant any actions
taken as a result of the investigation. Further, they shall not discipline or take other action
against workers or others who submit complaints or who assert that any company has failed
to comply with these Norms.
(f) Transnational corporations and other business enterprises receiving claims of violations of
these Norms shall make a record of each claim and obtain an independent investigation of the
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claim or call upon other proper authorities. They shall actively monitor the status of
investigations, press for their full resolution and take action to prevent recurrences.
(g) Each transnational corporation or other business enterprise shall engage in an annual or
other periodic assessment of its compliance with the Norms, taking into account comments
from and encourage the participation of indigenous peoples and communities to determine
how best to respect their rights. The results of the assessment shall be made available to
stakeholders to the same extent as the annual report of the transnational corporation or other
business enterprise.
(h) Assessments revealing inadequate compliance with the Norms shall also include plans of
action or methods of reparation and redress that the transnational corporation or other
business enterprise will pursue in order to fulfill the Norms. See also paragraph 18.
(i) Before a transnational corporation or other business enterprise pursues a major initiative
or project, it shall, to the extent of its resources and capabilities, study the human rights
impact of that project in the light of these Norms. The impact statement shall include a
description of the action, its need, anticipated benefits, an analysis of any human rights
impact related to the action, an analysis of reasonable alternatives to the action, and
identification of ways to reduce any negative human rights consequences. A transnational
corporation or other business enterprise shall make available the results of that study to
relevant stakeholders and shall consider any reactions from stakeholders.
17. States should establish and reinforce the necessary legal and administrative framework for
ensuring that the Norms and other relevant national and international laws are implemented by
transnational corporations and other business enterprises.
Commentary
(a) Governments should implement and monitor the use of the Norms, for example, by
making them widely available and using them as a model for legislation or administrative
provisions with regard to the activities of each enterprise doing business in their country,
including through the use of labour inspections, ombudspersons, national human rights
commissions, or other national human rights mechanisms.
18. Transnational corporations and other business enterprises shall provide prompt, effective and
adequate reparation to those persons, entities and communities that have been adversely affected
by failures to comply with these Norms through, inter alia, reparations, restitution, compensation
and rehabilitation for any damage done or property taken. In connection with determining
damages, in regard to criminal sanctions, and in all other respects, these Norms shall be applied by
national courts and/or international tribunals, pursuant to national and international law.
19. Nothing in these Norms shall be construed as diminishing, restricting, or adversely affecting
the human rights obligations of States under national and international law, nor shall they be
construed as diminishing, restricting, or adversely affecting more protective human rights norms,
nor shall they be construed as diminishing, restricting, or adversely affecting other obligations or
responsibilities of transnational corporations and other business enterprises in fields other than
human rights.
Commentary
(a) This savings clause is intended to ensure that transnational corporations and other
business enterprises will pursue the course of conduct that is the most protective of human
rights – whether found in these Norms or in other relevant sources. If more protective
standards are recognized or emerge in international or State law or in industry or business
practices, those more protective standards shall be pursued. This savings clause is styled after
similar savings clauses found in such instruments as the Convention on the Rights of the Child
(art. 41). This provision and similar references in the Norms to national and international law
are also based upon the Vienna Convention on the Law of Treaties (art. 27), in that a State
may not invoke the provisions of its internal law as justification for its failure to comply with
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a treaty, the Norms, or other international law norms.
(b) Transnational corporations and other business enterprises are encouraged to express their
own commitment to respecting, ensuring respect for, preventing abuses of, and promoting
internationally recognized human rights by adopting their own internal human rights rules of
operation which are even more conducive to the promotion and protection of human rights
than those contained in these Norms.
I. Definitions
20. The term “transnational corporation” refers to an economic entity operating in more than one
country or a cluster of economic entities operating in two or more countries – whatever their legal
form, whether in their home country or country of activity, and whether taken individually
or collectively.
21. The phrase “other business enterprise” includes any business entity, regardless of the
international or domestic nature of its activities, including a transnational corporation, contractor,
subcontractor, supplier, licensee or distributor; the corporate, partnership, or other legal form used
to establish the business entity; and the nature of the ownership of the entity. These Norms shall
be presumed to apply, as a matter of practice, if the business enterprise has any relation with a
transnational corporation, the impact of its activities is not entirely local, or the activities involve
violations of the right to security as indicated in paragraphs 3 and 4.
22. The term “stakeholder” includes stockholders, other owners, workers and their
representatives, as well as any other individual or group that is affected by the activities of
transnational corporations or other business enterprises. The term “stakeholder” shall be
interpreted functionally in the light of the objectives of these Norms and include indirect
stakeholders when their interests are or will be substantially affected by the activities of the
transnational corporation or business enterprise. In addition to parties directly affected by the
activities of business enterprises, stakeholders can include parties which are indirectly affected by
the activities of transnational corporations and other business enterprises such as consumer groups,
customers, Governments, neighbouring communities, indigenous peoples and communities, nongovernmental organizations, public and private lending institutions, suppliers, trade associations
and others.
23. The phrases “human rights” and “international human rights” include civil, cultural,
economic, political and social rights, as set forth in the International Bill of Human Rights and
other human rights treaties, as well as the right to development and rights recognized by
international humanitarian law, international refugee law, international labour law, and other
relevant instruments adopted within the United Nations system.
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www.amnesty.org
AI Index: IOR 42/002/2004
January 2004
BN 082
Amnesty International
1 Easton Street London WC1X 0DW
Tel: 44 (0)20 7413 5500
55
3. Workshop ‘Nederland: een belastingparadijs voor multinationals?'
(SOMO)
Onderwerp: belastingontwijking door multinationals
Doel: Het zoeken naar oplossingen die belastingontwijking door multinationals in Nederland in de
toekomst voorkomen
Zaterdag 11 november presenteerde de Stichting Onderzoek Multinationale Ondernemingen (SOMO)
het onderzoeksrapport ‘The Netherlands: A tax haven?’. Uit dit onderzoek blijkt dat veel buitenlandse
bedrijven vestigen zich in ons land om gebruik te kunnen maken van gunstige fiscale regelingen. Jaarlijks stroomt zo’n €3600 miljard (meer dan 8 keer het BNP) door Nederlandse vestigingen van buitenlandse multinationals. Vaak bestaat een vestiging van een buitenlandse multinational uit niet meer dan
een ‘brievenbusbedrijf’, een bedrijf zonder werknemers dat beheerd wordt door een zogenaamd trustkantoor. Ondanks het afschaffen van enkele regelingen de afgelopen jaren blijft het aantal zogenaamde ‘brievenbusbedrijven’ snel groeien. Inmiddels telt Nederland er zo’n twintigduizend.
De aantrekkingskracht voor buitenlandse multinationals berust voor een belangrijk deel op de belastingverdragen die Nederland met andere landen heeft afgesloten. Door deze verdragen is het voordelig om betalingen van rente, royalties en dividenden van een dochterbedrijf in het ene land naar een
moederbedrijf in een ander land via Nederland te laten lopen. Er ontstaan schadelijke effecten als een
multinational via dochterbedrijven in Nederland opbrengsten kan wegsluizen zonder daar belasting
over te betalen in het land van herkomst. Andere landen, ook ontwikkelingslanden, lopen daardoor
belastinginkomsten mis.
Voor Nederland levert dit systeem naar schatting €1,2 miljard aan extra belastinginkomsten op, plus
enkele duizenden banen bij trustkantoren en belastingadviesbureau’s. Daar staat tegenover dat Nederland op deze manier ook het witwassen van geld vergemakkelijkt en bedrijven met een slechte reputatie aantrekt, zoals Trafigura, dat betrokken was bij het gifschandaal in Ivoorkust.
Het SOMO onderzoek genereerde veel aandacht in de media. Zowel de Volkskrant als het NRC publiceerden een artikel op de voorpagina, het RTL 4 journaal en NOS radio 1 namen het op in hun
nieuwsuitzendingen en vrijwel alle internet nieuws websites besteedden er aandacht aan. Hieruit blijkt
dat ‘Nederland als belastingparadijs voor multinationals’ een onderwerp is dat veel discussie oproept.
SOMO wil graag de inhoudelijke discussie aangaan tijdens een expertmeeting. SOMO wil deze discussie aangaan en hoort graag van experts, zowel op het gebied van belastingadvies als maatschappelijk verantwoord ondernemen, wat hun reacties zijn op het SOMO rapport en hun opvattingen over
het thema in het algemeen. Het programma van de expertmeeting is als volgt:
•
Korte presentatie van de belangrijkste bevindingen, conclusies en aanbevelingen uit het SOMO
rapport ‘The Netherlands: A tax haven?
•
Rondetafel discussie naar aanleiding van de belangrijkste aanbevelingen uit het SOMO rapport
met daarin aandacht voor:
o
Welke maatregelen moet/kan de Nederlandse overheid nemen om belastingontwijking door
multinationals tegen te gaan, zoals:
 Instellen van een officieel onderzoek waarin de mate van het probleem geschetst
wordt en duidelijk wordt gemaakt wel en niet schadelijk is voor andere landen
 Vergroting van transparantie door invoering van een nieuwe accountancy standaard
 Uiteindelijk stoppen met faciliteren van belastingontwijking door multinationals
o
Welke verantwoordelijkheid zouden bedrijven moeten en kunnen nemen met betrekking tot
belastingontwijking, zoals:
56


Belasting betalen gaan zien als onderdeel van MVO beleid en daar naar gelang over
rapporteren bijvoorbeeld in het jaarlijkse CSR report.
Afzien van belastingontwijking.
Sprekers: Francis Weyzig en Michiel van Dijk
Francis Weyzig studeerde ontwikkelingsstudies en ontving een prijs van de Wereldbank/AIID voor zijn
afstudeerscriptie over Maatschappelijk Verantwoord Ondernemen (MVO) in Mexico. Weyzig werkt
sinds 2004 bij SOMO en doet onder meer onderzoek naar belastingontwijking door multinationals,
MVO in de farmaceutische industrie, arbeidsomstandigheden bij Nederlandse multinationals en
publiek-private partnerschappen.
Michiel van Dijk studeerde economie in Maastricht tot 1999. In 2005 promoveerde hij aan de
Technische Universiteit Eindhoven met een onderzoek over de groei en technologische ontwikkeling
van de Indonesische papier industrie en was daarna nog een jaar werkzaam als universitair docent aan
dezelfde universiteit. Sinds juni 2006 is Van Dijk werkzaam voor SOMO als onderzoeker. Hij houdt zich
daar voornamelijk bezig met onderzoek naar belastingontwijking door multinationals en
arbeidsomstandigheden in de elektronische industrie.
Voorzitter: n.t.b.
57
The Netherlands:
A Tax Haven?
November 2006
Michiel van Dijk, Francis Weyzig & Richard Murphy
58
All the empirical evidence indicates that the Netherlands is a tax haven. This is because it
deliberately offers companies who would not otherwise seek to be resident within its territory
the means to reduce their tax charges on interest, royalties, dividend and capital gains income
from foreign subsidiaries. This SOMO report investigates the extent to which the Netherlands
can be regarded as a tax haven, and analyses the factors behind this, such as the unique network
of bilateral treaties for the avoidance of double taxation and the special fiscal regimes for group
financing operations. It estimates the number of ‘mailbox companies’, mostly established to
route financial flows through the Netherlands purely for fiscal reasons, at almost 20,000, and this
number has been increasing rapidly in recent years.
The Netherlands benefits primarily from attracting financial flows to its territory by increasing
the tax yield it enjoys from corporate income and from employment generated in the trust and
tax consultancy sector. These benefits do not, however, outweigh the negative consequences for
other countries. Hence, Dutch tax policy is inconsistent with its policy on Official Development
Assistance (ODA) and its associated high contribution to financing the achievement of the
Millennium Development Goals (MDGs). The tax haven features of the Netherlands also facilitate
money laundering and attract companies with a dubious reputation.
In order to promote a fair and just global economic system in which tax avoidance by
multinational corporations is minimised, the report gives recommendations for the Dutch
government and all other relevant actors.
59
The Netherlands: A Tax Haven?
Michiel van Dijk, Francis Weyzig, Richard Murphy
Amsterdam, November 2006
1
The Netherlands: A Tax Haven?
60
Colophon
The Netherlands: A Tax Haven?
By:
Michiel van Dijk, Francis Weyzig, Richard Murphy
Published by:
Stichting Onderzoek Multinationale Ondernemingen
(SOMO)
Centre for Research on Multinational Corporations
Cover Design:
Annelies Vlasblom
This document is licensed under the Creative Commons
Attribution-NonCommercial-NoDerivateWorks 2.5
License. To view a copy of this license visit:
http://creativecommons.org/licenses/by-nc-sa/2.5
ISBN:
90-71284-08-5
This report is financed by:
National Committee for International Cooperation and
Sustainable Development (NCDO)
Additional copies are available from:
SOMO
Keizersgracht 132
1015 CW Amsterdam
Phone: +31 (0)20 6391291
e-mail:[email protected]
Download and ordering at www.somo.nl
2
61
Executive summary
The Netherlands is a tax haven
This report investigates the extent to which the Netherlands can be regarded as a tax
haven. All the empirical evidence indicates that the Netherlands is a tax haven. This is
because it deliberately offers companies who would not otherwise seek to be resident
within its territory the means to reduce their tax charges on interest, royalties, dividends
and capital gains income from subsidiary companies.
The attractiveness of the Netherlands results from several factors. One of these is the socalled ‘participation exemption’ that exempts dividends and capital gains from subsidiary
companies abroad from corporate income tax in the Netherlands. A second reason is the
unusually large Double Taxation Treaty (DTT) network that substantially reduces
withholding taxes on dividend, interest and royalty payments between treaty countries and
the Netherlands. A third reason is the advance tax ruling system that gives certainty to
multinationals about how the income of their Dutch subsidiaries will be taxed. Other
reasons include the special regime for group finance companies (CFM), that is currently
being phased out, and general factors such as legal security and political and economic
stability.
As a consequence, the Netherlands hosts nearly 20,000 so-called ‘mailbox companies’
which do not have a substantial commercial presence. The data indicate every year more
new mailbox companies are established, in particular during the period 2003-2006. Official
statistics of the Dutch Central Bank (DNB) exclude some of these and count 12,500
Special Financial Institutions (SFIs) in 2002, which are defined as foreign companies that
route financial flows through the Netherlands at least partly for tax reasons. In 2002, the
last year for which figures are available, gross SFI flows through the Netherlands
amounted to €3,600 billion or over 8 times Dutch GNP. Most SFIs are managed by one of
the 132 specialised trust offices. However, the majority of SFI transactions can be
attributed to a small group of multinationals that control about 100 to 125 SFIs, and have
offices of their own.
The SFIs mainly function as conduits for dividend, royalty and interest payments. It has
been found that out of the 42,072 financial holding companies registered in the
Netherlands for which information on the (ultimate) parent was available, 5,830 are
managed by trust companies. Of these mailbox companies, 43% have a parent in a tax
haven jurisdiction such as the Netherlands Antilles, Switzerland, Cyprus, the British Virgin
Islands or the Cayman Islands. Hence there is a clear link to tax havens for conduit
structures.
Although not all tax planning structures are harmful in nature, some certainly are. The
Dutch group financing (CFM) regime, which will be abolished by 2011, is often regarded
as one of the most harmful tax policies. Corporate structures that use the rather unique
Executive summary
3
The Netherlands: A Tax Haven?
62
Double Taxation Treaty (DTT) network of the Netherlands to facilitate financial flows to
and from other tax havens, such as the Netherlands Antilles and Cayman Islands, seem to
be particularly harmful as well.
Many of the arrangements created by the Netherlands to facilitate these objectives have
been found to be unacceptable by either the OECD or the European Union, and as a
result they have been or are being revised. The tax ruling system, for example, has been
revised in 2001 and stripped of its harmful characteristics. It is clear that the revisions
which are being made are those necessary to ensure that the new arrangements will
comply with the basic requirements of those organisations, but certainly not all of them will
comply with the spirit of international tax co-operation that they are seeking to promote.
Indeed, from 2007 it is possible that the Netherlands will be offering tax rates as low as
5% on interest income under the ‘group interest box’ in the current “Werken aan Winst”
proposal for modifying tax legislation, to replace the CFM regime. This might mean that
the Netherlands will be offering the lowest tax rates on financial flows in the developed
world.
The main conclusion of this report is very simple: the Netherlands is a tax haven.
Positive and negative impacts
The Netherlands mainly benefits from attracting financial flows to its territory by increasing
the tax yield it enjoys from corporate income and from employment generated in the trust
and tax consultancy sector. It has been estimated that the activities of the 12,500 SFIs
present in the Netherlands, which facilitate these flows and largely consist of ‘mailbox
companies’ and ‘paper headquarters’, generate some 2,500 direct jobs and a total direct
revenue for the Dutch state of €1.7 billion. Experts expect that measures such as the new
‘group interest box’ will mainly attract new SFIs and, apart from a small number of highskilled jobs, will not generate substantial new employment in the Netherlands.
However, these benefits do not outweigh the negative consequences for other countries. It
affects both the capacity of developing country governments to supply essential services
to their populations and the capacity of developed country governments to provide finance
for development in the form of debt relief and official development aid. Hence, the Dutch
tax policy is clearly inconsistent with the policy on Official Development Assistance (ODA)
and the associated high contribution towards financing the achievement of the Millennium
Development Goals (MDGs). Furthermore, it has a substantial negative impact through
the resulting shift of the tax burden to other sources of income such as labour, and the
reduced possibilities for smaller companies to compete with multinational corporations.
The tax haven features of the Netherlands also facilitate money laundering and attract
companies with a dubious reputation.
4
63
Recommendations
In order to promote a fair and just global economic system in which tax avoidance by
multinational corporations is minimised, SOMO presents the following recommendations.
‡
The Netherlands must put an end to harmful tax policies and stop being a bridge
between tax havens and other countries as soon as possible. The Netherlands
needs to review its taxation policies in the interests of the world community at
large. They should be revised to ensure that a level playing field is created where
each country receives the fair taxation due to it as a result of the commercial
activities undertaken within its borders.
‡
However, tax havens are a global problem which requires a global solution, and
the Netherlands putting an end to its harmful tax policies is a necessary but not
sufficient step. Hence it is important that the Netherlands also actively puts
pressure on other OECD countries to follow suit.
‡
The Dutch government should commission an official research on the
Netherlands as a tax haven. This SOMO report is the first comprehensive report
on this issue and a more detailed study, including a more quantitative analysis,
would be desirable.
‡
The Dutch Central Bank (DNB) should regularly publish statistical information on
SFIs.
‡
To support transparency, a new mandatory International Accounting Standard
should be adopted that requires multinationals to provide detailed financial
information on subsidiaries.
‡
All relevant actors, including corporations, government, civil society organisations,
consultants, and analysts, should recognise refraining from tax avoidance as a
core element of Corporate Social Responsibility (CSR). Issues such as a
multinational’s presence in tax havens and the use of mailbox companies do not
require fiscal expertise and can easily be assessed by any organisation. In the
end, such measures are perceived to be in the interests of multinational
corporations themselves as well.
Executive summary
5
The Netherlands: A Tax Haven?
64
Contents
Executive summary......................................................................................................................3
Chapter 1 Introduction .................................................................................................................7
1.1.
Motivation for this study....................................................................................................7
1.2.
Methodology.....................................................................................................................10
Chapter 2 The definition of tax havens.......................................................................................12
Chapter 3 The Netherlands is a tax haven..................................................................................15
3.1.
Historical causes ..............................................................................................................15
3.2.
Headquarters and Special Financial Institutions...............................................................16
3.3.
In the Netherlands we trust...............................................................................................22
3.4.
What’s in it for the Netherlands? ......................................................................................30
Chapter 4 Plan your tax ...............................................................................................................32
4.1.
Tax planning, mitigation, avoidance, and evasion ............................................................32
4.2.
What makes the Netherlands so popular?........................................................................33
4.2.1. Participation Exemption....................................................................................................33
4.2.2. Double taxation treaty network .........................................................................................33
4.2.3. Tax rulings........................................................................................................................35
4.2.4. General factors .................................................................................................................37
4.3.
Dutch holding companies .................................................................................................38
The Netherlands Antilles route .........................................................................................46
4.4.
4.5.
Dutch royalty conduit companies......................................................................................49
4.6.
Dutch interest conduit and group financing companies ....................................................52
4.7.
Holding, financing, and licensing activities combined .......................................................54
4.8.
Alternative tax planning structures ...................................................................................55
Chapter 5 Changes in the Dutch tax system..............................................................................57
5.1.
Pressure for change .........................................................................................................57
5.2.
Currently proposed changes ............................................................................................59
Chapter 6 Conclusions and recommendations .........................................................................61
6.1.
Conclusions ......................................................................................................................61
6.2.
Recommendations............................................................................................................62
Annex 1 Glossary .........................................................................................................................66
Annex 2 Dutch double tax treaties..............................................................................................73
Annex 3 List of regulated trust offices .......................................................................................75
Annex 4 Tax planning sources....................................................................................................80
Annex 5 Tax Havens.....................................................................................................................81
6
65
1
Chapter 1
Introduction
introduction
1.1.
Motivation for this study
Quotations on Dutch tax planning opportunities
For centuries, the Netherlands has encouraged entrepreneurial spirit, an international
perspective and open market policies. These historical factors, along with the country's secure
political and economic climate, make it a near perfect environment for international tax
planning. This environment is further enhanced by the Netherlands' network of tax agreements
with virtually every significant financial territory in the world, as well as the benefits that can be
gained from basing intermediate holding companies within the Netherlands Antilles.1
Although it is a small country the Netherlands has one of the largest tax treaty networks in the
world and, therefore, can be used to great effect by companies as part of their tax planning.2
The Netherlands historically plays a key role in international tax planning. The country offers a
wide range of facilities that allow both non-resident corporate and individual clients a broad
range of tax advantages.3
For decades The Netherlands have been the pilot country in facilitating tax driven structures as
a result whereof many foreign enterprises hold their investments abroad through Dutch ‘tax
planning’ companies. Not only there are several supporting technical arguments to do so, like
the beneficial and flexible tax and legal regime, but it also has to do with emotions. Simply
stated, the Netherlands are stable and reliable and therefore a safe place to do business and
apart from that, it is a country worth visiting.4
In a globalised economy, tax havens are an international problem. The Tax Justice
Network (TJN), committed to a socially just, democratic and progressive system of
taxation, estimates that as much as US $255 billion is lost every year to governments
around the world because of the low or zero taxation of funds in offshore centres.5 This is
the additional tax revenue that would be generated if the income from the total wealth of
the about 70 tax havens in the world was taxed at the standard rates of the countries from
1
2
3
4
5
http://www.dboffshore.com/offshore/html/location/netherlands.shtml (31 August 2006).
http://www.anglo-legal.com/index.php?id=86 (31 August 2006)
Amicorp website, “The Netherlands” (Sep 2006).
http://www.taxci.nl/read/using_netherlands_tax_planning (29-08-06).
TJN, “Tax us if you can: A true strory of global failure,” TJN Briefing paper, Sep 2005 (Sep 2006).
Chapter 1 - Introduction
7
The Netherlands: A Tax Haven?
66
which it originated. As a consequence, governments are forced to reduce public spending
or increase taxation on smaller, less mobile companies and poorer individuals.
As a result of tax avoidance and tax evasion, countries both poor and rich fail to collect
important tax revenues that could have been used to combat poverty and stimulate
development. This affects national and international development efforts, including the
achievement of the Millennium Development Goals (MDGs), such as halving extreme
poverty and hunger, universal primary education, and halting the spread of infectious
diseases worldwide by 2015. Even Kofi Annan, the United Nations Secretary-General,
recently expressed his concern that money which potentially could have been used to
achieve the MDGs is disappearing into tax havens.6 The tax revenues lost worldwide due
to the use of tax havens are larger than the estimated cost to halve world poverty by 2015.
Tax havens undermine the interests of poor countries in four major ways.7
1.
Secret bank accounts and offshore trusts in tax havens provide wealthy elites and
companies with the means to escape their tax obligations. It is estimated that
50% of the total holdings of cash and listed securities of rich people in Latin
America is held in tax havens. This figure rises to 70% in the case of Middle
Eastern countries.
2.
Multinationals’ ability to substantially lower their tax burden by routing capital
flows through mailbox companies in tax havens provides them with unfair
competitive advantages vis-à-vis their – often smaller – competitors in developing
countries.
3.
Banking secrecy and offshore trusts offered by financial institutions in tax havens
make it possible to launder the proceeds of political corruption, illicit arms deals,
embezzlement, and global drug trade. The lack of transparency in international
financial markets contributes to the spread of global crime, terrorism, bribery and
the looting of natural resources by the elite.
4.
Tax havens have contributed to the rising incidence of financial crisis that can
destroy livelihoods in poor countries.
The aim of the project is to investigate the extent to which the Netherlands can be
regarded as a tax haven for multinational corporations. The report does not focus on
Dutch companies, but on the international tax planning structures of foreign multinationals
in which the Netherlands has a prominent role. In this regard, constructions linking the
Netherlands with other tax havens are most important, as it will turn out that the
Netherlands facilitates huge flows to and from tax havens such as the Netherlands
Antilles, the Cayman Islands and Luxembourg. The corporate tax rate in the Netherlands,
on the other hand, is only of marginal relevance to this study. Furthermore, the report
does not address the taxation of private wealth.
6
7
8
UN, “Secretary-General's remarks at Ministerial Conference on innovative sources of financing for
development,” Paris, France, 28 Feb 2006, <http://www.un.org/apps/sg/sgstats.asp?nid=1937> (Sep
2006).
Murphy R, Christensen J, Kimmis K, ‘Tax Us If You Can’, The Tax Justice Network, London, 2005,
available as a download from www.taxjustice.net
67
In deciding to undertake this research, the following has been noted.
‡ As the quotations in the box above illustrate, tax planning websites and
international trust offices advertise the Netherlands as a historically important
offshore and tax planning centre. The Offshore Business Magazine, a financial
magazine for the offshore world and its clients, even presents a map depicting all
offshore centres in world, based on data from the TJN. It features the Netherlands
alongside well known tax havens like the Cayman Islands, Bermuda, Jersey and
the British Virgin Islands (see Annex 5).
‡ The OECD ranked the Netherlands as one of the top five industrialised countries
that supported harmful tax competition. Also the EU Code of Conduct Group on
Business Taxation under the chairmanship of Dawn Primarolo from the UK
reported fifteen practices in Dutch Law which were considered in contravention of
the Code.8
‡ Many corporations based in the EU or elsewhere have mailbox companies in the
Netherlands primarily for fiscal reasons. A recent example of such practice in the
news has been Trafigura Beheer BV, which on paper is a ‘Dutch’ corporation but
in reality is managed by a trust office while the actual management is located in
Switzerland. Other companies have their ultimate or intermediate headquarters in
the Netherlands primarily for fiscal reasons too, including for example IKEA, Mittal
Steel, EADS (the parent company of Airbus), and Fujitsu-Siemens.
Hence, there are many and convincing indications that the Netherlands might be
considered a tax haven. Taking into account that the Netherlands has functioned as a tax
haven for probably more than two decades, it is striking that – apart from a handful of
newspaper articles – to the best of our knowledge no research reports have been
published which specifically address this issue. Even after the infamous scandals of
ENRON and Parmalat in 2004, which involved a high number of Dutch mailbox
companies, and the public appeal to investigate the possible harmful effect of these
structures that followed, no specific research has been conducted on these issues.9
This study is a first attempt to fill this gap. To answer our main research question, the
following issues will be examined. Firstly, what is a tax haven? In order to conclude
whether the Netherlands is a tax haven or not, it is important that the concept of a tax
haven is defined clearly. It seems that not everybody uses the same definitions. Secondly,
what evidence exists that the Netherlands is a tax haven? To answer this question, the
available data on the number of mailbox companies per year is summarised, as well as
the level of funds that is annually channelled through these entities. Finally, and continuing
on from the second question, what structures are used by multinationals to exploit the
Netherlands tax regime in order to minimise taxation? Parent, holding and subsidiary
8
9
Primarolo Group, “Code of Conduct (Business Taxation),” 29 Nov 2000,
<http://www.uv.es/cde/TEXTOS/primaloro.html> (Sep 2006); OECD, “Towards Global Tax Cooperation: Progress in Identifying and Eliminating Harmful Tax Practices,” 2000,
<http://www.oecd.org/dataoecd/9/61/2090192.pdf#search=%22towards%20global%20taxcooperation%22> (Sep 2006)
“De stelling van Henk Langendijk: verbied financiële constructies via ‘paradijzen’”, NRC handelsblad, 17
January 2004, sec Opinie & Debat.
Chapter 1 - Introduction
9
The Netherlands: A Tax Haven?
68
companies of multinationals are continuously involved in intra-group financial
arrangements, with dividend, interest and royalty payments being most relevant to this
study. The evidence indicates that for each type of financial flow, a specific conduit
structure can be set up to minimise taxation.
The report is intended to inform civil society and the general public about the effects of the
Dutch tax system, initiate dialogue with politicians, government staff and tax advisors,
provide policy recommendations, and eventually change the Dutch tax system. It should
be stressed that many groups have a role to stop aggressive tax avoidance by
multinational corporations. The Dutch government should revise tax legislation to end the
existing opportunities for abuse. Multinationals themselves should pay their fair share of
taxes and not use tax havens to avoid taxes in the countries where they are operating.
They should also be more transparent and demonstrate this. Civil society groups dealing
with multinationals, which up to now perhaps have paid relatively little attention to taxation
issues, need to recognise that taxation is an integral and fundamental part of corporate
responsibility. They should question and expose corporate tax avoidance strategies and
press other actors to take their responsibilities. Tax advisors, accountants, providers of
trust services, and other financial professionals must draw a clear line between legitimate
and harmful corporate behaviour, and not support or endorse harmful tax avoidance
practices.
This report may appear to be of a rather technical nature, particularly for readers with a
limited background in taxation and corporate finance. For the same reason, the report
could also easily lead to arguments about technicalities. However, the main message of
this report is very simple: the Netherlands is a tax haven.
1.2.
Methodology
Whenever investigating a subject, the desire is to get first hand evidence of what is
happening. This, of course, is also the desire when looking at the use of tax havens. But it
is usually not possible, either for investigators from civil society or, indeed, on many
occasions for those pursuing these issues from within tax authorities, for a combination of
reasons.
Firstly, the companies undertaking such activities do not wish to broadcast the fact that
they are doing so. This reflects their perception that tax avoidance is unpopular and likely
to attract adverse criticism, even if they consider it to be something they must do on behalf
of their shareholders.
Secondly, the law allows corporations undertaking these activities to hide them.
Corporations are not required to disclose their holding and financing structures, so that the
mechanisms and structures used for tax avoidance remain opaque. Neither are they
required to publish the accounts of many subsidiary companies, if they are included in the
consolidated accounts and the parent company assumes responsibility for the subsidiary.
Furthermore, there are no obligations to file accounts with public registers in many tax
10
69
havens and developing countries. Finally, there is also no obligation to disclose the
transactions that take place between group companies, and the profits earned, tax paid
and profit retained in each country in which the group operates. Without this data, it is very
difficult to identify the precise tax avoidance structures of corporations and how these
affect a particular country
A different methodology therefore has to be adopted when looking at tax haven and
related tax planning activity. The method developed has been to use the literature
available in tax journals and in the material published by professional advisers to assess
the schemes that they promote, and which are likely to be used by those companies
seeking to avoid tax. This is supplemented by an analysis of Dutch mailbox companies,
links between Dutch holdings and tax havens, and brief case-studies on specific
multinationals. This is considered a reliable methodology.
Furthermore, companies wishing to avoid tax by using tax havens, whether onshore or
offshore, do not achieve that aim by themselves. They are sold the structures that they
use. As such, the materials produced by those likely to sell those structures have been
used as the basis for much of this report, and are part of the evidence that many of the
suggested structures are likely to be in common usage.
Chapter 1 - Introduction 11
The Netherlands: A Tax Haven?
2
70
Chapter 2
The definition of tax havens
hoofdstuk2
In its publication ‘Tax Us If you Can’, the Tax Justice Network (TJN) defines a tax haven
as:
“Any country or territory whose laws may be used to avoid or evade taxes which
may be due in another country under that other country’s laws.” 10
This report will suggest that this criterion is met for the Netherlands. The OECD has
defined ‘harmful preferential tax regimes’ (which might otherwise be considered to be
those undertaken by a tax haven) as having the following key features:11
i) No or low effective tax rates
ii) “Ring-fencing” of regimes
iii) Lack of transparency
iv) Lack of effective exchange of information
In addition, the presence of companies with limited economic substance to their activities
is seen as an indication of tax haven activity by the OECD. Other factors the OECD thinks
indicate such practices include:
v) An artificial definition of the tax base
vi) Failure to adhere to international transfer pricing principles
vii) Foreign source income exempt from residence country tax
viii) Negotiable tax rate or tax base
ix) Existence of secrecy provisions
x) Access to a wide network of tax treaties
xi) Regimes which are promoted as tax minimisation vehicles
xii) The regime encourages purely tax-driven operations or arrangements
This report will suggest that the Netherlands has undertaken harmful tax competition, and
continues to seek to do so. In particular, it has sought or does seek to exploit categories
vi, vii, viii, x, xi and xii, although it does not overtly fall foul of the initial criteria. With regard
to items vi and viii, however, steps have now been taken to remedy the defects.
10
11
12
Murphy R, Christensen J, Kimmis K, “Tax Us If You Can”, (London: The Tax Justice Network, 2005), p.
67, <http://www.taxjustice.net/cms/upload/pdf/tuiyc_-_eng_-_web_file.pdf> .
OECD, “Harmful Tax Competition – an Emerging Global Issue” (Paris: OECD, 1998).
71
The EU Code of Conduct on Business Taxation has slightly different criteria.12 It is
focussed on business taxation measures which ‘affect, or may affect, in a significant way
the location of business activity in the Community’. More specifically, the Code states that
‘tax measures which provide for a significantly lower effective rate of taxation, including
zero taxation, than those levels which generally apply in the Member State in question are
to be regarded as potentially harmful and therefore covered by this code’. The
Netherlands offers low rates of tax on certain forms of income to influence the location of
business and appears to have the intention of continuing to do so. As such it is engaged in
harmful tax competition.
It is important to note that there is no such thing as a standard tax haven. Most have been
created to service particular markets and needs. In this context it is important to make the
distinction between ‘pure’ tax havens and countries which exhibit harmful preferential tax
regimes.
‘Pure’ tax havens correspond with the standard image of the offshore island with palm
lined beaches and numerous ‘brass plate’ companies whose whole existence is of little
greater substance than the contents of a filing cabinet drawer. The main source of income
of such places is in the assistance of tax avoidance or evasion by operating a under a veil
of secrecy. Consequently, any standard form of income or corporate taxation is absent.
Such havens exist. Examples are the Bahamas, Cayman Islands and Bermuda.
The second group of tax havens consists of countries with a diversified economy and
industrial base which have a normal tax system but with certain, often very lucrative,
exceptions for certain activities or types of corporation. In addition, such countries are
commonly characterised by the presence of specialised lawyers and accountants who
assist companies with their tax planning and a large number of tax treaties which make it
possible to minimise taxation.
One mechanism to avoid taxation in particular provided by the Netherlands is the conduit
arrangement.13 This means that transactions are designed to flow through the country that
offers such a regime, in order to reduce tax charges elsewhere. Government officials often
argue that such arrangements benefit the economy because they create employment and
income for professional people in the country providing financial services, and they
generate tax revenue through moderate taxation for the service of channelling capital.
However, the sum of these benefits is bound to be smaller than that which would have
been paid to the countries through which the transactions would otherwise have been
routed. Whereas some types of conduit structures may be legitimate, some appear to be
quite harmful for other countries.
12
13
Resolution of the Council and of the Representatives of the Governments of the Member States
meeting within the Council on 1 December 1997 on a code of conduct for business taxation published in
the Official Journal of the European Communities 6.1.98.
Unknown author, “Nederland onttrekt 40 mld aan heffingen; opbrengst rijk 500 miljoen”, NRC
Handelsblad, 11 Dec 1998, Sec. Economy, p. 13; F. de Kam, “Fiscaal gidsland”, NRC Handelsblad, 11
Dec 1998, Sec. Economy, p. 15; and F. de Kam, “Judasloon voor de schatkist: Belastingparadijs
Nederland”, NRC Handelsblad, 6 Mar 2004, Sec. Economy, p. 24.
Chapter 2 – The definition of tax havens 13
The Netherlands: A Tax Haven?
72
The Netherlands is clearly not a ‘pure’ tax haven. It could not be. It has a significant
commercial base of its own which it has to tax in order to sustain its government
expenditure. This is incompatible with the secretive, tax evasion assisting haven. However
as this report will show, the Netherlands clearly is a country which is characterised by a
preferential harmful tax regime.
14
73
3
Chapter 3
The Netherlands is a tax haven
hfdstuk3
3.1.
Historical causes
This report is concerned with the current taxation provisions of the Netherlands, but it is
impossible to appraise these or their significance without some consideration of how they
developed. Most of the regulations mentioned below are explained in more detail in the
next chapter.
Historically, the Netherlands has had an outward-oriented economy, in which international
trade and foreign investment play an important role. It was one of the countries where the
first multinational companies, such as Royal Dutch Shell and Philips, emerged. To ensure
that the companies were not taxed twice – first in the countries where their subsidiaries
were located and again in the Netherlands where the head office was established – the
Dutch government has actively worked to conclude double tax treaties with the countries
in which Dutch multinationals have been active.
Another feature of the Dutch tax regime, in many ways complementary to the network of
tax treaties, is the participation exemption, which has been effective since 1893. Its
original purpose was to prevent double taxation within domestic chains of companies, but
following the internationalisation of Dutch business, it was also applied to foreign
subsidiaries of multinationals.
After the Second World War, the Netherlands sought to establish a niche for itself in the
world market by creating a taxation environment attractive to international business, in
particular holding companies. Around the end of the 1970s and beginning of the 1980s,
the Netherlands started to gain a reputation as a ‘conduit’ country for capital flows of
multinationals wishing to avoid taxation.14
An important first step in this process was the decision to liberalise the exchange controls
of group financing companies of multinationals in the mid 1970s.15 At first, companies
which were exclusively involved in taking up and on-lending money abroad could obtain a
general permit, as such creating the first official mailbox companies in the Netherlands. In
1983, the ongoing liberalisation of capital movements made an end to the permit system
and the Dutch Central Bank (DNB) started to register special financial institutions (i.e.
mailbox companies and other legal forms for avoiding taxation) within the balance of
payments system.
14
15
A cursory literature review by one of the authors, undertaken at the library of the Institute of Chartered
Accountants in England and Wales in London, suggests that some components of this had been in
place before the early 1980s.
DNB Statistical Bulletin, March 2000, p. 19.
Chapter 3 – The Netherlands is a tax haven 15
The Netherlands: A Tax Haven?
74
The attractiveness of the Netherlands to a large extent stems from its historical
relationship with the Netherlands Antilles. The Netherlands Antilles benefit from the
Belastingregeling voor het Koninkrijk (BRK) with the Netherlands, which has the same
effect as a tax treaty. Under the BRK, companies established in the Netherlands Antilles
used to be able to obtain a reduction of Netherlands withholding tax to almost zero.
The structure involving a connected Netherlands and Netherlands Antilles company is
known as the ‘Dutch Sandwich’ or the ‘Antilles route’, which have become familiar
concepts in the business of tax planning.16 In the early 80s, the Dutch Sandwich used to
be a popular construction for Canadian firms seeking to invest in the USA. By channelling
the funds from Canada to the Netherlands via the Netherlands Antilles into the USA,
dividend withholding tax could be reduced from 15% to 5% and interest withholding tax
from 30% to 0%.17 Later, these arrangements came under scrutiny of Canadian and US
tax officials and were abolished. Tax treaties with ‘pure’ tax havens, such as the
Netherlands Antilles, are unusual. For a long time the Antilles route was therefore known
as the most lucrative and ‘widely used exit route from Europe’.18
Another feature that has contributed to the reputation of the Netherlands as a conduit
country is the ruling practice. Rulings make it possible to obtain certainty in advance on
how certain tax structures are dealt with by the tax authorities. Such arrangements
originate from 1975, when an entrepreneur started a lawsuit against the Dutch treasury
about the corporate taxation of its two German subsidiaries. Although the entrepreneur
lost, the treasury was forced to write a recommendation on how certain structures would
be taxed in the future, in effect publishing the first ruling.19
3.2.
Headquarters and Special Financial Institutions
The Dutch government deliberately designed the tax legislation to make it attractive for
multinationals in search of a location to establish their European or global headquarters or
other holding activities. The thinking behind this is that foreign investment generates
employment, stimulates technology diffusion and leads to greater demand for products
and services of domestic companies. In addition to factors such as infrastructure and
distance to markets, the fiscal regime is one of the decisive factors for headquarter
location.20 To some extent this policy has been successful, and over the years a number
of large companies have established their European or global headquarters in the
Netherlands.
16
17
18
19
20
16
th
Both terms are listed in B. Larking, “IBFD tax Glossary 5 edition”, IBFD, 2005.
See the summary of the 1982 annual meeting of the International Tax Planning Association,
http://www.itpa.org/open/summaries/florence82s.html (26-09-06).
Amicorp Group, ”The Netherlands”, Amsterdam, March 2005, p. 10,
http://www.amicorp.com/web/amicorp.com/amicorpv2.nsf/files/Documents_English_Netherlands.pdf/$fil
e/Netherlands.pdf (26-09-06)
R. Vermeulen, “Belastingparadijs grachtengordel,” Algemeen Dagblad, 21 October 2000, Magazine, p.
24.
D. van Den Berghe, “European Headquarters: Location decisions and establishing sequential company
activities”, Ernst & Young International Location and Advisory Services, 2005.
75
Unfortunately, the Dutch tax legislation has also attracted a high number of ‘vultures‘,
which use the favourable tax conditions to channel their payments through the
Netherlands without generating any economic activity of significance. Unlike some other
countries, in the Netherlands there is no special legal form to distinguish tax planning
vehicles from standard types of business entities. This report therefore uses the popular
and probably more appropriate terms of ‘mailbox’ company and ‘shell’ corporation when
referring to tax planning structures.21 A shell corporation is defined as:
"a company that is incorporated but has no significant assets or operations. Shell
corporations are not in themselves illegal, and they may have legitimate business
purposes. However, they are a main component of underground economy, especially
those based in tax havens.”22
The Dutch Central Bank (DNB) registers mailbox companies and other business
structures that exist for tax planning purposes as Special Financial Institutions (SFIs) or, in
Dutch, Bijzondere Financiële Instellingen (BFIs). SFIs are defined as:
“Netherlands-based companies or institutions whose shares are held directly or indirectly
by non-residents, which specialise in raising funds outside the Netherlands and on-lending
or investing them outside the Netherlands. The funds raised by these institutions are onlent or invested almost entirely within the group of which they form part. These institutions
are based in the Netherlands partly for fiscal reasons, enjoying tax advantages either in
the Netherlands, or in the country where the parent company is established.”23
Several large multinationals have established official headquarters in the Netherlands
purely for tax reasons. Some of these are intermediary holding companies or European
headquarters only, with an ultimate parent in another country, but some are also global
ultimate parent companies. Given their importance to the corporation, such offices are not
usually managed by trust offices (but some are) as is the case with most mailbox
companies. On the other hand, they are also far from the large multilayered financial,
economic and administrative centres, which the Dutch government intends to attract with
its multinational friendly tax-regime. Examples of companies with tax-induced
headquarters in the Netherlands are Volkswagen, IKEA (see box), Gucci, Pirelli, Prada,
Fujitsu-Siemens, Mittal Steel, and Trafigura.24
21
22
23
24
Most tax havens offer so-called International Business Corporations (IBCs) or Personal Investment
Companies (PICs), which are defined as a “tax-free company which is not permitted to engage in
business within the jurisdiction it is incorporated in.”
(http://en.wikipedia.org/wiki/International_business_company (25-09-06)). As such, this legal form does
not exist in the Netherlands. In the accounting literature, the terms Special Purpose Entity (SPE) or
Special Purpose Vehicle (SPV) are also used to refer to shell corporations, which are usually
established to fulfill one narrow or temporary objective, primarily risk sharing, securitisations or for
competitive reasons. However, not all SPEs and SPVs are shell corporations. See J. Tavakoli, “Special
Purpose Entities: Uses and Abuses”, Presentation to the International Monetary Fund, 19 April 2005,
http://www.tavakolistructuredfinance.com (17-09-06).
Wikipedia, <http://en.wikipedia.org/wiki/Shell_company> (17 Sep 2006).
“Recent developments at special financial institutions”, DNB Statistical Bulletin, 2003, p. 21.
See R. Vermeulen, “belastingparadijs grachtengordel”, Algemeen Dagblad, 21 Oct 2000, Magazine, p.
24; “Ënron gebruikte Nederland als belastingparadijs”, Algemeen Dagblad, 8 Feb 2002, Sec. Economy,
Chapter 3 – The Netherlands is a tax haven 17
The Netherlands: A Tax Haven?
76
IKEA: The world’s largest charity
IKEA, the Swedish home-furnishing retailer, has a complex holding structure in the Netherlands
involving several dozens of BVs and foundations. The final parent of the corporation is not
located in Sweden or elsewhere abroad, but a tax-exempt Dutch foundation called Stichting
Ingka Foundation, administrated by Equity Trust N.V. The Economist conservatively estimated
the net worth of this foundation at €28 billion, which exceeds the Bill & Melinda Gates
Foundation, the second largest foundation in the world, by a considerable amount. Yet
Stichting Ingka Foundation’s charitable donations are rather limited. It provides funding to the
Lund Institute of Technology in Sweden for interior design in the order of €1-2 million per year.
Through its subsidiary Ingka Holding BV, Stichting Ingka Foundation owns most companies of
the Ikea group worldwide. For the year ending 31 August 2004, the most recent year for which
accounts have been filed, Ingka Holding BV reported consolidated revenues of €13.1 billion
and profits before tax of €1,997 million, which implies a gross profit margin of 15%. The holding
paid €555 million of taxes on these profits, so its effective tax rate was 27.8%.25
However, this is only part of the story. The intellectual property of the IKEA logo and concept is
owned by Inter IKEA Systems BV, which is controlled by Inter IKEA Systems Holding BV.
These two Dutch companies fall outside the holding structure owned by Ingka Holding BV.
Through franchise agreements with all IKEA stores, Inter IKEA Systems receives 3% of sales.
For Ingka Holding BV, the largest franchisee, this would amount to some €400 million, or 20%
of pre-tax profits. The parent company of Inter IKEA Systems is Inter IKEA Holding SA, located
in Luxembourg. This company in turn belongs to a company with the same name registered in
the Netherlands Antilles. In 2004, Inter IKEA Holding SA reported €631 million in franchise
fees, €590 million of ‘other operating expenses’, and €225 million of profits before tax.
Apparently, some of the operating expenses involve payments to I.I. Holding SA, another IKEA
company in Luxembourg, which reported €328 million of profits before tax in 2004. Together,
these two holdings in Luxembourg paid only €19 million of tax over their combined €553 million
of pre-tax profits.26 If the franchise income is added to the profits reported in the Netherlands,
the sum of these total profits in 2004 is €2.55 billion. The combined tax paid over these profits
was €574 million, resulting in a considerably lower effective tax rate of 22.5%.
25
26
18
p. 23; and H. Stil, “Belastingparadijs met een luchtje: Nederland haalt met voordeeltjes problemen in
huis,” Het Parool, 20 Sep 2004, Sec. Economy, p. 21
KVK data, Sep 2006.
J. van Kerkhof, “De wonderlijke wandel en handel van IKEA,” 19 Aug 2006,
<http://www.bndestem.nl/economie/article584100.ece> (September 2006); “Flat-pack accounting,” The
Economist, 11 May 2006,
<http://www.economist.com/business/displaystory.cfm?story_id=E1_GJTJTPJ> (Sep 2006); ”Kritiek op
fiscale trucs Ikea,” Accountingweb, 22 Aug 2006 (Sep 2006).
77
The Netherlands clearly facilitates the tax avoidance scheme of IKEA. The Stichting Ingka
Foundation might have been founded for securing total control over the corporation by the
founder of IKEA and his family or to avoid taxes on their private income and wealth. This
construction does not in itself lower corporate taxes, though, as Ingka Holding BV does pay an
apparently normal amount of tax. The foundation is therefore only of marginal interest in this
study. However, the 0% withholding tax on outgoing royalty payments and the royalty conduit
opportunities of the large Dutch double tax treaty network, combined with the advantages of
Dutch holding structures, allow a considerable amount of profits to be leaked to other tax
havens where it is taxed at a very low rate.
Figure 1: Number of SFIs, 1977-2006
20,000
18,000
16,000
Nuber of SFIs
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005
Source: DNB statistical Bulletin, March 2000 and June 2003.
Note: The graph is partially based on Chart 1 of DNB statistical Bulletin, March 2000, p. 20 and the
numbers presented are therefore not exact. Data for the years 2001 and 2003-2006 (blue) are
estimated using the compound growth rate for the period 1990-2002.
There is no data available on the amount of SFIs after 2002. However, if it is assumed that
the growth trend of the 1990s is maintained, the number of SFIs in 2006 will be about
17,000. However, this figure should be regarded as an upper limit only, as the estimate
does not take into account the possible negative effects of the Primarolo report and
subsequent changes to Dutch tax law, and the increasing attractiveness of other EU
countries, mainly Ireland and Cyprus, as locations for holding companies.
Chapter 3 – The Netherlands is a tax haven 19
The Netherlands: A Tax Haven?
78
Most SFIs (80% in 2002) are represented by trust offices. Nonetheless, these companies
only account for about a quarter of total SFI transactions. The majority of transactions are
made by a small group of multinationals, which control about 100 to 125 SFIs –
presumably the handful of tax-induced or ‘paper’ headquarters mentioned above.
Table 1 presents the geographical breakdown of SFIs’ foreign assets and liabilities at the
end of 2001. The figures corroborate the SFIs’ main function – to route funds from one
country to another via the Netherlands – as foreign assets are almost equal to foreign
liabilities. The small difference between the two is accounted for by net domestic assets.
SFIs hold most assets in Germany (16%), the United Kingdom (13%) and the United
States (6%). Parent companies in the same countries also have the largest participations
in SFIs. Furthermore, the fact that well-known tax havens like Luxembourg, the
Netherlands Antilles, Switzerland and the Cayman Islands figure prominently on the
liabilities side, confirms that the Netherlands operates as a conduit country for
multinationals aiming to avoid taxation.
Table 1: SFIs’ foreign assets and liabilities, 2001
SFIs’ foreign assets
Value
(€ billion)
Germany
184
United Kingdom
147
United States
68
France
64
Hong Kong
59
Italy
55
Spain
54
Ireland
45
Belgium
43
Switzerland
36
Other Countries
365
Total
1,120
SFIs’ foreign liabilities
Share (%)
16
13
6
6
5
5
5
4
4
3
33
100
United Kingdom
Germany
United States
France
Luxembourg
Netherlands Antilles
Belgium
Switzerland
Japan
Cayman Islands
Other countries
Total
Value
(€ billion)
367
132
128
58
44
37
30
22
18
13
300
1,149
Share (%)
32
11
11
5
4
3
3
2
2
1
26
100
Source: Source: DNB statistical Bulletin, June 2003, p. 24.
Note: End-of-year figures.
Figure 2 shows the gross transactions of SFIs for the period 1996-2002. Gross
transactions are defined as the sum of total in and outflows and mainly constitute
payments for royalties, dividends, interest and capital endowments (also see chapter 4). It
is suggested that in particular the latter two make up a large part of all transactions. As a
consequence of the design of the tax regime it is very lucrative to use the Netherlands for
group financing activities. Group financing activities mainly consist of channelling loans
from the parent company, possibly supplemented with funds obtained through the issue of
stocks and bonds, to subsidiaries in third countries, via the Netherlands.
20
79
Figure 2: Gross transactions of SFIs
5000
Gross transactions (EUR billion)
4500
4000
3500
3000
2500
2000
1500
1000
500
0
1996
1997
1998
1999
2000
2001
2002
Source: DNB statistical Bulletin, June 2003, p. 21.
Note: The graph is partially based Chart 1 of DNB statistical Bulletin, June 2003, p. 21. The figures
presented are therefore not exact.
The figure indicates that the value of gross transactions effected by SFIs has increased
substantially from €782 billion in 1996 to €4,500 billion in 2001. Gross transactions only
declined in 2002, reaching €3,600 billion. This decrease was mainly caused by
exceptionally large transactions with Belgium one year before and does not reflect a
general decline in capital flows as gross transactions with the United Kingdom and
Germany – the countries with the highest share of gross transactions – continued to
expand. Due to their magnitude SFI transactions are not recorded in the balance of
payments, in order to prevent distortion.27
In conclusion, the dramatic increase in gross transactions – up to more than eight times
the GDP of the Netherlands in 2002 – and the fact that to a large extent these transactions
originate from well-known tax havens, such as the Netherlands Antilles and Cayman
Islands, clearly indicate that the Netherlands has gained popularity as a conduit country
for avoiding taxation, and can therefore be considered as a tax haven itself.
27
Instead the net effect of SFI in- and outflows is included under the item Errors and omissions. As of
December 2005, the DNB has also published balance of payments statistics including SFI transactions.
Chapter 3 – The Netherlands is a tax haven 21
The Netherlands: A Tax Haven?
3.3.
80
In the Netherlands we trust
As pointed out above, about 80% of the SFIs are represented by trust offices,
representing a quarter of total SFI transactions. Although relatively small, in absolute
terms these SFIs still channel around €900 billion through the Netherlands. This amount is
controlled by trust offices, which are therefore important players in the game of tax
avoidance. This paragraph will be taking a closer look at this particular group of
companies and their clients.
Trust offices provide various services to their clients.28 According to a tax expert, the
primary function of trust offices is to provide ‘substance’.29 Trust offices incorporate legal
entities on behalf of clients, mostly multinationals, and provide them with an address,
management and administration. These are essential under substance over form
requirements which require that a company has a real presence in the country, and in turn
are essential in order to benefit from local tax advantages. Consequently, most mailbox
companies are located at the same address as the trust office. Clearly personnel is not a
requirement for substance, as most trust clients report zero when asked for the number of
employees.30 In addition, the trust office may provide administrative and support services
such as the organisation of shareholder meetings, and give advice on legal and fiscal
matters, although the latter is mostly undertaken by specialised consultancy firms. As
mailbox companies only serve a purely administrative function (i.e. to avoid tax)
multinationals can save a lot by using the services and expertise of trust offices to
establish such a company vis-à-vis doing it themselves.
As a consequence of the increasing pressure to monitor money transactions related to
terrorism or money laundering and possibly also because of the negative publicity on the
trust sector, following the scandals with ENRON and Parmalat (see box), the Dutch
government adopted the Act on the Supervision of Trust Offices (Wet Toezicht
Trustkantoren, WTT) on 1 March 2004. As of this date, the trust sector has been
supervised by the Dutch Central Bank. Only companies with a licence are allowed to offer
trust services. Furthermore, trust offices must be managed by a natural person (instead of
a company) and are required to show on which grounds clients are accepted or refused.
28
29
30
22
The term ‘trust’ offices when referring to the Dutch trust sector, should not be confused with the AngloSaxon concept of a ‘trust’, which is a way of controlling assets without legally owning them. This specific
legal form does not exist in Dutch legislation. It has been argued that ‘management services company’
or ‘company service provider’ would be better terms for the types of services provided by Dutch trust
offices. See W.M.E. van Gorkum and J.R. de Carpentier, “Toezicht op trustkantoren”, NIBESVV,
Bankjuridische reeks, 50, 2004, Amsterdam, for a brief overview of the Dutch trust sector and the
recently adopted law on the supervision of trust offices.
Based on a statement cited in E. van der Wallle and J. Wester, ´De gevaarlijke charme van een trust’,
NRC Handelsblad, 5 January 2004, Sec. Economy.
Based on information from the Chamber of Commerce, see paragraph 3.3.
81
Big Trust Scandals in the Media
Parmalat
Using mailbox companies in the Netherlands Antilles, the Cayman Islands and the
Netherlands, Parmalat collected billions of euros of funds on the international capital market. In
the Netherlands alone, the company managed to obtain about € 6 billion of bond loans via its
subsidiary Parmalat Finance Corporation B.V.. The main reason for Parmalat to use a Dutch
mailbox company to finance the parent company is the Netherlands-Italy tax treaty. Under this
treaty, the Italian interest withholding tax is reduced from 27% to 10% when interest is paid to
creditors in the Netherlands. Assuming an interest rate of 7% and € 6 billion of loans, Parmalat
saved more than € 70 million (17% less withholding tax on €420 million of interest) in tax
payments annually. As the Netherlands does not impose interest withholding tax, Parmalat
Finance, in turn, was able to channel interest repayment to its foreign creditors without being
taxed. Moreover, as the interest received from Parmalat in Italy cancels out the interest paid to
the foreign creditors, the profit made by Parmalat Finance was very small. It therefore only has
to pay a very limited amount of corporate tax, leaving the Dutch treasury almost empty handed
(also see paragraph 4.6) 31
Parmalat Finance was partially managed by Forum Administrations, the trust office of Nautah
Dutilh, the largest law firm in the Netherlands. Only a few months after the Parmalat affair,
Nautah Dutilh sold its trust office to Amaco, one of the largest providers of trust services in the
world.
There is no information on the number of trust offices in the Netherlands before the
introduction of the WTT. Probably there were more than 300 as DNB reports that it
received 318 initial responses from possible trust offices at the time of implementing the
WTT.32 Of these 183 applied for a WTT licence. Presently there are 132 trust offices with
a WTT licence from DNB.33 About half of these trust offices offer their services from
different entities, which are mostly, but not always, located outside the head office. The
DNB also distinguishes between independently operating trust offices and trust offices
which are part of a group. The size of the trust offices differs considerably. The ten largest
offices generate a turnover of € 5-25 million with trust activities, and have in between 40 to
150 employees.34 The smallest, single-person trust offices have a turnover of up to
€200,000 per year. Around 20 trust offices are affiliated with (business) banks, including
Fortis, ING, Rabobank, Van Lanschot Bankiers, Deutsche Bank and Insinger de
31
32
33
34
H. Stil, “Belastingparadijs met een luchtje”, Het parool, 10 September 2004, sec. Economie, “De stelling
van Henk Langendijk; verbied financiële constructies via ‘paradijzen”, NRC Handelsblad, 17 January
2004, sec Opinie & Debat, E. van der Walle and J. Wester, “De gevaarlijke charme van een trust”, NRC
Handelsblad, 5 January 2004, and F. de Kam, “Judasloon voor de schatkist: Belastingparadijs
Nederland, NRC Handelsblad, 6 March 2004, Sec Economie.
DNB, “Quarterly Bulletin”, March 2006, p. 74.
See annex 3 for a list of trust offices with a licence. The list is based on the register of trust offices
published by DNB (http://www.dnb.nl/dnb/pagina.jsp?pid=tcm:12-45167-64). The DNB also presents
information on all entities affiliated with a trust office. For this research the trust office register of 30 June
2006 has been used.
W.M.E. van Gorkum and J.R. Carpenties, ibid., p. 17.
Chapter 3 – The Netherlands is a tax haven 23
The Netherlands: A Tax Haven?
82
Beaufort.35 However, after the Enron and Parmalat scandals, it seems that several banks
and large law firms are afraid that dealing with mailbox companies could damage their
reputation, and have sold off their trust offices.36
Big Trust Scandals in the Media
The Suharto Family
The Netherlands has contributed to the estimated US$ 15 billion accumulated by the former
Indonesian dictator Suharto and his family.37 In the mid 1990s, several of Suharto’s children
attracted hundreds of millions of investment capital for their companies by using mailbox
companies in the Netherlands. Citra Marga Finance BV, owned by Siti Hardiyanti Rukmana,
also known as 'Tutut’, the oldest daughter of Suharto, managed to attract US$ 197 million for
her company PT Citra Marga Nusaphala Persada, which owned the monopoly of toll road
operation in Indonesia. Bambang Trihatmodko, the middle son of Suharto, was involved in at
least four mailbox companies to collect funds for several of his companies. Finally, the
youngest daughter of Shafto, Site Hesitate Teriyaki, borrowed approximately US$ 150 million
on the international capital market through Cabining International Finance Company BV. The
funds were meant for her company PT Cemen Cibinong. All of the companies of Suharto’s
offspring were managed by trust offices. But what is striking is that three of the abovementioned mailbox companies are still operational: Citra Marga Finance BV and Cibinong
International Finance B.V, both managed by Equity Trust N.V., and Tri Polyta Indonesia,
managed by Amicorp Netherlands B.V.38
In order to map out the number and identity of mailbox companies serviced by the trust
sector, address information of all 132 regulated trust offices was matched with the
addresses of Dutch companies registered with the Dutch Chamber of Commerce.39 As
one of the main functions of a trust office is to domicile legal entities used for tax planning
purposes, companies with exactly the same address as a trust office must be a client. In
total no less than 19,647 companies and other legal entities could be identified as
potential trust office clients. Of these companies 77% are limited companies by shares
(Besloten Vennootschap, BV) – the most common legal form for mailbox companies – 2%
are foreign business entities, 3% are limited partnerships (Commanditaire Vennootschap,
35
36
37
38
39
24
W.M.E. van Gorkum and J.R. de Carpentier, ibid., Note 9.
In the period 2004-2005, ABN Amro sold its trust activities to Equity trust (also see below), Business
Bank Van der Hoop sold its subsidiary First Alliance Trust to the N.M.T. Group, the law firm Nauta Dutilh
sold Forum Administrations to Amaco and SNS Reaal sold Trust Management Finance (TMF) to British
PPV Ventures. See various articles at: http://www.ingtrust.com/onderwerpen/news/press_releases.asp?navid=press (25 September 2006)
http://www.time.com/time/asia/asia/magazine/1999/990524/cover1.html.
“Wij hebben een naam hoog te houden; Het Nederlandse Belastingparadijs en Soeharto’s kinderen”,
Geer van Asbeck, NRC Handelsblad, 22 July 1999, Sec. Economie, p. 10. and Vermeend in problemen
door familie Soeharto”, Het Parool, 27 July 1999, Sec. Economy, p. 7.
Dutch company information is taken from the database: REview and Analysis of Companies in the
Netherlands (REACH), published by Bureau van Dijk. All data in this report refers to the July-September
2006 version of REACH.
83
C.V.), 1% are cooperations, 3% are public limited companies (Naamloze Vennootschap,
N.V.), and 14% are foundations (stichting). Paragraph 4.8 presents some more
information on how some of these legal entities are used for tax planning.
The number of matched addresses should be regarded as an upper boundary for the
number of trust office clients. In a few cases the exact addresses of potential clients were
not available and therefore companies located in the same building as the trust office, but
on a different floor, might have been counted.40 Furthermore, some trust offices domicile
legal entities which are not necessarily related to tax planning such as charitable
foundations, foundations established for estate planning purposes, or for certification of
shares (stichting administratiekantoor). Also sometimes, for administrative reasons, trust
offices offer a postal address to Netherlands-based companies. Nevertheless, the data
shows that these types of legal entities make up a relatively small part of trust office
clients.
There are various reasons to believe that the estimate is close to the actual number of
legal entities serviced by trust offices to avoid taxation. Firstly, 59% of the matched
companies are classified as ‘financial holding companies’, 2% as ‘holdings’ and 3% as
‘exploitation of patents and licenses’. Also many other classifications hinted at similar
practices such as ‘fixed assets interest groups’ and ‘commercial finance companies’. As
will be described in the next chapter, these classifications correspond with the three most
common structures for tax planning in the Netherlands.
Secondly, unlike trust offices, a company address usually only domiciles a single entity.
The number of erroneously included companies as a consequence of problems with the
address is therefore likely to be small. Moreover, a number of suspect companies were
excluded after detailed examination of sector classification codes and other available data.
Finally, the estimate is comparable to, although still significantly higher than the estimated
figure of 17,000 SFIs mentioned above. This is not unexpected as it seems that DNB only
includes active legal entities in its number of SFIs.41 It is likely that trust offices administer
a relative high number of dormant entities which are not reflected in the DNB statistics.
Furthermore, chapter 4 makes clear that tax planning structures often involve a chain of
(Netherlands-based) mailbox companies or other legal entities such as the foundation. It is
not clear how the DNB measures the number of SFIs and if all these entities are included
in the statistics.
40
41
Some trust offices are located at an address with an extension (e.g. ‘a’, ‘second floor’, etc.), which is not
always presented in REACH.
DNB Statistical Bulletin, March 2000, p. 20.
Chapter 3 – The Netherlands is a tax haven 25
The Netherlands: A Tax Haven?
84
Figure 3: Number of new mailbox companies per year, 1975-2006
1800
1600
Number of new mailbox companies
Projection for end-2006
1400
1200
1000
800
600
400
200
0
1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005
Note: The figure does not include the establishment of new foundations as this information is missing
in REACH.
Source: Own computations using REACH.
Figure 3 depicts the number of new mailbox companies per year for the period 1975-2006.
The figure is constructed by using information on the year of start-up of the approximately
20,000 mailbox companies administered by the 132 licensed trust offices in 2006. New
mailbox companies are defined as the total number of mailbox companies established (i.e.
that entered the market) in a certain year. Hence, the figure does not show the total
number of registered mailbox companies per year, which would be much higher.
It should be stressed that for several reasons, Figure 3 underestimates the ‘real’ number
of new mailbox companies per year. Firstly, the figure does not include the establishment
of new foundations, as this information was not available. Secondly, the figure does not
include the start-up of new mailbox companies domiciled by trust offices, which failed to
obtain a licence after the introduction of the WTT in 2004. As a consequence of the WTT,
the exact number of trust offices – the only entities which are allowed to domicile mailbox
companies – is known as of March, 2004. There is no problem after 2004, therefore,
because the figure includes the data of all new mailbox companies of licensed trust
offices. However, before the adoption of the WTT there were probably more than 300 trust
offices, each with their own clients. For this period, the figure only depicts the new mailbox
companies of the 132 trust offices, mentioned above, but excludes the mailbox companies
of trust offices which ceased to offer trust services after the implementation of the WTT.
Finally, the figure does not measure the number of new mailbox companies which were
domiciled by one of 132 trust offices but went out of business before the 10th of August,
2006 – the day on which the sample of mailbox companies was created.
26
85
The following patterns can be discerned in Figure 3. Between 1975 and the mid 1990s
there is a gradual rise in the number of new mailbox companies between 1975 and the
mid-1990s with a small ‘hump’ around 1990.
In the following period more new mailbox companies are established each year, reaching
a peak in 2000 during which 1,339 new companies registered at the addresses of trust
offices. The rapid growth in the number of new mailbox companies follows the same trend
as
Figure 1, demonstrating a similar rise in the number of SFIs over the same period, and
reflecting a combination of factors, including the liberalisation of capital movements, the
globalisation of business activities and an increasing focus on tax planning activities by
multinational companies. However, one should refrain from making direct comparisons
between the two figures, as this would also require information on the closure of mailbox
companies. Another factor, which probably contributed to the boom in mailbox companies
around 2000 was the on-going research at the time on harmful tax regimes by the OECD
and EU. It seems likely that many multinationals and trust offices anticipated the closure of
some very beneficial Dutch tax rules, causing a rush on mailbox constructions. This view
is confirmed by the fact that far fewer mailbox companies were established in 2001 and
2002, during which the Dutch government put an end to old ruling practice and the special
regime for group finance activities – the two most harmful tax arrangements (see chapter
4).
In 2003, the number of new mailbox companies was much higher again. One reason for
this might be a reallocation effect of mailbox entities from trust offices which failed to
obtain a licence, to those trust offices which did. However, it seems likely that such an
effect would only have occurred in 2003 and 2004, around the time the WTT was adopted.
It is very striking that the number of new mailbox companies was also much higher than
before in the two subsequent years. In 2005 and 2006, trust offices domiciled 1,261 and
1,083 new clients, respectively. However, the figure for 2006 only includes the number of
new mailbox companies up to the beginning of August, the last month for which data is
available. If we assume that the number of new mailbox companies for the missing period
August-December is identical to the establishment rate for the same period in 2005, a total
of no less than 1,681 new mailbox companies will have been established in 2006. This is
by far the largest increase in the number of new mailbox entities for any given year over
the period studied.
The recent rise in the number of new mailbox companies strongly implies that the
Netherlands still offers very lucrative tax planning arrangements to multinationals and is
therefore maintaining its reputation as a conduit country and tax haven. To reach definitive
conclusions in the matter, however, would require detailed information on financial flows
and beneficial ownership of the mailbox companies, complemented by more recent data
on SFIs. Such information is, unfortunately, not available.
Figure 4 shows the number of mailbox companies per trust office address. It only depicts
the addresses which domicile at least 200 entities.
Chapter 3 – The Netherlands is a tax haven 27
The Netherlands: A Tax Haven?
86
Figure 4: Number of mailbox companies per trust office address*
Holding and Finance Company Rabobank Trust B.V., Croeselaan 18, Utrecht (1)
200
Monterey Management B.V., Max Euw elaan 61, Rotterdam
201
FTC Trust B.V., Schiphol Boulevard 231, Luchthaven Schiphol
207
ABN AMRO Special Corporate Services B.V., Gustav Mahlerlaan 10, Amsterdam
210
Zenco Corporate Services B.V., Weena 674, Rotterdam
217
BK Corporate International B.V., Oudegracht 202, Alkmaar
221
Deutsche International Trust Company N.V., Herengracht 450, Amsterdam
227
F. van Lanschot Trust Company B.V., Herculesplein 5, Utrecht
248
Equity Estate B.V., Kabelw eg 37, Amsterdam
259
Duma Corporate Services B.V., De Boelelaan 7, Amsterdam
268
Pan-Invest B.V., Martinus Nijhofflaan 2, Delft
349
Equity Trust Co. N.V. Vestiging Rotterdam, Schouw burgplein 30, Rotterdam
351
Executive Management Trust B.V., Drentestraat 24 bg, Amsterdam
387
First Alliance Trust N.V., Claude Debussylaan 44, Amsterdam (2)
397
556
ING Management (Nederland) B.V., Teleportboulevard 140, Amsterdam
597
Amicorp Netherlands B.V., Prof J H Bavincklaan 7, Amstelveen
994
Amaco Management Services B.V., Amsteldijk 166 6hg, Amsterdam (3)
1,180
ATC Corporate Services (Netherlands) B.V., Fred. Roeskestraat 123, Amsterdam (4)
1,214
Citco Nederland B.V., Naritaw eg 165, Amsterdam
1,335
Equity Trust Co. N.V. , Straw inskylaan 3105, Amsterdam (5)
1,633
TMF Management B.V., Locatellikade 1, Amsterdam
2,387
Fortis Intertrust (Netherlands) B.V., Rokin 55, Amsterdam
0
500
1,000
1,500
2,000
2,500
3,000
Number of mailbox companies
Note: * The figure only depicts trust addresses with at least 200 clients. Data for other locations is
available on request.
(1) RCS Management B.V. Vestiging Utrecht is also located at the same address.
(2) Trust Company Amsterdam B.V. is also located at the same address.
(3) IMFC Management B.V. and Intruad Management B.V. are also located at the same address.
(4) NCS Benelux B.V. and RCS Management B.V. are also located at the same address.
(5) EQ Management Services B.V. and BTM Trust B.V. are also located at the same address.
Table 2 lists the three largest trust offices in the Netherlands according to the number of
clients. With a total of 2,583 clients, Fortis Intertrust is the largest provider of trust services
in the Netherlands. This figure is calculated by adding up the number of mailbox
companies in all the offices or affiliates of Fortis Intertrust. Although Fortis Intertrust is
composed of one main office, seven offices and five sub-offices, the company operates
from only four locations in Amsterdam, Haarlem, The Hague and Rotterdam. Clearly, most
clients are domiciled at Rokin 55, Fortis Intertrust’s main office. It is not exactly clear which
is the second largest trust office in the Netherlands. Three trust offices have their main
office at Strawinskylaan 3105 in Amsterdam: EQ Management Services B.V., Equity Trust
Co. NV and the Bank of Tokyo-Mitsubishi (BTM) Trust B.V. Apparently EQ Management
Services (previously ABN AMRO Trust Company BV) has been part of Equity Trust since
its takeover on the first of July 2005, and can therefore be considered as one company.42
42
28
Bouwfonds Asset Management, Prospectus Bouwfonds Office Value Fund NV 2de Emissie, 2006, p. 27
http://www.bouwfonds.nl/site/nl-nl/Particulier/Beleggen/Office+Channel/Uitleg+fonds.htm (13-09-06)
87
There is no information available concerning whether BTM Trust is also affiliated to Equity
trust. Nonetheless, all available evidence indicates that the company is only a small player
and is likely to have far fewer clients than Equity Trust and associated offices. In total, the
three trust offices serve 1,729 mailbox companies. The third largest provider of trust
services is TMF Management B.V. which operates from offices in Amsterdam and
Rotterdam with a total of 1,703 clients.
Table 2: Total number of mailbox companies per address of three largest trust
offices
Trust Office*
Address
Total Fortis Intertrust (Netherlands) B.V.
Fortis Intertrust (Netherlands) B.V. (head
office)
Fortis Intertrust (Netherlands) B.V. Vestiging
Haarlem
Fortis Intertrust (Netherlands) B.V. Vestiging
's-Gravenhage
B.V. Maatschappij voor Executele en
Trustzaken
Dracso B.V. vestiging Rotterdam
Rokin 55, Amsterdam
Number of
companies
2,583
2,387
Fonteinlaan 11, Haarlem
Kneuterdijk 15, the Hague
Herengracht 548, Amsterdam
Coolsingel 93, Rotterdam
0
37
111
48
Total EQ Management Services B.V., Equity Trust Co. NV. And BTM Trust B.V.
1,729
EQ Management Services B.V. (head
office)
Equity Trust Co. N.V. (head office)
BTM Trust (Holland) B.V. (head office)
Manacor (Nederland) B.V.*
Strawinskylaan 3105, Amsterdam
1,335
Strawinskylaan 3111, Amsterdam
33
EQ Management Services B.V. Vestiging
Haarlem
EQ Management Services B.V. Vestiging
Rotterdam
Nationale Trust Maatschappij N.V. Vestiging
Haarlem**
Equity Trust Co. N.V. Vestiging Rotterdam
Zijlstraat 70 - 74, Haarlem
0
Van Oldenbarneveltplaats 22, Rotterdam
9
Houtplein 47, Haarlem
1
Schouwburgplein 30, Rotterdam
Total TMF Management B.V.
351
1,703
TMF Management B.V. (head officer)
Locatellikade 1, Amsterdam
TMF Management B.V. Vestiging
Rotterdam
Nationwide Management Services B.V.
Vestiging Rotterdam
Westblaak 89, Rotterdam
1,633
68
Westblaak 91, Rotterdam
2
Note: *The trust companies are composed of a main office, offices and sub-offices. The table only
shows offices with different addresses. For a full list of trust companies and their respective offices
see the Dutch Central Bank register of trust offices. The numbers of clients per trust main office are
presented in annex 3.
** Part of EQ management Services B.V.
Chapter 3 – The Netherlands is a tax haven 29
The Netherlands: A Tax Haven?
3.4.
88
What’s in it for the Netherlands?
Of course, it must be asked what the Netherlands gains from serving as a conduit country
and domiciling almost 20,000 mailbox companies. According to the DNB the Dutch
economy benefits in several ways from these activities.43
‡
‡
‡
‡
Mailbox companies generate high-grade jobs for financial experts, accountants
and fiscal and legal advisors. According to Vereniging International Management
Services (VIMS), the branch organisation of the larger trust offices in the
Netherlands, the trust sector provides direct employment to about 2,500 people.44
If indirect employment by tax consultants, law firms and accountants is also taken
into account, employment generated is higher.
Domiciling mailbox companies also secures tax. If, for example, a loan is
arranged through the Netherlands then a small margin on the interest charged
could be retained in the Netherlands, and indeed has to be in order to justify the
commercial nature of the transaction. In 2001, the most recent information
available, the total direct revenue for the Dutch state as a consequence of SFIs
activity was €1.7 billion, approximately 70% of which (€1.2 billon) from taxation.45
As has been pointed out by the DNB, “this amount is, however, totally
disproportionate to the total in- and outflows channelled through these institutions
in the same year”.46 Around €0.5 billion, 30% of total revenue of mailbox
companies, is spent on office and management costs. These costs include
payments to trust offices, payments for banking services, contributions to the
Chamber of Commerce and personnel and accommodation costs incurred in
undertaking activities for own account.
As most mailbox companies are established in Amsterdam, they contribute to
Amsterdam’s position as a financial centre.
Mailbox companies stimulate the establishment of primary group activities in the
Netherlands, such as production, research and development, and trade.
However, alongside these benefits, fostering mailbox companies and maintaining a
conduit-friendly tax regime also has various negative effects, which should be mentioned
as well. Besides the general, global, problems associated with tax havens, pointed out in
the introduction, they include:
‡
43
44
45
46
30
Serving as a conduit country and allowing, or even stimulating, the establishment
of between 17 to 20 thousand mailbox companies is deemed to attract a number
of ‘dirty’ and therefore unwanted businesses. A good example of this is the
financial activities of the children of former president Suharto in the 1990s, as
pointed out above. Another example is James Hardie, formerly a world leader in
DNB Statistical Bulletin, March 2000, p. 26-27.
http://www.vims.nl/?pageID=59&languageID=1 (25-09-06).
On its website, VIMS states that the total tax revenue amounts to a total of EUR 3 billion per year. It is
not clear on what this estimate is based and seems rather large compared to the figure of the DNB,
even taking into account the growth in the number of SFIs.
DNB Statistical Bulletin, June 2003, p. 21.
89
‡
‡
‡
47
48
49
the production of construction materials with asbestos. In 1998, James Hardie,
moved its headquarters from Australia to the US, while at the same time
incorporating its holding company in the Netherlands using a mailbox structure.
Although the company indicated that tax reasons were the main reason for its
relocation, its seems more likely that it was intended to avoid a multibillion dollar
claim by asbestos victims in Australia.47
A related problem is that lawsuits of such business with respect to pollution,
bankruptcy or fraud take place in the Netherlands although the head office is
nothing more than a mailbox company and the actual management,
administration and legal department are located in a third country. An example of
this is the probable future lawsuit involving Trafigura.48 Such lawsuits damage the
reputation of the Netherlands as a nation.
As has been pointed out above, tax havens provide a secure cover for laundering
the proceeds of all kinds of illegal activities. That this also applies to the
Netherlands is corroborated by a recent study which analyses the extent of
money laundering in the Netherlands. It points out that “some of the experts
expressed that they would not be surprised if 1% of SFI transactions are used for
money laundering” and concluded that “the Netherlands is a tax haven and this
makes it vulnerable to money laundering”. 49
The Dutch policy of willingly serving as a conduit country for multinational
companies is not consistent with its aid policy. As has been pointed out above,
because of tax havens like the Netherlands, a total of US$ 255 billion in tax
money is lost every year by poor and rich countries, which could have been used
to contribute to the Millennium Development Goals (MDGs). The Netherlands is
partly responsible for this problem. On the other hand, as one of the few countries
in the world, the Netherlands spends 0.8% of GDP on Official Development
Assistance (ODA). Hence there is a clear inconsistency between the Dutch tax
and aid policy.
“Wij hebben een naam hoog te houden; Het Nederlandse Belastingparadijs en Soeharto’s kinderen”,
Geer van Asbeck, NRC Handelsblad, 22 July 1999, Sec. Economie, p. 10., “Vermeend in problemen
door familie Soeharto,” Het Parool, 27 Jul 1999, Sec. Economy, p. 7., Herman Stil, “Belastingparadijs
met een luchtje ; Nederland haalt met voordeeltjes problemen in huis”, Het Parool, 20 September 2004,
Sec Economie and “James Hardie ontduikt asbestclaims”, 14 september 2004,
http://www.arbobondgenoten.nl/aktueel/september2004/hardie.htm.
Another example – although these are not specifically ‘dirty’ cases – is the lawsuits of Yukos. See
“Yukos wint kort geding van dochter bij Nederlandsche rechtbank” NRC Handelsblad, 25 nov 2005, sec.
Economie and O. Pleshanova et al., “Dutch Fortune”, Kommersant Daily, 18 Aug 2006
http://www.kommersant.com/page.asp?idr=1&id=698534 (15-09-06).
B. Unger et al, “The amounts and the effects of money laundering”, report for the Ministry of Finance,
February 16, 2006, p 77, p. 11.
Chapter 3 – The Netherlands is a tax haven 31
The Netherlands: A Tax Haven?
4
90
Chapter 4
Plan your tax
hfdstuk 4
4.1.
Tax planning, mitigation, avoidance, and evasion
‘Tax planning’, ‘tax mitigation’ and ‘tax avoidance’ are different terms used by tax
professionals to describe the desire to pay as little tax as possible. In contrast to ‘tax
evasion’, which refers to illegal non- or under-payment of taxes, tax planning is a legal and
often very lucrative business, involving a wide number of highly paid consultants,
accountants, and lawyers who try to find the loopholes in the legislation of different
countries to minimise the tax burden of companies.
It should be stressed that not all tax planning is harmful or illegitimate. For example,
dividend conduits channelling dividends via the Netherlands to a third country may be
exclusively used to prevent profits which have already been taxed in the country where
they were realised being taxed again when they are distributed to the parent company.
However, multinational corporations can also establish subsidiaries in any country and
use these to structure intra-group financial flows in such a way as to exploit the
differences between the tax legislation in different countries. This can lead to the
relocation of profits before they are taxed to low-tax jurisdictions and to situations of
double non-taxation, also called ‘double-dipping’. Therefore some types of international
tax avoidance structures can be very harmful.
This chapter presents an overview of the most common structures prominently featuring
the Netherlands as conduit country. Most of this information is drawn directly from the
prospectuses published by trust offices and accountancy firms in order to inform their
potential clients on the possibilities for tax planning in the Netherlands, and therefore
provides a good indication of current practice.50 However, the overview is by no means
exhaustive or complete. Setting up conduit structures is the core business of the tax
planning industry, and they are therefore not inclined to reveal all the details of their
activities to possible competitors, who might copy their strategies, or to tax authorities,
who might close the loopholes in national tax legislation. Moreover, the game of cat and
mouse between tax planners and tax authorities means that both strategies to avoid
taxation and tax legislation are constantly changing, making it very difficult to present a
complete overview of tax planning and conduit structures. Finally, this chapter does not
address transfer pricing, which is an alternative strategy in international tax planning.
50
32
Unless otherwise noted, the information in this chapter is drawn from the prospects and websites of
companies specialised in tax planning (See Annex 4); CBS, 2002, “De Nederlandse Economie
2001,”De Nederlandse Economie 2001,” (Sep 2006), p. 178-179.
91
4.2.
What makes the Netherlands so popular?
As underlined by the quotations at the beginning of this document, the Netherlands plays
a key role in international tax planning. There are several features which make the
Netherlands a very attractive location for multinationals wishing to avoid taxation.51
4.2.1. Participation Exemption
One of the main features which make the Netherlands tax regime attractive as a means of
avoiding taxation is the participation exemption. According to this regime, under certain
conditions, dividend payments and capital gains from subsidiary companies are exempted
from Netherlands corporate income tax in the holding company.
The logic of the exemption is said to be ‘based on a combination of the idea of not taxing
profits twice in the corporate tax sphere and the idea of treating a group as one whole.’52
The conditions for the application of the participation exemption that have been required to
date (but which are expected to change in 2007) are:
‡
‡
‡
‡
The Netherlands-resident holding company must hold at least 5% of the issued
(and paid) share capital in the Foreign or Netherlands resident company;
The shares must be held for long-term investment purposes, and not as part of a
short-term investment activity;
If the shareholding is in a non-Dutch company, then the foreign company must be
subject to a foreign profits tax at national level. Note however, that the rate and
amount of corporate tax is not important, as long as it is at a fixed level.
In addition, if the subsidiary is not Dutch it must not be engaged in passive group
financing activities. This means it cannot be a mere cash conduit.
Due to its nature, the participation exemption has been and still is one of the core
elements of tax planning in the Netherlands. Not surprisingly, on one of the tax planning
sites it was stated that ‘the Dutch participation exemption has for many years been as
much of an export product as tulips and Gouda cheese.53
4.2.2. Double taxation treaty network
As explained in paragraph 3.1., the Netherlands has, and has had for a long time, an
extensive network of double tax treaties to prevent double taxation which substantially cut
back withholding tax for dividends, interest and royalties. By preventing double taxation,
tax treaties are expected to stimulate trade and investment between the two countries
which signed the treaty. The first tax treaty was signed in 1933 with Belgium, and the
Netherlands currently has treaties with more than 80 countries.54 Figure 5 depicts the
51
52
53
54
Also see “Special Financial Institutions in the Netherlands”, p. 20.
Quotation from http://www.dutchtax.net/Dutch/Memos/Participation%20Exemption.htm accessed 13-706
http://www.dutchtax.net/Dutch/Memos/Participation%20Exemption.htm accessed 13-7-06
I.J.J Burgers, R. Betten & H.M.M Bierlaagh, Wegwijs in het Internationaal en Europees Belastingrecht
Chapter 4 – Plan your tax 33
The Netherlands: A Tax Haven?
92
cumulative number of tax treaties over time. Unusually, it has been noted that few of these
contain significant anti-avoidance provisions.55
Figure 5: Cumulative number of tax treaties, 1948-2004
Cumulative number of tax treaties
90
80
70
60
50
40
30
20
10
0
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
Source: http://www.taxci.nl/read/tax_treaties_Netherlands (Sep 2006).
Annex 2 presents a list of countries with which the Netherlands has a tax treaty and the
accompanying withholding tax rates for dividends, interest and royalties both from and to
the Netherlands. The tables in the annex show that these treaties often result in dividend
withholding tax paid by a subsidiary to the Netherlands holding company being reduced to
zero. This is a special feature of Dutch tax treaties. The treaties of most other countries do
not go this far, and usually set dividend withholding tax at a rate of between 5% and
15%.56
Note that under the terms of the EU Parent-Subsidiary Directive, if a country owns 25% or
more of the shares of another EU company and meets other conditions, dividend
withholding tax is fully cancelled if the subsidiary company is located in an EU country.57
This means that the Dutch tax treaty network is mainly beneficial for dividend payments
from non-EU countries to the Netherlands. Apart from low dividend withholding tax rates,
55
56
57
34
(Amersfoort: SDU 2005, Derde druk)
Noted at http://www.lowtax.net/lowtax/html/offon/netherlands/nethom.html accessed 12-7-06
P.M. van Schie et al., “Hoofdlijnen van het Nederlands Belastingrecht” (Deventer: Kluwer, 2006), p. 386.
Besides the 20% rule the following conditions must also be met: (1) the subsidiary has the legal form as
described by the Directive; (2) The subsidiary is subject to a normal corporate income tax as described
by the Directive; and (3) the subsidiary has no dual residency status with a country outside the EU.
93
tax treaties usually also eliminate withholding tax on interest and limited withholding tax on
royalties to between 0% and 15% in most cases. In comparison, most countries apply a
withholding tax rate for royalties of around 30%.
Tax treaties also reduce withholding tax rates for dividends paid by a Dutch holding
company to its parent company. For treaty countries, the rate is set between 0% and 15%,
while it is 25% for non-treaty countries. Withholding tax from the Netherlands is always
zero on interest and royalties, irrespective of the target country. This makes it especially
attractive for foreign companies to establish a conduit company in the Netherlands to
route royalty, licence or patent payments, tap international capital markets and
intermediate in group financing structures. Again, note that most countries apply an
interest withholding tax of 30%.
4.2.3. Tax rulings
A major advantage of the Dutch tax regime, often cited in the prospectuses of trust offices
and the websites of specialised tax planning advisors, are what are referred to as 'tax
rulings'. Rulings are agreements from the tax authorities on how much will be taxed, given
the method of profit calculation between the business unit in the Netherlands and the
other members of the group. In the Netherlands it is almost always possible to consult with
the tax authorities in advance about the fiscal consequences of a proposed conduit
structure, providing maximum security and minimum risk in tax planning.
In 2001, the ruling policy changed after the Primarolo report identified the advance tax
rulings system in the Netherlands as a harmful tax practice, because certain tax
arrangements resulted in artificial or non-standard arrangements.58 These included costplus rulings, resale-minus rulings, and rulings with fixed margins for intra-group finance
activities. Under such rulings, the Netherlands could be used as a conduit country for
interest payments and other financial flows, while income reported in the Netherlands
(called the ‘spread’ between incoming and outgoing flows) could be agreed in advance at
a low level. Many old rulings were based on model rulings, which were published.
As a result of the Primarolo report, the ruling practice became stricter and demanded
greater substance in the Netherlands in order to benefit from the favourable tax treatment.
The Dutch ruling practice is now split into two parts, being Advance Tax Rulings (ATRs)
and Advance Pricing Agreements (APAs). ATRs are intended for situations involving the
application of the participation exemption to intermediate holding companies, international
structures with hybrid entities (treated differently by Dutch and foreign tax authorities), and
determining the absence of a permanent establishment in the Netherlands.59 The APA
practice allows for obtaining upfront agreement on the transfer prices to be used by a tax
paying company. ATRs are generally granted for four years and the period for APAs will
58
59
Primarolo Group, “Code of Conduct (Business Taxation),” 29 Nov 2000,
<http://www.uv.es/cde/TEXTOS/primaloro.html> (Sep 2006).
M. Vrouwenvelder, “Tax planning to reduce foreign taxes for U.S. multinationals – an EU and
netherlands tax update,” Tax Management International Journal, Vol. 30, Issue 9 (7 Sep 2001), p. 40314.
Chapter 4 – Plan your tax 35
The Netherlands: A Tax Haven?
94
generally be four to five years, and in certain exceptional cases even for a longer period of
time.60 Since 1 January 2006, the rulings from the old ruling practice have been invalid.
Under the new system, it is still possible to obtain certainty in advance how (a combination
of) specific intra-group transactions will be taxed. However, in contrast to the old ruling
system, model rulings are no longer used or published. Fixed margins are no longer
accepted and operational and economic substance requirements are more stringent.61
The new rulings are determined on a case-to-case basis, and are not publicly available.
The contents of these rulings cannot therefore be analysed here.
Companies must meet certain substance requirements in order to obtain a tax ruling,
including:62
‡ at least 50% of the managing directors of the company must be Dutch residents;
‡ important management decisions must be taken in the Netherlands;
‡ bookkeeping must be done in the Netherlands;
‡ the main bank account and the accounts of the entity must be kept in the
Netherlands;
‡ the company must run financial risks.
The table below provides an overview of the outcomes of ATR and APA applications, as
well as applications for the interim ruling system that ended on 31 December 2005. Taking
into account that ATRs are usually valid for 4 years, it can be assumed that approximately
500 to 700 companies in the Netherlands have approved advance tax rulings. These are
probably large multinational corporations the Dutch holdings of which are involved in
substantial international intra-group transactions.
Table 3: Outcomes of ruling applications in 2003-2005.
Year
2005
2004
2003
ATR
APA
App
Den
196
144
..
15
14
..
Oth
30
40
..
Total
241
198
257
Interim ruling system
App
Den
86
51
..
10
17
..
Oth
23
29
..
Total
119
97
77
App
Den
11
14
..
1
7
..
Oth
2
4
..
Total
14
25
83
App=Approved, Den=Denied, Oth=Others
Notes: “Other” includes applications that were withdrawn; in 2003, there were a total of 267 approved
applications, 62 denied applications, and 88 other outcomes. Sources: Beheersverslag
Belastingdienst 2004 and 2005; Ministerie van Financiën, “Kengetallen APA/ATR-praktijk 2003,”
<http://www.minfin.nl/DGB04-593.doc> (Sep 2006).
60
61
62
36
Ministerie van Financiën, “APA/ATR beleid,”
<http://www.minfin.nl/nl/onderwerpen,belastingen/belastingen_internationaal/apaxatr_beleid.html> (Sep
2006).
TCI, “International tax planning - The Dutch Finance Company,”
http://www.taxci.nl/read/dutch_finance_company (Sep 2006).
Ministerie van Financiën, “Vraag en antwoordbesluit dienstverleningslichamen,”
<http://www.minfin.nl/nl/actueel/kamerstukken_en_besluiten,2004/08/vraag_en_antwoordbesluit_dienst
verleningslichamen.html> (Sep 2006).
95
Although the conditions for obtaining an tax ruling became stricter in 2001, this system of
advance rulings was noted as a major attraction of the Dutch tax system at a KPMG
seminar held in London on 25 May 2006, in the summary of which it was noted: ‘Approval
was also expressed for the system of ‘rulings’ in the Netherlands, which made it easier to
achieve certainty than in the UK.63
4.2.4. General factors
Apart from the fiscal considerations discussed above, some general factors also play an
important role in the decisions of multinationals to use the Netherlands as a conduit
country. Almost all tax planning brochures also recommend the Netherlands for its legal
security and political and economic stability.
Another factor is the Netherlands’ long experience with tax planning structures. The
country was among the first to introduce a regime to exempt from taxation dividends
received from subsidiaries (i.e. the participation exemption) and therefore has the most
experience with tax structures aimed at benefiting from these rules. Other countries (e.g.
Ireland) have also introduced similar systems, but these are to a large extent incomplete
because of a lack of case law which is still under development. In contrast, in the
Netherlands basically all aspects of the participation exemption have been tested by the
courts, which has led to “effective tax rate reduction roadmaps” for tax planning in the
Netherlands.64
Apart from the stable political and fiscal climate, the Netherlands has gained global
recognition for the quality and expertise of its tax consultants, lawyers and accountants.
Probably because of the beneficial tax regime and in contrast with other countries, tax
consultancy in the Netherlands has developed as a separate branch, consisting of a
relative high number of lawyers, accountants and consultants who work for firms
specialising in tax planning. This, in turn, has led to the emergence of specific and
separate university studies dealing with tax issues.65
A final advantage of the Netherlands is that the Dutch tax system satisfies the
requirements of both the EU as well as the OECD, and for that reason, in contrast with
more known tax havens, it is also attractive to investors from the point of view of
reputation.
63
64
65
KPMG, “Compliance to Performance Seminar,”, London, UK, 25 May 2006, Summary of proceedings,
p. 18.
J. Peters and R. Marlyn, Conduit entity rules are key to IP planning, International Tax Review, (London:
Oct 2005), p 1.
A. Grotenhuis, “De Indiers rukken op: Fiscale Zaken”, NRC Handelsblad, 19 November, 2004, sec.
Economie.
Chapter 4 – Plan your tax 37
The Netherlands: A Tax Haven?
4.3.
96
Dutch holding companies
The most commonly used strategy for large multinational companies for effective foreign
tax reduction is the use of a holding company in a low-tax jurisdiction.66 A holding
company is a corporation that for the most part owns shares in related companies
(subsidiaries) and unrelated companies. For a country to be an attractive holding company
location, its tax regime should satisfy four criteria.67
1.
2.
3.
4.
It should be possible to get dividends out of the subsidiaries to the holding
company free of withholding tax, or at a lower rate of withholding tax by virtue of a
tax treaty or the EU Parent-Subsidiary Directive.
The dividend income received by the holding company from the subsidiary must
either be exempted from or subject to low rates of corporate income tax in the
holding company's jurisdiction.
The profits realised by the holding company on the sale of shares in the
subsidiary must either be exempt from or subject to a low rate of capital gains tax
in the holding company's jurisdiction.
The outgoing dividends paid by the holding company to the ultimate parent
corporation must either be exempt from or subject to low rates of withholding tax
in the holding company's jurisdiction.
The Netherlands satisfies these four criteria. The combination of a large treaty network
and the participation exemption makes that the Netherlands an ideal location for a holding
company.
Figure 6 shows a diagram of common holding structures using the Netherlands as conduit
country The ‘chain’ is composed of (at least) three levels. At the highest level is the parent
company, which is located in the EU or a treaty country. At an intermediate level is the
holding company located in the Netherlands. This is normally a BV (limited liability
company). At the lowest level are the subsidiaries (operating companies), which might be
located in the EU, a treaty country or a non-treaty country.
66
67
38
Michaela Vrouwenvelder, Tax Planning to reduce foreign taxes for U.S. multinationals – an EU and
Netherlands tax update, Tax Management International Journal, vol. 30 (9) (2001), p. 403-415.
http://www.lowtax.net/lowtax/html/offon/netherlands/nethom.html (12-7-06) and
http://www.deloitte.com/dtt/article/0,1002,sid%253D2883%2526cid%253D47144,00.html (06-09-06).
Also see Michaela Vrouwenvelder, Tax Planning to reduce foreign taxes for U.S. multinationals – an EU
and Netherlands tax update, Tax Management International Journal, vol. 30 (9) (2001), p. 403-415.
97
Figure 6: Holding company structure
Provided the requirements for the participation exemption are met, the basic principle to
reduce taxation of the Group using a holding company works as follows (from the lowest
to the highest level).
Tax payments by the subsidiary
‡
‡
68
Corporate income tax: the subsidiary companies pay corporate income tax in
conformity with the local tax legislation. Tax rates differ substantially between
countries. Corporate income tax in the Netherlands is currently 29%, but is
scheduled to be lowered to 25.5%.
Dividend withholding tax:
„ between 0% and 15% if the subsidiary is located in a treaty country;
„ 0% if subsidiary company located in the EU, under the EU ParentSubsidiary Directive;68
„ depending on local tax legislation if the subsidiary company is located in a
non-treaty country.
The dividend withholding tax rate can be overruled by the EU Parent-Subsidiary directive, which
provides for a 0% withholding tax rate for dividend payments within the EU.
Chapter 4 – Plan your tax 39
The Netherlands: A Tax Haven?
98
Tax payments by the Dutch holding company
‡
‡
Corporate income tax: 0% due to participation exemption, if the income has
already been taxed at the level of the subsidiary.
Dividend withholding tax and capital gains:
„ 25% if the dividend is paid in the Netherlands and not transferred to the
parent company;
„ between 0% and 15% if the parent company is located in a treaty country;
„ 0% if the parent company is located in the EU under the EU ParentSubsidiary Directive.
Tax payments by the parent company
‡
‡
Corporate income tax: Depending on local legislation.
Dividend tax: Depending on local legislation
The consequence of this is that, for example, if a profit earned by a subsidiary in Cyprus is
taxed at a low rate of 10% (or less, on occasion), then the tax paid in Cyprus settles the
tax due in the Netherlands even though the tax rate in the Netherlands is much higher,
currently 29.6%.69 No dividend withholding tax is charged on the transfer of the profits to
the Netherlands as Cyprus is an EU member state.
The treatment of dividends in the Netherlands is unusual, and the consistency with which
it has been made available makes the Netherlands unique in this area even though other
countries such as Luxemburg, Belgium and Switzerland offer variations on this exemption.
Furthermore, few countries offer an equivalent exemption from tax on profits made on the
sale of investments in subsidiary companies (capital gains) which for many conglomerate
groups are a major source of revenues. No capital gains tax is charged on the disposal of
shares which qualify for the participation exemption.
A major advantage of the Dutch holding company is that there are almost no substance
requirements. This means that the holding company does not need to have employees. In
many cases, a foreign-owned intermediate holding company is serviced by a trust office
which provides management, administration and an address, as described in the previous
chapter. Some countries demand a certain substance in the Netherlands before tax
benefits on the basis of double taxation treaties are allowed. However, such anti-abuse
clauses are lacking from most tax treaties negotiated by the Netherlands .
In principle, Dutch holding structures of foreign multinationals need not be harmful. If
multinationals properly pay their corporate income taxes in all countries where they
operate and use a Dutch holding structure to avoid dividend withholding taxes when
transferring the profits of these subsidiaries to the parent company, that could be
completely legitimate. Such an arrangement would only avoid double taxation of the same
profit. However, such structures may become harmful when combined with financing and
69
40
http://www.taxsummaries.pwc.com/uk/wwts/wwts.nsf/id/MTHN-6QDGXU?OpenDocument accessed 137-06
99
Table 4: Location of parent companies of Dutch companies classified as financial
holdings
Country
Non-tax havens
The Netherlands
USA
United Kingdom
Germany
France
Sweden
Italy
Others
Total
Tax havens:
Netherlands Antilles
Belgium
Luxemburg
Switzerland
Israel
Bermuda
Cyprus
British Virgin Islands
Cayman Islands
Singapore
Malta
Aruba
South Africa
Gibraltar
Liechtenstein
Panama
Bahamas
Mauritius
Hungary
Seychelles
Belize
Uruguay
Barbados
Libanon
Saint Kitts and Nevis
Hong Kong
Liberia
Bahrein
Marshall Islands
Vanuatu
Total
Total
All companies
Number
Companies using trust
Number
Share(%)
Share (%)
32,394
1,657
879
422
350
263
252
1,118
37,335
77
4
2
1
1
1
1
3
89
1,280
691
331
51
140
111
163
585
3,352
22
12
6
1
2
2
3
10
57
2,128
805
791
263
220
116
97
75
50
26
24
23
19
15
14
13
12
8
6
6
4
6
3
3
3
2
2
1
1
1
4,737
5
2
2
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
11
1430
210
409
62
109
23
54
49
38
14
3
19
5
4
4
8
7
4
5
5
4
4
2
1
1
1
1
1
1
2,478
25
4
7
1
2
0
1
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
43
42,072
100
5,830
100
Source: REACH, Sep 2006.
Note: See annex 5 for the list of tax havens.
Chapter 4 – Plan your tax 41
The Netherlands: A Tax Haven?
100
licensing arrangements that further reduce tax liabilities or with transactions within the
group that do not apply the arm’s length principle for transfer pricing and no or too little
corporate income tax was paid in the country where the profit was generated.
Combinations of holding and other activities are discussed in paragraph 4.7. Moreover,
Dutch holdings may serve as conduits for tax havens such as the Netherlands Antilles or
the Cayman Islands, and therefore facilitate the establishment of a corporation’s
headquarters or other group companies in such low tax jurisdictions. This suggests rather
aggressive and harmful forms of tax avoidance. To demonstrate the link with tax havens,
Table 4 shows the locations of the parents of all Dutch companies classified as ‘financial
holdings’ and with available data on the location of the ultimate share holder shareholder
(or the ultimate known shareholder; the data are not complete in this regard).70
The table confirms that companies domiciled by trust offices are established specifically to
avoid taxation. In comparison with the data on all holding companies in the Netherlands,
the share of corporations with a parent company in a tax haven is much higher. Indeed, no
less than 25% (the largest group) of the trust clients has a parent located in the
Netherlands Antilles. Other relatively popular tax havens include Switzerland, Cyprus, the
British Virgin Islands and the Cayman Islands, which domicile together four per cent of the
parent companies. It is also telling that of all financial holding companies with a parent in a
tax haven, in most cases the majority is serviced by a trust office, again confirming that
such companies are mainly established for tax planning purposes. A good example are
financial holdings with a parent on the British Virgin Islands. Out of these 75 companies,
49 are managed by a trust office.
BHP Billiton’s Dutch reserves of ‘diversified resources’
Disclaimer
The group tax department of BHP Billiton plc has been asked to review this case study, provide
additional information to answer the questions that have arisen, and correct any errors in the
data. In response, the group tax department provided some contextual information and
emphasised that BHP Billiton ‘(…) fully complies with its obligations and pays taxes in these
countries in accordance with the law’. We have no reason to doubt this statement.
Furthermore, the corporation expressed its view that ‘(…) the BHP Billiton Case Study is a
material inaccurate reflection of the facts and application of the underlying principles and
should be removed from the report’.71 However, when asked to identify specific points that
were inaccurate, the company did not do so. Therefore SOMO has not been able to correct any
points that are inaccurate in BHP Billiton’s view or to decide to remove the box on an informed
basis. Any additional information related to the case study received from BHP Billiton after this
report has been published will be made available on the SOMO website (http://www.somo.nl).
70
71
See Note 39.
BHP Billiton, Group Tax Department, faxes to SOMO received on 27 Oct 2006 and 3 Nov 2006.
42
101
BHP Billiton’s presence in The Netherlands
BHP Billiton is the world's largest diversified resources company, and its businesses include oil
production, coal, iron ore, copper, bauxite, nickel, and diamond mining, and refining and
smelting operations. It has substantial operations in developing and transition countries. The
present corporation was created in 2001 by a merger between BHP Ltd (now BHP Billiton Ltd),
based in Australia, and Billiton plc (now BHP Billiton plc), based in the UK. Although the
corporation operates as a single group, the Ltd and plc continue to exist as separate legal
entities.
BHP Billiton has historical roots in the Netherlands that date back to 1860. Unlike mailbox
companies, it has a real and substantial presence and employs 200-250 people performing
group functions. The corporation has a large holding structure in the Netherlands compromising
at least 47 BVs and 1 NV, including 24 financial holdings. Most of these companies share the
address Verheeskade 25 in Den Haag and form part of a complex hierarchical structure with
BHP Billiton Company BV at the top. This company, in turn, is directly owned by BHP Billington
Holdings Ltd in the UK and ultimately by BHP Billiton plc. The remaining Dutch BVs are directly
held by Billiton Marketing Investments BV, 58% of which is owned by the Australian parent and
42% by the UK parent company. Various Dutch BHP Billiton companies have names that
suggest they operate in developing countries, such as Billiton Chile BV, BHP Billiton Ghana
BV, and Billington Indonesia holdings BV. However, reliable data suggests that most of these
companies do not have any subsidiaries.
The question is, does the corporation’s holding structure in the Netherlands contribute to tax
avoidance? In the financial year 2004-2005, the entire BHP Billiton group reported US$ 2,111
million in tax payments (including withholding taxes) on a total of US$ 8,741 million earnings
before tax (after relatively minor exceptional items). This amounts to a corporate tax charge of
approximately 24.1%. Substracting the increase in deferred tax due after more than 1 year,
which almost doubled from 2004 to 2005, US$ 1,603 million of immediate tax payments
remains, lowering the effective corporate tax rate to 18.3%. Although the group‘s financial
statements include several pages of notes on taxation, these comments do not offer a
satisfactory explanation for the low tax rate.
Links with other tax havens
Although no certainty can be obtained on the basis of the available data, the overall picture
suggests that the group might be avoiding taxes in the countries in which it operates, and that
its holdings in the Netherlands may play an important role in this. A first indication is the link
between Dutch holdings and a subsidiary on Jersey. Together, BHP Billiton Company BV and
its two direct subsidiaries BHP Biliton Finance BV and BHP Billiton Holdings BV own a 92%
stake in BHP Billiton South Africa (Jersey) Ltd on the Channel Island of Jersey, a well-known
tax haven jurisdiction. This company, in turn, holds “5% preference” shares in various group
companies, including BHP Billiton SA Investments Ltd (which holds the group’s operations in
South Africa) and BHP Billiton Group Ltd (which holds all BHP Billiton plc’s investments). BHP
Billiton Company BV also owns BHP Biliton Jersey Ltd, a holding company in Jersey, which in
turn owns a number of other companies, including Sociedade geral de mineração de
Mozambique SARL, apparently in Mozambique.
Chapter 4 – Plan your tax 43
The Netherlands: A Tax Haven?
102
This suggests that some group profits may be routed through Jersey to The Netherlands, but
information about the purpose of this structure could not be found.
Thin capitalisation and intra-group borrowings
Intra-group borrowings can form part of a tax avoidance strategy. Hypothetically, it might be
possible that operating companies abroad borrow from BHP Billiton Finance BV or another
Dutch BV, paying high interest payments on these borrowings, and as a consequence reporting
a net loss before taxation. There is evidence of thin capitalisation, as some companies report
negative equity, or very high debt to equity ratios (see table below). The last five companies in
the table are direct subsidiaries of Billiton Development BV. However, most of these seem just
empty shells that do not report any revenues and operating costs of a few hundred thousand
US$ or less, and pay no interest or taxes (but receive no tax credits either). Tt is therefore
highly unlikely that this forms part of a tax avoidance strategy. Billiton Development BV itself
reports relatively modest revenues of US$ 18 million and participations in subsidiary profits of
US$ 9 million. Furthermore, Billiton Development BV’s assets, consisting of over 25
subsidiaries, are valued at zero on its balance sheet. The purpose of this strange sub-structure
is not clear.
Table 5: Thin capitalisation of some BHP Billiton companies (x 1,000 US$, as of 30 Jun 2005).
Company
Equity
Long
Short
Balance
Debt/equity
term
term
total
ratio
debt
debt
Billiton Development BV
-98,445
96,901
1,544
0
-1.0
Billiton Argentina BV
Billiton Chile BV
Billiton Exploration and
Mining Peru BV
Billiton Indonesia
Holdings BV
BHP Billiton Ghana BV
-9,586
9,424
194
32
-1.0
-16,967
16,787
428
248
-1.0
-14,779
14,847
413
481
-0.97
17
3,361
0
3,378
198
9
0
0
9
∞
Source: KVK data, Sep 2006.
There are some discrepancies between the borrowings and lendings of some companies and
their paid and received interest, however. BHP Billiton Company BV, for example, had US$ 0.5
billion of debtors and lendors in mid-2004 and US$ 1.8 billion in mid-2005, while it only
received US$ 1.8 million of interest income in the year 2004-2005. Inversely, BHP Billiton
Finance BV had a huge US$ 5.3 billion of short-term debts in mid-2004 and US$ 3.3 billion in
mid-2005, plus a constant long-term debt of US$ 741 million, while it paid only US$ 149 million
of interest. This suggests that the Dutch BVs are involved in intra-group borrowings with
artificially high or low interest rates, which might in theory be linked to tax avoidance strategies.
However, on the basis of the available data, the question whether this is indeed the case
cannot be answered.
44
103
Accumulation of group profits
The accumulation of group profits in foreign subsidiaries for the purpose of achieving tax
deferral, sometimes without limit, is also a potential tax avoidance strategy. Accumulation of
group profit will be analysed using some unconsolidated financial figures which are available
for BHP Billiton Company BV. During the book year 2004-2005, the company’s book value of
total assets increased from US$ 2.7 billion to US$6 billion. The difference is mainly due to a
huge increase in financial assets, which are probably investments in subsidiary companies, and
in debtors, which are probably amounts owed by other group companies, as already explained
above. The increase in assets is matched by a similar increase in undistributed profits, from
US$328 million in mid-2004 to US$ 3.7 billion in mid-2005. The company’s income from
dividends in 2004-2005 also amounted to US$ 3.7 billion. This is over 40% of the corporation’s
US$ 8.7 billion total profit before taxation, or well over half of the group’s after-tax profits. It
therefore appears that approximately half of the profits made by BHP Billiton subsidiaries all
over the world were accumulated in the Netherlands. It is not totally clear whether or how the
accumulation of group profits in The Netherlands might be linked to the increase in deferred tax
liabilities, however.
BHP Billiton Company BV did not pay taxes on its income from subsidiaries, because such
income consisted of tax-exempted dividends. In fact, the company made a pre-tax loss of US$
11 million and received US$ 1.5 million in tax credits from the Dutch government. In 2002-2003
and 2003-2004, tax payments were also negative. Apparently, most of the income of BHP
Billiton Company BV in 2004-2005 was derived from its share in undistributed profits from the
fully-owned subsidiary BHP Billiton Finance BV. The latter reported US$ 3.9 billion of untaxed
exceptional earnings, the precise nature of which could not be determined. BHP Billiton
Finance BV did pay taxes over the past years, in the order of US$ millions.
The accumulation of profits in the Netherlands is confirmed by the accounts of BHP Billington
Holdings Ltd, the direct parent of BHP Billiton Company BV. BHP Billington Holdings Ltd
reports income from shares in group undertakings of US$ 8.2 million, which is only a fraction of
the profits reported by BHP Billiton Company BV, and paid no dividends in 2005. In other
words, none of the profits reported by the Dutch holding company are transferred upwards to
the ultimate parent company as dividends.
Higher up in the holding structure, the income flows can no longer be fully traced, because
most shares of BHP Billington Holdings Ltd are held by BHP Billiton UK Holdings Ltd and BHP
Billiton UK Investments Ltd in the British Virgin Islands. No accounts of these companies are
available. These two companies, in turn, are both 100% owned by BHP Billiton Group Ltd in the
UK, which reports US$ 1.1 billion of income from shares in group undertakings. This income
must largely come from its two subsidiaries in the British Virgin Islands, because the only other
direct subsidiary of BHP Billiton Group Ltd is BHP Billiton (UK) Ltd, which reported US$ 26
million of profits and paid out US$ 39 million of dividends. BHP Billiton Group Ltd also owns a
few direct shares in BHP Billington Holdings Ltd, but this company did not pay out any
dividends, as was already mentioned above. The question is, of course: how does US$ 1.1
billion of income end up in two companies in the British Virgin Islands when the known
subsidiary of these companies, BHP Billington Holdings Ltd, did not pay any dividends to
them?
Chapter 4 – Plan your tax 45
The Netherlands: A Tax Haven?
104
Conclusion
As usual, the available data is insufficient to determine with certainty whether the corporation is
indeed avoiding taxes, perhaps in the order of US$ hundreds of millions, and if so, how intragroup transactions are scheduled precisely to achieve this effect. The holding and financing
structures of the group are very complex and further research would be required to assess the
taxation consequences of these structures in more detail. Although no certainty can be
obtained on the basis of the available data, the overall picture suggests that the group might be
avoiding taxes in the countries in which it operates, and that its holding companies in the
Netherlands may play an important role in this.
4.4.
The Netherlands Antilles route
It should be borne in mind that the Kingdom of the Netherlands includes three states, the
Netherlands, the Netherlands Antilles and Aruba. The last two are also noted tax havens,
with the Netherlands Antilles being generally considered a relatively important one.
The Netherlands tax treatment of income and capital gains flowing through its territory are
particularly amenable to companies owned in Netherlands Antilles, as Mittal Steel was, for
example, until 2004. Although the use of the Antilles route has already become less
attractive since the late 1990s,72 Table 4 above shows that it is still widely used. This is
because under the Belastingregeling voor het Koninkrijk (BRK), the tax treaty covering the
Netherlands, Netherlands Antilles, and Aruba, the following favourable arrangements are
available.73
‡ As is usual with the Netherlands there is no withholding of tax on interest or
royalties paid to the Netherlands Antilles. This assists these income streams to
flow beyond the reach of normal taxation.
‡ Since 2002, dividends paid by a Dutch corporation to a Netherlands Antilles
corporation are subject to 8.3% dividend withholding tax in the Netherlands.
Under the agreement, the tax income is transferred to the government of the
Netherlands Antilles. The income of a Netherlands Antilles corporation from
dividends and capital gains from a Dutch subsidiary corporation are 100% tax
exempt, provided that it owns at least 25% of the Dutch corporation (BV).
‡ Of the dividends and capital gains from subsidiaries in other countries, 95% is tax
exempt. The normal tax rate of 34.5% is applied to the remaining 5%, resulting in
an effective rate of 1.725%. There is no requirement that such income is subject
to taxation abroad. However, withholding taxes may apply in the country of origin.
‡ It is also possible for a Netherlands Antilles BV to apply for a 0% tax rate. In that
case, the company may only be involved in financing and investment in securities
72
73
46
F. de kam, “Fiscaal gidsland,” NRC Handelsblad, 11 Dec 1998, Sec. Economy, p. 15; H. Schutten, “De
vluchtwegen van het kapitaal,” Het Parool, 20 Mar 1996, sec. Economy, p. 25.
Lowtax.net, “Netherlands Antilles double tax treaties,” <http://www.lowtax.net/lowtax/html/jna2tax.html>
(17 Jul 2006); Amicorp Group, ”Netherlands Antilles,” (4 Sep 2006); PwC, 14 Mar 2005, “Update over
fiscale mogelijkheden op de Nederlandse Antillen en Aruba” (4 Sep 2006).
105
‡
and deposits, and it must be governed by a certified Netherlands Antilles trust
company (or resident person).
In the Netherlands Antilles, no withholding tax is charged on outgoing dividends.
At present, there are over 2,600 BVs and NVs incorporated in the Netherlands Antilles
with direct subsidiaries in The Netherlands. Of these subsidiaries, some 2,000 are
financial holding companies,74 which strongly suggests that these are holding structures
set up to benefit from the Netherlands Antilles route. The ultimate parent company in such
structures is not always known. In some cases, though, the ultimate parent is not located
in the Netherlands Antilles but in a tax haven of a different type. Examples are BacardiMartini, and in the recent past DHL, before it was taken over by Deutsche Post. Both
corporations had their ultimate parents in Bermuda. The special holding structure of
Bacardi-Martini is analysed in more detail below.
Bacardi-Martini: the Netherlands as a conduit for Bermuda,
Liechtenstein, Bahamas
Bacardi-Martini is a privately owned corporation, and financial figures such as revenues, profits,
and tax payments at the group level are not available. At least 50 direct subsidiaries worldwide
are held through a Dutch holding company (see figure below). At the level of the Dutch holding
company, some key figures consolidated up to this level are available. These are combined
figures for the Dutch holding and its direct and indirect subsidiaries worldwide, with transactions
between them eliminated. These accounts do not include revenues generated outside the
Dutch holding structure, for example by the group’s companies in Liechtenstein and Bahamas
and at the level of the parent companies in the Netherlands Antilles and Bermuda.
Over €2 billion of revenues passes through the Dutch subsidiary Bacardi-Martini BV. In the
year to 31 March 2005, its earnings before interest and taxes were €123 million. Tax charges
were €51 million or 48% of profits before taxes, and provisions for deferred taxes decreased by
€1 million, so cash tax expenses appear rather high. For the years 2002 to 2004 the amount of
tax paid on profits before taxation was also high at 43%, 80%, and 103% respectively. One
factor that might contribute to these high percentages might be goodwill depreciation, which is
subtracted from book profits, but usually not subtracted to determine taxable profits. Goodwill
held by the Dutch holding company, consisting for example of investments in subsidiaries
exceeding their book value equity and the value of trademarks, were substantial at over €0.5
billion or almost a quarter of Bacardi-Martini BV’s total assets as of end March 2005.
Furthermore, the operating margin at the level of the Dutch holding company seems relatively
low, compared for example to the GICS Distiller&Vintner Sub-Industry average net profit
75
margin of 9.3%. In 2005, the Dutch holding had a gross profit margin of 5.7% and a net profit
margin of 2.1%. It is known that some companies artificially lower profits through high interest
payments to other group companies.
74
75
Based on data from the KVK (Dutch Chamber of Commerce).
Standard & Poor’s, GICS Sub-Industry Benchmark represents S&P 1500 Composite, Report updated
09/06/2006.
Chapter 4 – Plan your tax 47
The Netherlands: A Tax Haven?
106
However, this is unlikely in the case of Bacardi-Martini BV, as its interest expenses were only
€21 million. It may be possible that the operating margins of the Dutch holding company are
lowered due to other high intra-group expenses, though, such as royalty payments for the use
of trademarks, included in the cost of sales.
Figure 7: Holding structure of Bacardi-Martini
Bacardi Ltd (Bermuda)
Bacardi-Martini & Rossi
Holdings NV
(Netherlands Antilles)
Bacardi &
Company Ltd
(Liechtenstein)
Bacardi &
Company Ltd
(Bahamas)
Bacardi-Martini BV
(Netherlands)
Direct subsidiaries
worldwide
Direct subsidiaries
worldwide
Direct subsidiaries
worldwide
License
Royalties
Dividend, ownership relation
This cannot be directly assessed on the basis of the financial figures that are publicly available.
However, internationally, most of the corporation’s trade marks such as the brand names
‘Bacardi’, ‘Tequila Cazadores Reposado’, and ‘Black Goose’ are owned by two companies with
the name Bacardi & Company Ltd, one located in Liechtenstein and the other in the
76
Bahamas. Apparently, these companies are not owned directly or indirectly by the Dutch
holding company Bacardi-Martini BV, but held by Bacardi Limited (Bermuda) through a different
structure. It is therefore plausible that, in some way or another, Bacardi-Martini BV and its
subsidiaries pay for the use of trademarks to the Bacardi subsidiaries in Liechtenstein and the
Bahamas, and these royalty payments may form a substantial part of the Dutch holding’s
consolidated cost of sales.
Theoretically, in the countries in which the corporation operates, this could result in a combined
lost tax income in the order of tens of millions of euros due to tax avoidance. If the above
assumptions are correct, then in this particular case the Netherlands would be serving as a
conduit country for dividends from third countries to the Netherlands Antilles, and possibly for
royalties from third countries to the Bahamas and Liechtenstein, and finally on to Bermuda.
76
Data from the US Patent and Trademark Office, Sep 2006.
48
107
This would be facilitated by the special treatment of dividends paid by a Dutch company to a
parent company in the Netherlands Antilles and the absence of withholding taxes on royalties,
combined with the Netherlands’ large network of double tax treaties that reduce or eliminate
withholding taxes on outgoing dividends and royalties from third countries.
Given the lack of detailed information, it is impossible to know the motivation behind Bacardi’s
corporate structure – tax avoidance being only one of several possibilities. Probably only
Bacardi can shed light on these issues, but unfortunately the company refused to comment on
this case study.
4.5.
Dutch royalty conduit companies
A licensing or royalty conduit company acts as an intermediary between the owner or
creator of intellectual property (e.g. in the form of a patent, film rights, copyrights or
trademark) who is not resident in the Netherlands and a person who wants to use that
patent under licence in another, third, country.
It is common for the company which owns the intellectual property to be located in a tax
haven where profits can be ‘taken out’ at very low or zero tax rates. Furthermore the
payment of the royalty income from the Netherlands to the home country of the intellectual
property owner will not be subject to any withholding taxes. Finally, because of the
Netherlands' extensive system of double tax treaties, royalties paid to the Netherlands by
the subsidiary or independent licensee will have no or very low withholding taxes applied
to them. This might not be the case if the royalties were paid straight to the home country
of the intellectual property owner. This is what makes this structure so beneficial. The
licensing activities can be combined with holding, financing or actual operating activities
such as trading or manufacturing. Figure 8 illustrates the working of a royalty conduit
company.
The Dutch company has to pay the standard Dutch corporate income tax of 29.6% on the
difference between the royalties paid to the intellectual property owner and the royalties
received from its subsidiaries or independent licensees. Nonetheless, this is likely to be
much less than any withholding tax paid in most cases if royalties were paid direct from
the third country to the patent owner’s home state without use of the Dutch intermediary.
The EU Interest and Royalties Directive came into effect in 2004. Under the directive, a
0% withholding tax applies to qualifying interest and royalty payments between qualifying
associated corporations established in the EU. To qualify, certain conditions must be met.
The Directive has reduced some of the attractiveness of these arrangements, whereby
royalties are paid between related companies, but the Dutch have responded to his by
planning to offer new incentives to those wishing to route royalties through the
Netherlands, as will be noted later in this report.
Chapter 4 – Plan your tax 49
The Netherlands: A Tax Haven?
108
In 2006, new Dutch rules for interest and royalty conduit companies came into force with
stricter anti-abuse provisions. Under these new rules, the participation exemption no
longer applies to dividends from foreign companies that are mainly involved in granting
licences and/or providing loans to other companies.77 While this might be effective against
royalty conduits in tax havens such as the Netherlands Antilles owned by Dutch holdings,
it does not affect the royalty and interest conduits in the Netherlands used by foreign
multinationals as described in the figure below.
Figure 8: Royalty conduit structure
Table 6 presents information on the location of the parent company of royalty conduit
companies in the Netherlands (i.e. the location of company in the top box of Figure 8). The
table was compiled by selecting all the companies with main activity ‘exploitation of
patents and licences’ and with data available on the location of the ultimate shareholder
(or the ultimate known shareholder; the data is not complete in this regard).78 It covers
about half of the companies with this sector classification in the Netherlands. Table 6 also
provides information on royalty conduit companies that are serviced by trust offices. No
less than 3% of all companies using trust services are classified as exploiting patents,
licences, etc – the fourth category after financial holdings, investments in financial assets,
and trust offices for shares and bonds – which corroborates that the sector classification
chosen includes royalty conduit companies.
77
78
50
J. Mongon and A. Johal, PwC, “Conduit entity rules are key to IP planning,’ International tax Review,
Oct 2005, p. 1.
See Note 39.
109
Table 6: Location of Parent Company of Companies classified as exploiting of
patents and royalties.
Country
Non tax havens:
Netherlands
United States
Great Brittain
Italy
Spain
France
Germany
Others
Total
Tax havens:
Netherlands Antilles
Luxemburg
Switzerland
British Virgin Islands
Belgium
Bermuda
Singapore
South Africa
Bahamas
Cyprus
Cayman Islands
Barbados
Gibraltar
Honkong
Panama
Total
Total
All companies
Number
Share (%)
Companies using trust
Number
Share (%)
679
62
53
17
15
15
14
60
915
58
5
5
1
1
1
1
5
79
48
24
29
12
12
1
3
23
152
17
8
10
4
4
0
1
8
54
150
33
17
15
14
6
3
2
2
2
2
1
1
1
1
250
13
3
1
1
1
1
0
0
0
0
0
0
0
0
0
21
83
19
3
13
5
3
1
2
1
1
0
0
0
0
131
29
7
1
5
2
1
0
1
0
0
0
0
0
0
46
1,165
100
283
100
Source: own computations using REACH
The figures confirm that the parent companies of royalty conduit companies are generally
located in a tax haven country. The highest share (58%) of the parent companies in the
‘all companies’ column are located in the Netherlands. It is hardly surprising that the
Netherlands tops the list, as there are probably many companies which are not part of a
royalty conduit structure and therefore have their parent company in the Netherlands. It is
also possible that another parent company exists on top of the Dutch parent company,
which is located in a tax haven. This would not be picked up by the figures shown.
Companies using trust services are almost by definition part of tax planning structures and
are therefore much more likely to use the royalty conduit structure. It is therefore not
surprising that 29% of such companies, the highest share, have their parent company
situated in the Netherlands Antilles. Other popular tax haven locations are Luxemburg
(7%) and the British Virgin Islands (5%).
Chapter 4 – Plan your tax 51
The Netherlands: A Tax Haven?
4.6.
110
Dutch interest conduit and group financing companies
Financing companies may be divided into interest conduit companies, group financing
companies, and fundraising vehicles.79
Fundraising vehicles are less relevant in the context of this report. They are used for
borrowing or issuing bonds in international capital markets (see box on Parmalat in
chapter 3). The funds are then lent onwards to subsidiaries and the parent company. The
benefit of this structure is that interest payments from subsidiaries and the parent
company can be exempted from withholding tax due to the Dutch double tax treaty
network, and no withholding tax is paid on outgoing interest by the Dutch fundraising
vehicle either.
Figure 9: Interest conduit structure
Interest conduit companies are similar to royalty conduit companies but are used for the
purpose of making inter-group or third-party loan interest payments where tax withholding
would take place if the interest were to be paid directly between the two principal parties to
the arrangement. Withholding tax is saved by routing the loan through the Netherlands at
the price of a small tax liability arising in the Netherlands over the ‘spread’ between
interest received and paid. Like the royalty conduit company, the parent company is
normally located in a tax haven. Again, advance rulings are available on what is an
79
52
TCI, “International tax planning - The Dutch Finance Company,”
http://www.taxci.nl/read/dutch_finance_company (Sep 2006).
111
acceptable margin to be made in the Netherlands. It is suggested that the margins could
be as low as 0.5%.80 The attractiveness of this arrangement has also been reduced by EU
Directives, but plans are now being mooted to re-establish Dutch pre-eminence in this
market.
Figure 10: Group financing structure
Group financing companies also provide loans to other companies within the group.
However, they are different from interest conduit companies in the sense that they are
financed by equity instead of loans from the parent company. Group treasury and
financing activities may be centralised in the Dutch company. Structures also exist with a
Dutch BV with a branch in Luxembourg or Switzerland, which have special tax regimes for
group financing activities.81 A Dutch group financing company can be used to avoid taxes
in other countries by making excessive loans to subsidiaries abroad. As a result, the
subsidiaries become thinly capitalised, which means that they have a very high or even
negative ratio of debt to equity. The high interest payments on these debts lead to lower
taxable profits reported by the subsidiaries, or even turn them into losses. Alternatively, a
group finance company may not provide excessive loans, but charge artificially high
interest rates on the intra-group loans instead.
80
81
Lowtax.net, “Netherlands: Intertest Conduit Companies,”
<http://www.lowtax.net/lowtax/html/offon/netherlands/netint.html> (Jul 2006).
TCI, “International tax planning - The Dutch Finance Company,”
http://www.taxci.nl/read/dutch_finance_company (Sep 2006).
Chapter 4 – Plan your tax 53
The Netherlands: A Tax Haven?
112
Under a Dutch law introduced in 1997, called the Concernfinancieringsmaatschappij
(CFM) regime in Dutch, group finance companies were able to operate at pre-agreed
margins unrelated to changes in commercial situations. In addition, reserves could be
made against up to 80% of income from financing activities.82 These are unusual and
contrary the bases of calculation of tax liabilities usually used, lowering the effective rates
of tax charged to 6%, even though the standard rate of corporate income tax was charged
on the remaining 20% of income (29.6% corporate tax on 20% of income is 5.9% effective
tax on income). Tax allowable reserves can be made, for example, for the cost of
replacing assets and investments, which is almost unknown in any other taxation system
where the anticipation of expenditure is normally strictly forbidden.83
Various experts consider that the CFM regime is the most harmful aspect of the current
Dutch tax system. It has been found to be in breach of the EU Code of Conduct on
Business Taxation and will be discontinued under pressure from the EU and OECD.84
Since 11 July 2001, new companies can no longer apply for the regime. For corporations
that were already using the CFM regime, it will remain in force until 2011, although
apparently for some the regime might already end in 2007.85 Alternative arrangements
are, however, being planned for group finance companies, which are discussed in
chapter 5 on proposed changes in the Dutch tax system. The newly proposed ‘group
interest box’ reduces the effective tax rate on interest income to 5% for qualifying interest
income.86
4.7.
Holding, financing, and licensing activities combined
Financing companies do not need to own the subsidiaries to which they provide loans in
order to benefit from the 0% withholding tax under Dutch double tax treaties, they can
simply lend money to any (group) company. Furthermore, finance conduit companies or
fundraising vehicles may be held by the parent company outside normal holding structures
82
83
84
85
86
54
Ernst & Young, “Concernfinancierings-maatschappij blijft gehandhaafd tot 2011,” News release 27 Feb
2003,
<http://www.ey.nl/?pag=788&nieuws_id=1549&PHPSESSID=d6f4edbf634da31db771653148cdb679>
(Nov 2006); M. Vrouwenvelder, “Tax planning to reduce foreign taxes for U.S. multinationals – an EU
and netherlands tax update,” Tax Management International Journal, Vol. 30, Issue 9 (7 Sep 2001), p.
403-14.
KPMG, ‘Investment in the Netherlands’ 2004, page 64
Primarolo Group, “Code of Conduct (Business Taxation),” 29 Nov 2000,
<http://www.uv.es/cde/TEXTOS/primaloro.html> (Sep 2006); OECD, “Towards Global Tax Cooperation: Progress in Identifying and Eliminating Harmful Tax Practices,” 2000,
<http://www.oecd.org/dataoecd/9/61/2090192.pdf#search=%22towards%20global%20taxcooperation%22> (Sep 2006); Tax expert, 12 Oct 2006, interview by M. Van Dijk.
Uncorrected stenogram, Legislative meeting, Vaste commissie voor Financiën, 18 Sep 2006; Ernst &
Young, “Concernfinancierings-maatschappij blijft gehandhaafd tot 2011,” News release 27 Feb 2003,
<http://www.ey.nl/?pag=788&nieuws_id=1549&PHPSESSID=d6f4edbf634da31db771653148cdb679>
(Nov 2006).
Wijziging van belastingwetten ter realisering van de doelstelling uit de nota “Werken aan winst” (Wet
werken aan winst), Document 30 572 No. 2, Art. 12c; W. Paardekooper, Baker & Mackenzie, “World
Tax Review 2006 on the Netherlands,” <http://www.internationaltaxreview.com> (Jul 2006), p. 2.
113
and theoretically even external service companies, not owned by the corporation, could be
used for these purposes.87 In practice, however, group financing, holding and finance
conduit activities are often combined, usually involving a hierarchical structure of several
Dutch BVs that can be quite complex.
It must be stressed that in many groups of companies, profits are retained within
intermediate holding companies so long as these are stable, low tax environments and are
not returned to the parent company. This is possible because most parent companies do
not themselves distribute all their profits to their shareholders by means of dividends. For
companies publicly listed in the UK, for example, a payout ratio of 30% - 40% is
common.88
A Dutch holding company that receives low taxed dividends or gains from its own
subsidiary companies can effectively defer these gains for its parent company, almost
indefinitely. Because of the Netherlands’ extensive range of double tax treaties and
because the Netherlands has a reasonably high corporation tax rate, it is not subject to
what are called ‘controlled foreign company’ rules used by most developed countries to
control tax haven abuse by parent companies in their territories seeking to shelter profits
offshore. The consequence of this is that the profits of the Dutch subsidiary cannot be
taxed in the home state of the parent company, and as result the profits can be left in the
Netherlands indefinitely without the higher rate of tax arising that would be due if the
profits were paid to the parent company.
Therefore part of the dividend, capital gains, royalties and/or interest income is often left or
accumulated in the Netherlands. This does not, however, prevent the profits being used
by the parent company. For example, the profits retained in the Netherlands can be lent
from the Dutch holding to the parent company with a very low rate of tax being charged in
the Netherlands on the resulting interest income (maybe only 5% in future), but with the
parent company getting full tax relief, for example at rates of up to 30% in the UK. This
increases the attractiveness of tax structures involving the Netherlands.
4.8.
Alternative tax planning structures
The conduit structures outlined above mainly involve companies limited by shares
(Besloten Vennootschap, BV). Very brief information was found on a number of alternative
tax planning structures which involve other types of legal entities.
Some mention has been made of the orphan structure or asset protection structure. This
structure is used to split off the legal title of assets from the equity and/or control of the
original owner. In the Netherlands this is done by placing the shares of a BV in a
Foundation. Orphan structures are normally set up by a trust office which sits on the board
of directors of the foundation and the BV.
87
88
J. Peters, “Conduit entity rules are key to IP planning,” International Tax Review (Oct 2005), p. 1.
Data from research used to produce ‘Mind the Tax Gap’, The Tax Gap Limited, 2006, available from
www.taxjustice.net/cms/upload/ pdf/Mind_the_Tax_Gap_-_final_-_15_Jan_2006.pdf
Chapter 4 – Plan your tax 55
The Netherlands: A Tax Haven?
114
The main goal of an orphan structure is to ensure that the assets and liabilities of the
subject company are treated as off-balance with respect to the sponsor of the structure.89
Other reasons for creating an orphan structure are to avoid or minimise regulation which
might otherwise apply to a structure, and to ensure that the company is ‘bankruptcy
remote’ from companies in the same group as the sponsor. Orphan structures are also
used for securitisation and estate planning. In the latter case, the related foundation is
called a stichting administratiekantoor.
Finally, the finding that apart from BVs and foundations, a substantial share of the mailbox
companies domiciled by trust offices are limited partnerships and cooperations suggest
that tax planning structures also exist involving these type of legal entities.
89
56
http://en.wikipedia.org/wiki/Orphan_structure (27-09-06).
115
5
Chapter 5
Changes in the Dutch tax system
hfdst 5
5.1.
Pressure for change
The Dutch tax system has been passing through a period of change due to pressure from
the EU, OECD, and various individual countries. In 1998, the OECD issued the report
‘Harmful tax competition: An emerging global issue’, which marked the start of a working
programme on harmful tax practices. A second report in 2000 identified potentially harmful
regimes in different OECD countries, including several Dutch model rulings and risk
reserves for international group financing.90
Parallel to this, the EU Code of Conduct Group on Business Taxation, under the
chairmanship of Dawn Primarolo from the UK, reported its initial findings to the EcoFin
Council on 29 November 1999, identifying 15 practices included in Dutch law that were
considered violations of the Code.91 All countries had some such transgressions, but the
Netherlands was especially heavily criticised.92 The following harmful practices were
identified:
1.
2.
3.
4.
5.
6.
7.
8.
Cost plus pricing rulings, suggesting the OECD arm’s length transfer pricing rules
were not respected;
Abusive intra-group financing rules on non-arm’s length terms, implying that
standard OECD arrangements were not required, and were quite often
sanctioned by prior agreement with the Dutch tax authorities;
The participation exemption provided a low tax on foreign source income;
The taxation of royalty income was at low rates;
The allowance of reserve accounting for group finance companies was a nonstandard tax practice reducing tax rates;
The taxation of foreign branches was not in line with international norms;
The regime for taxing shipping was non-standard;
Advance rulings were given on certain tax arrangements which might result in
artificial or non-standard arrangements.
These issues were serious, and unusually extensive. The Netherlands had deliberately
created these opportunities. It was required to take action to change them under the terms
of the Code. All the changes had to be made by 2011 at the latest. The result is that all the
90
91
92
OECD, “Towards Global Tax Co-operation: Progress in Identifying and Eliminating Harmful Tax
Practices,” 2000,
http://www.oecd.org/dataoecd/9/61/2090192.pdf#search=%22towards%20global%20taxcooperation%22> (Sep 2006)
Full text available at http://www.uv.es/cde/TEXTOS/primaloro.html accessed 12 July 2006
R. Veremeulen, “belastingparadijs grachtengordel,” Algemeen Dagblad, 21 Oct 2000, Magazine, p. 24.
Chapter 5 – Changes in the Dutch tax system 57
The Netherlands: A Tax Haven?
116
historic structures which have made the Netherlands an attractive tax haven to date will be
subject to change, the details of which are given below. The OECD model for transfer
pricing arrangements was already adopted in 2002 and is now required by Dutch law.
The second reason for change in the Dutch tax system has been the impact of decisions
of the European Court of Justice on Dutch tax law. Such decisions have impacted on the
Netherlands, and perhaps most particularly in the case known as Bosal Holdings NV, after
the Dutch steelmaker which brought and won the case. As a result of their successful
claim in 2003, Bosal proved that the Netherlands had to provide it with tax relief on the
cost of borrowing funds to enable it to buy and finance subsidiary companies, even though
the dividends and capital gains it received from those subsidiary companies were not
taxable in the Netherlands.93 This put the Netherlands in the unenviable position of finding
that the participation exemption required it to provide tax relief (and therefore pay potential
tax refunds) while giving it no right to collect tax to match that relief. This threatened any
benefit it might have received as a tax haven and as such it reacted by introducing new
tax anti-avoidance rules in 2004. These consisted of the following:94
‡
‡
‡
Amending the participation exemption to allow costs to be offset as required by
the European Court of Justice decision;
Introducing thin capitalisation rules, which effectively limit the amount of interest
which can be subject to tax relief;
Limiting the carry forward of losses for holding and finance companies, to try to
limit the overall loss of income the government might suffer as a result of the
Bosal case.
Thirdly, there has been pressure from the European Commission to change the Dutch
ruling practice, because companies in other countries cannot obtain certainty in advance
as to how their transactions will be taxed, and this allows Dutch companies an unfair
advantage.95 This has led to the current system of ATRs and APAs described in the
previous chapter.
In combination, these pressures from the EU under its Code of Conduct, from the
European Court of Justice and from the European Commission, have pressurised the
Netherlands into a programme of reform of its taxation laws. The major changes resulting
from that programme are scheduled to commence in 2007. As is also noted below, the
Dutch government is making the detailed changes required of it by the EU, but appears to
remain committed to the use of the Netherlands as a tax haven by companies whose
parent organisation is resident elsewhere.
93
94
95
58
For a summary of the case see, for example, http://www.ey.com/GLOBAL/content.nsf/UK/IT_-_Alerts__03_10_DC_-_Dutch_thin_capitalisation_rules#5 accessed 14-7-06
See, for example, commentary by Tax Consultants International at
http://www.taxci.nl/read/participation_exemption_2004
“’Geen fiscaal paradijs’: Staatssecretaris Bos vindt Brusselse kritiek niet terecht,” Algemeen dagblad,
10 Nov 2000, Sec. Economy, p. 13.
117
5.2.
Currently proposed changes
In April 2005, the Dutch Ministry of Finance published its plans for reform of the Dutch tax
system, called Werken aan winst ('Work on Profit, towards a Lower Tax Rate and a
Broader Tax Base’). The key elements are:96
96
97
98
99
‡
A plan to cut tax rates from 31.5% in 2005 to 25.5%. 25% had been proposed, but
this is not possible as it falls foul of the Netherlands – Japan double tax treaty.97
‡
The introduction of what has become known as ‘tick the box’ options for taxation
of certain sorts of income. Under these arrangements, pioneered in the USA,
application can be made for certain forms of income to be taxed in special ways.
The arrangements in the Netherlands will relate to royalty and group interest
income.
‡
The first ‘box’ option will be for patent income (‘octrooibox’ in Dutch). Under this
option, income from self-generated (rather than purchased) patents will be taxed
at an effective rate of 10%. However, there are some doubts as to whether the
patent income box will actually be used by a substantial number of companies,
due to the restrictions that apply.98
‡
The second ‘box’ option is the ‘group interest box’ (‘groepsrentebox’ in Dutch) and
reduces the effective tax rate on interest earned on group loans to 5%, subject
again to a maximum limit. Income from short-term investments such as bank
deposits will also benefit from the 5% rate in some cases. This option replaces
the interest conduit and group finance company facilities that have been available
to date, and offers an exceptionally low tax rate. In contrast to the CFM regime,
the group interest box cannot be used for interest conduit activities, because pure
financing conduit companies are financed by loans rather than equity and the
group interest box limits the amount of preferentially treated interest income to a
fixed percentage of the average equity of the company. This percentage is equal
to the standard interest rate charged (or credited) by the Dutch tax authority and
is currently 3.75%. The group interest box would therefore be attractive for group
financing companies and combinations of financing and holding operations only.
Some have pointed out that harmful constructions, such as ‘double dipping’, will
be possible under the proposed legislation.99
This analysis is based on a wide range of sources. Amongst these are Wouter Paardekooper, Baker &
Mackenzie in World Tax Review 2006 on the Netherlands, page 2, at www.internationaltaxreview.com
(12 Jul 2006), and Peter Kirpensteijn and Bereket Gündüz; Udink & De Jong, ‘The Dutch Go Into the
Offensive’ for Udink & de Jong, Attorneys, at www.iln.com/articles/pub_249.doc (14 Jul 2006).
Freshfields Bruckhaus Deringer, ‘The Netherlands: white paper for 2007 corporate tax reform – draft
legislation published’ May 2006
Wijziging van belastingwetten ter realisering van de doelstelling uit de nota “Werken aan winst” (Wet
werken aan winst), Document 30 572 No. 2, Art. 12c; Uncorrected stenogram, Legislative meeting,
Vaste commissie voor Financiën, 18 Sep 2006.
Wijziging van belastingwetten ter realisering van de doelstelling uit de nota “Werken aan winst” (Wet
Chapter 5 – Changes in the Dutch tax system 59
The Netherlands: A Tax Haven?
118
‡
The participation exemption is to continue but will be modified so that the same
rules apply to domestic and foreign subsidiaries, which should then overcome EU
objections to the arrangement, which do not allow such differentiation. In fact, the
requirements for the use of the participation exemption have been relaxed. For
subsidiaries other than portfolio investment companies, the subject-to-tax
requirement is dropped.100
‡
In December 2005, The Netherlands reached an agreement with the Netherlands
Antilles to revise the current Belastingregeling voor het Koninkrijk (BRK), the tax
treaty covering the Netherlands, Netherlands Antilles, and Aruba. The 8.3%
withholding tax on dividends paid by a Dutch subsidiary to a parent in the
Netherlands Antilles will no longer apply. For financial corporations and publicly
traded companies supervised by the central bank, the rate will be 0%.
Withholding tax will also be 0% if dividends are invested in the Netherlands
Antilles Herstelbank (reconstruction bank) for a period of two years, and 75% of
the dividend for a further two years. This requirement was devised to prevent tax
evasion. The Herstelbank is still to be established. For other companies, the rate
will be 5%.101
These changes will not eliminate the advantages for foreign multinationals passing
financial flows through the Netherlands.102 They suggest that the Netherlands remains
committed to operating as a tax haven for international groups of companies and is trying
not to lose the existing cash flowing from tax haven entities. The proposed changes have
already been passed by the Dutch House of Representatives, but still need approval from
the Dutch Senate. Furthermore, some aspects of the proposed legislation, such as the
patent income box and group interest box, also need to be approved by the European
Commission before they can enter into force. It is possible that the EU will not accept the
proposed changes and consider them as potentially harmful tax practices. Experts expect
that measures such as the new ‘group interest box’ will mainly attract new SFIs and, apart
from a small number of highly skilled jobs, will not generate substantial new employment
in the Netherlands.103
100
101
102
103
60
werken aan winst), Document 30 572 No. 2, Art. 12c; Uncorrected stenogram, Legislative meeting,
Vaste commissie voor Financiën, 18 Sep 2006; W. Paardekooper, Baker & Mackenzie, “World Tax
Review 2006 on the Netherlands,” <http://www.internationaltaxreview.com> (Jul 2006), p. 2.
Based on KPMG data available at http://www.kpmg.com/Services/Tax/IntCorp/CTR/; Wijziging van
belastingwetten ter realisering van de doelstelling uit de nota “Werken aan winst” (Wet werken aan
winst), Document 30 572 No. 2, Art. 13.;
Zibb.nl belastingadvies & accountancy website, “Belastingakkoord tyussen Nederland en Antillen,”
based on De Volkskrant, 2 Dec 2005 (Sep 2006); Nivra website, “Nul procent dividendbelasting
Antillen,” 3 Dec 2005, <http://www.nivra.nl/index.asp?FD_Nieuws/20051203_antillen.htm> (Sep 2006);
PwC Nederland Website, “Nieuw belastingakkoord met Nederlandse Antillen,” 2 Dec 2005 (Sep 2006).
Ivo Kuipers, Why Dutch companies are still beneficial, KPMG Tax view, 22-23, 4, 2004
Tax experts, 12 Oct 2006 and 3 Nov 2006, interviews by M. Van Dijk.
119
6
Chapter 6
Conclusions and recommendations
hfdtsk 6
6.1.
Conclusions
Despite the Netherlands having an international reputation as a tax haven for about 30
years now, to the best of our knowledge this SOMO report is the first comprehensive
research on the issue. This was not an easy task. Tax planning is a very complex and
technical matter and it seems that the government, the Dutch Central Bank (DNB) and
multinational corporations all have an interest in disclosing as little information as possible.
In addition, current accounting standards do not require corporations to report revenues
and tax payments by location or to report intra-group financial flows and this is precisely
the data required for a more detailed analysis. Therefore the report has been largely
based on indirect evidence, such as the large presence of Special Financial Institutions
(SFIs) in the Netherlands and the tax avoidance structures advertised by tax consultants,
plus a small number of case studies.
Yet the empirical data and analyses presented in this report leave no doubt about the
conclusion that the Netherlands can be regarded as a tax haven. This is because it
deliberately offers companies who would not otherwise seek to be resident within its
territory the means to reduce their taxation charges on royalties, interest, dividends and
capital gains received from subsidiary companies. Although not all tax planning structures
are harmful in nature, some certainly are. The Dutch group financing (CFM) regime, which
will be abolished by 2011, is often regarded as one of the most harmful tax policies.
Corporate structures that use the rather unique Double Taxation Treaty (DTT) network of
the Netherlands to facilitate financial flows to and from other tax havens, such as the
Netherlands Antilles and Cayman Islands, seem to be particularly harmful as well.
Many of the arrangements created by the Netherlands to facilitate these objectives have
been found to be unacceptable by either the OECD or the European Union, and as a
result they have been or are being revised. The tax ruling system, for example, was
revised in 2001 and stripped of its harmful characteristics. It is clear that the revisions that
are being made are those necessary to ensure that the new arrangements will comply
with the basic requirements of those organisations, but certainly not all of them will comply
with the spirit of international tax cooperation that they are seeking to promote. Indeed,
from 2007 it is possible that the Netherlands will be offering tax rates as low as 5% on
interest income under the ‘group interest box’ in the current proposal for modifying tax
legislation “Werken aan Winst” to replace the CFM regime. This could mean that the
Netherlands will be offering the lowest tax rates on financial flows in the developed world.
The Netherlands benefits primarily from attracting financial flows to its territory by
increasing the tax yield it enjoys from corporate income and from employment generated
Chapter 6 – Conclusions and recommendations 61
The Netherlands: A Tax Haven?
120
in the trust and tax consultancy sector. According to the DNB there are 12,500 Special
Financial Institutions in the Netherlands (as of 2002), which facilitate these flows and
largely consist of ‘mailbox companies’ and ‘paper headquarters’. These generate some
2,500 direct jobs and a total direct revenue for the Dutch state of €1.7 billion. In addition, it
has been estimated that the Netherlands hosts nearly 20,000 so-called ‘mailbox
companies’, which do not have a substantial commercial presence. The data also indicate
every year more new mailbox companies are established, in particular during the period
2003-2006. Experts expect that measures such as the new ‘group interest box’ will mainly
attract new SFIs and, apart from a small number of highly-skilled jobs, will not generate
substantial new employment in the Netherlands.
However, these benefits do not outweigh the negative consequences for other countries. It
affects both the capacity of developing country governments to supply essential services
to their populations and the capacity of developed country governments to provide finance
for development in the form of debt relief and official development aid. The Dutch tax
policy is therefore clearly inconsistent with the policy on Official Development Assistance
(ODA) and the associated high contribution to financing the achievement of the Millennium
Development Goals (MDGs). Furthermore, it can have a substantial negative impact
through the resulting shift of the tax burden to other sources of income such as labour,
and the reduced possibilities for smaller companies to compete with multinational
corporations. The tax haven features of the Netherlands also facilitate money laundering
and attract companies with a dubious reputation.
6.2.
Recommendations
The conclusions above are based on an analysis of the empirical data gathered during the
study. This study has attempted to provide an objective reflection and interpretation of this
data. In this paragraph, SOMO presents a set of recommendations. In contrast to the rest
of the report, these are not intended to be neutral, but seek to promote a fair and just
global economic system in which tax avoidance by multinational corporations is
minimised. The recommendations below are partly based on recommendations which
other actors have elaborated elsewhere in more detail. No claim is made that these
represent the views of organisations other than SOMO, however.
‡
62
The Netherlands should put an end to all beneficial arrangements that allow
multinationals to avoid taxation. These include the elements of the current
proposal for modifying tax legislation “Werken aan Winst” that may be considered
as harmful tax practices, such as the group interest box, and the lack of sufficient
anti-avoidance provisions for the use of Double Taxation Treaties (DTTs) that
currently allows the Netherlands to be used as a conduit country for other tax
havens. Continuing to allow tax avoidance practices is inconsistent with the Dutch
policy on Official Development Assistance (ODA) and the associated high
contribution to financing the achievement of the Millennium Development Goals
(MDGs).
121
104
‡
At the same time, the Netherlands should actively put pressure on other
OECD countries to put an end to harmful tax practices and to tax havens in
general. As has been pointed out, tax havens are a global problem that require a
global solution. Putting an end to harmful tax policies in the Netherlands is a
necessary but small step towards solving the global tax problem. If other
countries do not take similar steps, multinational corporations might move their
group financing and royalty companies to other tax havens and choose to route
financial flows through other conduit countries. While this will probably mitigate
some of the aggressive tax avoidance strategies that for example use the rather
unique Dutch network of Double Taxation Treaties (DTTs), the main result will be
that the problem is displaced. International coordination and cooperation are
therefore essential in fighting the effects of harmful tax practices.
‡
Alternative approaches to taxation of internationally operating businesses
should be considered. These include the proposals that various actors have put
forward for unitary taxation, an alternative minimum tax, and a global tax
jurisdiction the revenues of which go into funding a development facility.104 Due to
the global operations and intra-group financial flows of multinational corporations,
the true tax base in each country is difficult to determine and can easily been
manipulated, as has been shown in this report. Unitary taxation, for example,
addresses this by calculating the profits that can be attributed to a country's tax
jurisdiction partly on the basis of global profit figures. As alternative approaches
have not been discussed in this report, we will not make a judgement or more
specific recommendation about them. However, when devising a solution for the
global problem of tax havens and harmful tax practices, such alternative
approaches should also be considered.
‡
The Dutch government should commission an official study on the
Netherlands as a tax haven. The study should include a detailed and
quantitative analysis of the extent of tax planning by foreign multinationals in and
via the Netherlands and identify which tax structures are harmful and which are
not. To the best of our knowledge, this SOMO report is the first comprehensive
report on this issue. Due to the complex nature of tax avoidance structures and
the lack of available data, a more detailed study would be desirable. An attempt
should also be made to quantify the amount of tax revenues foregone in
developing countries as a result of the harmful tax structures involving the
Netherlands.
See for example Oxfam GB, “Tax havens: Releasing the hidden billions for poverty eradication,” Policy
paper, Jun 2000, <http://www.oxfam.org.uk/what_we_do/issues/debt_aid/tax_havens.htm>; Groupe de
travail sur les nouvelles contibrutions financières internationales, “Rapport à Monsieur Jacques Chirac,
Président de la République,” 21 Oct 2003, <http://www.france.attac.org/IMG/pdf/Rapport_final.pdf>;
H.M. Wachtel, “Tax Distortion in the Global Economy,” Paper originally presented at Inter-Disciplinary
Council on the Global Economy, 2000, <http://www.tni.org/archives/wachtel/distortion.htm>; H.M.
Wachtel, “The Vanishing Corporate Profit Tax,” Aug 2004,
<http://www.tni.org/archives/wachtel/vanishing.pdf>; S. Picciotto, “Tax Jurisdiction & Global
nd
Apportionment,” Presentation to 2 Essex Conference, Jul 2004,
<http://www.taxjustice.net/cms/upload/pdf/Picciotto_Essex2004.pdf> (all Nov 2006).
Chapter 6 – Conclusions and recommendations 63
The Netherlands: A Tax Haven?
122
‡
The Dutch Central Bank (DNB) should regularly publish statistical
information on the number, transactions, liabilities and assets of Special
Financial Institutions (SFIs). This would probably be the only reliable
quantitative data that offers insight into the extent of tax avoidance in and via the
Netherlands. The fact that the DNB has published this data twice in the past
indicates that they are available, but not fully disclosed.
‡
All relevant actors should recognise refraining from tax avoidance,
including through the use of tax havens, as a core element of Corporate
Social Responsibility (CSR). Multinational corporations should include this
element in an integral way in their CSR policies, management systems, and
reporting mechanisms. Managing and communicating tax issues in a proactive
manner also increasingly appears to be in the long-term interest of multinationals
themselves. Recent reports by Henderson Global Investors and
SustainAbility/Tax Research LLP found that concerns about the economic impact
of multinationals are rising quickly and the financial and reputation-related risks
from aggressive tax avoidance strategies are often not sufficiently recognised.105
Similarly, the Dutch government should include responsible tax issues in all its
policies and programmes intended to stimulate CSR. Civil society organisations
(CSOs), especially those promoting CSR or entering into partnerships with
multinational corporations, need to advocate fair and transparent tax payments as
well. In particular, accepting large charitable donations from corporations should
be conditional on the corporation having responsible tax practices. The reason is
that aggressive tax avoidance combined with charitable donations is highly
undesirable and may make a multinational corporation seem very responsible,
while it is in fact escaping its basic obligations to society. CSR consultants,
sustainability analysts and other CSR-related service providers should take on
board tax issues as well. Although some tax issues require a certain amount of
fiscal expertise, other issues such as a multinational’s presence in obvious tax
havens and the use of mailbox companies can be easily picked up by any
organisation.
‡
105
64
A new mandatory International Accounting Standard should be adopted
that requires multinationals to provide detailed information on the countries
in which they operate, their subsidiaries in those countries and the financial
information of these subsidiaries, including information on turnover and tax
payments by location. Such a standard has already been developed by the
Association for Accountancy and Business Affairs (AABA) and is readily
Henderson Global Investors, “Responsible tax,” Oct 2005,
<http://www.henderson.com/global_includes/pdf/corporate_governance/ResponsibleTax.pdf> (Nov
2006); Henderson Global Investors, Feb 2005,
<http://www.henderson.com/global_includes/pdf/sri/tax_paper.pdf> (Nov 2006); SustainAbility & Tax
Research LLP, “Taxing issues: Responsible business and tax,” 2006,
<http://www.sustainability.com/insight/research-article.asp?id=450> (Nov 2006).
123
available.106 Investors and civil society alike have a strong interest in adequate
information about tax payments. This is supported by the Henderson Global
Investors and SustainAbility/Tax Research LLP studies and has been recently
acknowledged by the International Accounting Standards Board (IASB) in
response to a call for country-by-country reporting. Furthermore, increased
exposure will reduce the incentives for aggressive tax evasion strategies, such as
the use of tax havens, and will therefore help to create a level playing field for all
companies. The disclosure of tax payments per country will also enhance
transparency about a corporation’s contribution to host country revenues and
related development impacts.
106
R. Murphy, “Reporting Turnover and Tax by Location: A Proposed International Accounting Standard,”
AABA, 2003, <http://www.taxjustice.net/cms/upload/pdf/new_int._Account_Standard.pdf> (Nov 2006).
Chapter 6 – Conclusions and recommendations 65
The Netherlands: A Tax Haven?
124
Annex 1
Glossary
This glossary is based on that in the report ‘Tax Us If You Can’ published by the Tax
Justice Network107 and reproduced with permission, but adapted for the particular
purposes of this report with appropriate additions to suit the Dutch environment.
Vocabulary
Aggressive tax
avoidance
Dutch equivalent
Capital gains tax
Concernfinancieringsmaatschappij
(CFM) regime,
Concernfinancieringsactiviteiten (CFA)
regeling
Corporation tax
(or corporate tax)
Vennootschapsbelasting
Deferred tax
Latente belasting
107
66
Explanation
the use of complex schemes of uncertain legality to
exploit taxation loopholes for the benefit of
taxpayers who can afford the fees charged by
professional advisers who create such arrangements
.
A tax on the profits from the sale of capital assets
such as stocks and shares, land and buildings,
businesses and valuable assets such as works of
art.
A Dutch law introduced in 1997 that allows group
finance companies to operate on pre-agreed
margins unrelated to changes in commercial
situations. In addition, reserves could be made
against up to 80% of income from financing
activities, lowering the effective rates of tax charged
to 7%. The CFM regime had been found in breach of
the EU Code of Conduct on Business Taxation and
will be discontinued. For corporations currently
using the CFM regime, it will end at the latest by
2011.
A tax on the profits made by limited liability
companies and other similar entities in some
countries, but otherwise usually being similar in
application to income tax.
A liability that results from income that has already
been earned for accounting purposes but not for tax
purposes. If an expense is recognised for tax
purposes more quickly than it is for accounting
purposes (which is common with much plant and
equipment) this means that the tax cost for the years
when this happens are understated. Conversely,
when all the tax allowances have been used on the
assets there might still be accounting charges to
make and the tax cost would then be overstated. To
balance this equation a deferred tax is charged to
TJN, “Tax us if you can: A true strory of global failure,” TJN Briefing paper, Sep 2005 (Sep 2006).
125
Vocabulary
Dutch equivalent
Double Tax
Treaty (DTT)
Verdrag ter
voorkoming van
dubbele belasting
Effective tax rate
EU Interest and
Royalties
Directive (IRD)
EU ParentSubsidiary
Directive (PSD)
General antiavoidance
principle
Explanation
the profit and loss account in the earlier years and
put on the company’s balance sheet as a liability.
The liability is released as a credit to profit and loss
account in the later years and supposedly over the
life of the asset all should balance out. In practice,
however, tax may sometimes be deferred
indefinitely.
An agreement between two sovereign states or
territories to ensure, as far as possible, that income
arising in one and received in the other is taxed only
once. Includes rules to define Residence and
Source, and limits on Withholding Taxes. Also
usually includes provisions for cooperation to
prevent avoidance, especially information exchange.
The percentage of tax actually paid in relation to the
total income of the person paying the tax.
Under this Directive (No. 2003/49/EC), a 0%
withholding tax applies for qualifying interest and
royalty payments between associated corporations
in the EU. A corporation is considered associated if it
has cross holdings of at least 25% or a third
corporation has a direct minimum holding of 25% in
the two other EU corporations. The beneficial owner
of the interest or royalties must be a corporation of
another EU Member State or an EU Permanent
Establishment of such a corporation. It must also be
subject to tax in that Member State without
exemptions.
Under this Directive (No. 90/435/EEC amended by
2003/123/EC), no withholding tax applies for
dividend payments between a subsidiary in one
Member State and its parent (or a Permanent
Establishment) in another Member State. The parent
must hold at least 20% (from 1 Jan 2007: 15%) of
the shares of the subsidiary and the subsidiary must
be a resident in that Member State and subject to
tax without exemptions in the Member State where it
is resident.
A law that seeks to prevent a tax payer from
obtaining the taxation benefit arising from any
transaction if they undertook it solely or mainly to
obtain a tax benefit. It does so by looking at the
motivation of the taxpayer at the time of entering into
the transaction, for which reason the concept of tax
compliance is important. If the person was seeking
to be tax compliant then they should probably keep
the benefit they obtained from the transaction. If they
were taxation non-compliant then they should not.
Annex 1 – Glossary 67
The Netherlands: A Tax Haven?
Vocabulary
Dutch equivalent
General antiavoidance rule
Holding company
Houdstermaatschappij
International
Business
Corporations
(IBC)
Offshore
Offshore financial
centre
Parent company
68
Moederbedrijf
126
Explanation
Compare with a general anti-avoidance rule.
A general anti-avoidance rule seeks to tackle those
who try to break the rules of taxation through the use
of further rules. Rather than considering intention, it
lays downs ways of interpreting series of events to
determine whether the benefit of tax legislation can
be given to the tax payer. However, because rules
are invariably open to interpretation a general antiavoidance rule runs the risk of increasing the
opportunity for abuse.
A parent or intermediate parent company that
usually has no or little business operations of its
own, but has a group function and controls its
subsidiaries.
A type of company offered by many offshore finance
centres and tax havens, usually one which receives
all or most of its income from abroad. IBCs usually
pay an annual registration fee but are subject to
minimal or zero tax rates.
Offshore relates to any jurisdiction (regardless of
whether they are islands) which provides tax and
regulatory privileges or advantages, generally to
companies, trusts and bank account holders on
condition that they do not conduct active business
affairs within that jurisdiction. The term “offshore is
very broad and normally includes “onshore” tax
havens such as Andorra, Lichtenstein, etc.
Although most tax havens are Offshore Finance
Centres (OFCs) the terms are not synonymous.
Tax havens are defined by their offering low or
minimal rates of tax to non-residents but may or may
not host a range of financial services providers. An
OFC actually hosts a functional financial services
centre, including branches or subsidiaries of major
international banks. States and microstates that
host tax havens and OFCs dislike both terms,
preferring to use the term International Finance
Centres.
A company that either wholly owns or owns more
than 50% of another company, the latter being called
a subsidiary. This can be either direct or indirect
through an intermediate company. An intermediate
(parent) company is a company which has one or
more subsidiaries but is itself owned by another
company. The term ‘global ultimate parent’ refers to
the one that is finally not controlled by another
company.
127
Vocabulary
Participation
exemption
Dutch equivalent
Deelnemingsvrijstelling
Preferential tax
treatment
Ring-fencing
Special Financial
Institutions (SFsI)
Bijzondere
Financiële
Instellingen (BFIs)
Special purpose
vehicles
Spread
Subsidiary
company
Tax avoidance
Dochterbedrijf
Belastingontwijking
Explanation
An exemption from corporate income tax regarding
profits derived from qualifying shareholdings. All
corporate taxpayers except qualifying Dutch
investment companies can benefit from the
participation exemption. It is unique to The
Netherlands, although some other countries such as
Luxemburg and Switzerland offer variations on this
exemption.
A situation in which individuals or companies can
negotiate their tax treatment in the state in which
they have a tax liability. Pioneered by Switzerland in
the 1920s, the arrangement is commonplace in the
offshore world.
Different and preferential tax and regulatory
treatment given
by tax havens to companies and trusts owned by
non-residents
as contrasted to companies and trusts owned by
residents.
Netherlands-based companies or institutions whose
shares are held directly or indirectly by nonresidents, which specialise in raising funds outside
the Netherlands and on-lending or investing them
outside the Netherlands. The funds raised by these
institutions are on-lent or invested almost entirely
within the group of which they form part. These
institutions are based in the Netherlands partly for
fiscal reasons, enjoying tax advantages either in the
Netherlands, or in the country where the parent
company is established.
Any company, trust, LLP, partnership or other legal
entity set up to achieve a particular purpose in the
course of completing a transaction, or series of
transactions, typically with the principal or sole intent
of obtaining a tax advantage. Similar to SFIs.
Margin between interest, royalties and/or dividend
payments received and paid by a conduit company.
The spread is the operating margin of the conduit
company that gives it some substance, even though
this may be artificial and relatively small. This
operating margin is taxable in the conduit country
and therefore often required by that country’s fiscal
authorities.
A company 50% or more owned by another
company which is its parent company.
The term given to the practice of seeking to minimise
a tax bill without deliberate deception (which would
Annex 1 – Glossary 69
The Netherlands: A Tax Haven?
Vocabulary
Dutch equivalent
128
Explanation
be tax evasion or fraud).
The term is sometimes used to describe the practice
of claiming allowances and reliefs clearly provided
for in national tax law. It is, however, now generally
agreed that this is not tax avoidance. If the law
provides that no tax is due on a transaction then no
tax can have been avoided by undertaking it. This
practice is now generally seen as being tax
compliance. So what the term tax avoidance now
usually refers to is the practice of seeking to not pay
tax contrary to the spirit of the law. This is also
called aggressive tax avoidance.
Tax efficiency
Tax evasion
Belastingontduiking
Tax haven
Belastingparadijs
Aggressive tax avoidance is the practice of seeking
to minimise a tax bill whilst attempting to comply with
the letter of the law while avoiding its purpose or
spirit. It usually entails setting up artificial
transactions or entities to recharacterise the nature,
recipient or timing of payments. Where the entity is
located or the transaction routed through another
country, it is international avoidance. Special,
complex schemes are often created purely for this
purpose. Since avoidance often entails concealment
of information and it is hard to prove intention or
deliberate deception, the dividing line between
avoidance and evasion is often unclear, and
depends on the standards of responsibility of the
professionals and specialist tax advisers. An
avoidance scheme which is found to be invalid
entails repayment of the taxes, due plus penalties for
lateness.
A term used by tax professionals to suggest getting
away with paying as little tax as possible.
The illegal non payment or under-payment of taxes,
usually by making a false declaration or no
declaration to tax authorities; it entails criminal or
civil legal penalties.
Any country or territory whose laws may be used to
avoid or evade taxes which may be due in another
country under that other country’s laws.
The Organisation for Economic Cooperation and
Development defines tax havens as jurisdictions
where:
Non-residents undertaking activities pay little or no
tax;
There is no effective exchange of taxation
70
129
Vocabulary
Dutch equivalent
Tax mitigation
Tax planning
Tax shelter
Thin
capitalisation
Transfer-pricing
Onderkapitalisatie
Explanation
information with other countries;
A lack of transparency is legally guaranteed to the
organisations based there;
There is no requirement that local corporations
owned by non-residents carry out any substantial
domestic (local) activity. Indeed, such corporations
may be prohibited from doing business in the
jurisdiction in which they are incorporated.
Not all of these criteria need to apply for a territory to
be a haven, but a majority must.
A phrase used by tax professionals when describing
the desire to pay as little tax as possible.
A term used in two ways. It can be used as another
term for tax mitigation. When, however, tax
legislation allows more than one possible treatment
of a proposed transaction the term might legitimately
be used for comparing various means of complying
with taxation law.
An arrangement protecting part or all of a person’s
income from taxation. May result from pressures on
government or a desire to encourage some types of
behaviour or activity, or may be a commercial or
legal ruse, often artificial in nature, used to assist tax
planning.
Financing a company with a high proportion of loans
rather than shares. Used by Transnational
Corporations to reduce the business profits of a
subsidiary, since the interest on loans is usually
allowed as a deduction, but dividends on shares are
paid out of after-tax income. The interest is usually
paid to another subsidiary of the transnational
corporation located in a tax haven where no tax is
paid upon its receipt, resulting in an overall reduction
in the tax charge of the group of companies.
A transfer pricing arrangement occurs whenever two
or more businesses (whether corporations or not)
which are owned or controlled directly or indirectly
by the same people trade with each other. The term
transfer pricing is used because if the entities are
owned in common they might not fix prices at a
market rate but might instead fix them at a rate
which achieves another purpose, such as tax saving.
If a transfer price can be shown to be the same as
the market price then it is always acceptable for tax.
What are not acceptable for tax purposes are
transfer prices which increase the cost or reduce the
sales value in states which charge higher tax rates
and increase the sales value or reduce the costs in
Annex 1 – Glossary 71
The Netherlands: A Tax Haven?
Vocabulary
Withholding tax
72
Dutch equivalent
130
Explanation
states with lower tax rates. The difficulty for many
corporations at a time when over 50% of world trade
is within rather than between corporations is that
there is no market price for many of the goods or
services that they trade across national boundaries
because they are never sold to third parties in the
state in which they are transferred across national
boundaries within the corporation. This gives rise to
complex models in which attempts are made to
allocate value to various stages within the supply
chain within a company, which process is open to
potential abuse. For this reason it is argued that
such firms should be taxed on a unitary basis.
Tax deducted from a payment made to a person
outside the country. Generally applied to investment
income, such as interest, dividends, royalties and
licence fees.
131
Annex 2
Dutch double tax treaties
Withholding tax rates to the Netherlands
Country
dividends
%
Interest
%
Argentina
Aruba
Australia
Austria
Bangladesh
Belarus
Belgium
Brazil
Bulgaria
Canada
China
Croatia
Czech Rep.
Denmark
Egypt
Estonia
Finland
France
Georgia
Germany
Greece
Hungary
Iceland
India
Indonesia
Ireland
Israel
Italy
Japan
Kazakhstan
Korea
Kuwait
Latvia
Lithuania
Luxembourg
Macedonia
10/15
0/12
10
0
15
10
15/5
0
10/15
10
5
0/5
15
10
0
15
5/15
0
15/10/5
10/0
10
10
0/15
0
0/10
0
0
0
0
12
5/15
10
0
0
0/5/15
0/10
Not yet in force
0
0
0
10
5/15
0
0/15
0
0
10
15/10
0/10
0
0
5/10/15
10/15
5/10/15
0/10
5/15
10
5/15
10
10/15
15
10
0
5/15
10
5/15
10
0/2.5/15
0
15
0
royalties
%
Country
dividends
%
Interest
%
royalties
%
3/5/10/15
0
10
0/10
10
0/3/5/10
0
15
0
10/0
10
0
5
0
12
5/10
0
0
Malaysia
Malta
Mexico
Moldova
Morocco
Neth.
New
Nigeria
Norway
Pakistan
Philippines
Poland
Portugal
Romania
Russian
Singapore
Slovak
South Africa
Spain
Sri Lanka
Suriname
Sweden
Switzerland
Taiwan
Thailand
Tunisia
Turkey
Ukraine
USSR
UK
United
Uzbekistan
Venezuela
Vietnam
Zambia
Zimbabwe
/
0
0/5/15
15/5
10/25
0
15
7.5/10
0
10/20
15
0/5/15
10
0/5/15
5/15
10
0/10
0
10
10/15
7.5/15/20
15/0
0
10
10
20
5/10
0/5/15
5/15
(4)
15/5
15
0/10
5/10/15
5
10
10
0
5/10/15
5
10/25
0
10
7.5
0
20
15
0/5
10
0/3
0
0
0
0
10
10
0
0
5
10
15
10
10/15
2/10
0
0
0
10
5
10
10
10
8
0
10
2
10
0
10
7.5
0
5/15
15
5
10
0/3
0
0
7
0
0
10
10
0
5
5
10
10
10/15
5
5/10
5/10
0
0
5
0
6
10
0
0
0
10
15
11
10
0/10
0
0
0
10
5/7/10
5/10/15
10
10
Source: Amicorp Group, “The Netherlands: Management, administration, fiduaciary, consulting and
corporate structuring services,” 2004 (Sep 2006), p. 33-34.
Annex 2 – Dutch double tax treaties 73
The Netherlands: A Tax Haven?
132
Withholding tax rates from the Netherlands
Country
dividends
%
Interest
%
royalties
%
Country
dividends
%
Interest
%
royalties
%
Argentina
Armenia
Aruba
Australia
Austria
Bangladesh
Belarus
Belgium
Brazil
Bulgaria
Canada
China
Croatia
Czech Rep.
Denmark
Egypt
Estonia
Finland
France
Georgia
Germany
Greece
Hungary
Iceland
India
Indonesia
Ireland
Israel
Italy
Japan
Kazakhstan
Korea
Kuwait
Latvia
Lithuania
Luxembourg
Macedonia
Malawi
10
0/5
5/7.5/15
15
0/5
10
0/5
0/5
15
5
5
10
0/15
0
0
0
5
0
0/5
0/5/15
0/10
0/5
5
0
10
10
0
5
0/5/10/15
5
0/5
10
0/10
5
5
0/2.5
0/15
15
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Malaysia
Malta
Mexico
Moldova
Morocco
Neth.
New
Nigeria
Norway
Pakistan
Philippines
Poland
Portugal
Romania
Russian
Singapore
Slovak
South Africa
Spain
Sri Lanka
Suriname
Sweden
Switzerland
Taiwan
Thailand
Tunisia
Turkey
Ukraine
USSR
UK
United
Uzbekistan
Venezuela
Vietnam
Yugoslavia
Zambia
Zimbabwe
Non-treaty
0
0/5
5
0/5/15
10
8.3
15
12.5
0
10
10
0/5/15
0/10
0/5/15
5
0
0
5
0/5
10
7.5/15
0
0
10
5
0/20
5
0/5
15
0/5
5
5
0
5/7/10/15
5
5
10
25
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Source: Amicorp Group, “The Netherlands: Management, administration, fiduaciary, consulting and
corporate structuring services,” 2004 (Sep 2006), p. 33-34.
74
133
Annex 3
List of regulated trust offices
Trust Office
Type
Address
Statutory seat
ABN AMRO Special
Corporate Services B.V.
Albacross Corporate
Services B.V.
Independent
trust office
Independent
trust office
Amsterdam
Amsterdam
3
Alco Trust B.V.
Independent
trust office
Independent
trust office
Independent
trust office
Gustav Mahlerlaan 10,
1082 PP Amsterdam
Nicolaas Maesstraat 66
2hg, 1071 RC
Amsterdam
Sophialaan 33, 1075 BL
Amsterdam
P Cornelisz Hooftstr 150,
1071 CG Amsterdam
Palladiostraat 13, 3066
AH Rotterdam
# of
mailboxes
210
Amsterdam
17
Amsterdam
25
Rotterdam
8
Amsteldijk 166 6 hg,
1079 LH Amsterdam
President Kennedylaan
19, 2517 JK 'sGravenhage
Prof J H Bavincklaan 7,
1183 AT Amstelveen
Luzerneklaver 17, 3069
DS Rotterdam
Apollolaan 133-135, 1077
AR Amsterdam
Spuistraat 172, 1012 VT
Amsterdam
Fred. Roeskestraat 123,
1076 EE Amsterdam
Laan Copes v
Cattenburch 52, 2585 GB
's-Gravenhage
Kimwierde 414, 1353 EX
Almere
Beemdstraat 25, 5653
MA Eindhoven
Oudegracht 202, 1811
CR Alkmaar
Herengracht 440, 1017
BZ Amsterdam
Gelderlandhaven 2 Y,
3433 PG Nieuwegein
Parklaan 81A, 5600 CJ
Eindhoven
Bosseweg 45, 5682 PE
Best
Amsterdam
Alea Management B.V.
Alkemade Administratieve
& Fiscale Dienstverlening
B.V.
Amaco (1)
Trust group
Amfa Beheer B.V (2)
Independent
trust office
Amicorp Netherlands B.V.
Trust group
Andante B.V.
ATC (4)
Independent
trust office
Independent
trust office
Independent
trust office
Trust group
Aufisco B.V.
Trust group
Apollo Corporate Services
B.V.
Associatie Cassa B.V (3)
Balance & Trust B.V.
Independent
trust office
Beemd Trust B.V.
Independent
trust office
BK Corporate International Trust group
B.V.
BNP Paribas Trust B.V.
Trust group
Bonheem Intertrust B.V.
Box Consultants B.V.
Brabant Management &
Trust Company (BM&TC)
B.V.
Brabers, Douma, Van
Nispen, Leenen
(Maatschap)
Calyon Trust B.V.
Capital Support Group
B.V.
C-Corp (5)
Citco Nederland B.V.
Independent
trust office
Independent
trust office
Independent
trust office
1074
's-Gravenhage
106
Amsterdam
606
Rotterdam
22
Amsterdam
24
Amsterdam
71
Amsterdam
1183
's-Gravenhage
213
Almere
23
Eindhoven
37
Amsterdam
240
Amsterdam
62
Utrecht
17
Eindhoven
47
Best
29
Trust group
Hogeweg 16, 2585 JD 'sGravenhage
' s-Gravenhage
42
Trust group
Strawinskylaan 3501,
1077 ZX Amsterdam
Churchillplein 5e, 2517
JW 's-Gravenhage
Haaksbergweg 31, 1101
BP Amsterdam Zuidoost
Naritaweg 165, 1043 BW
Amsterdam
Amsterdam
55
Independent
trust office
Independent
trust office
Trust group
' s-Gravenhage
2
Amsterdam
38
Amsterdam
1214
Annex 3 – List of regulated trust offices 75
The Netherlands: A Tax Haven?
134
Trust Office
Type
Address
Statutory seat
CMF Netherlands B.V.
Independent
trust office
Independent
trust office
Trust group
Rotterdam
Independent
trust office
Independent
trust office
Hardwareweg 32, 3821
BM Amersfoort
Nieuwe Stationsstraat 10,
6811 KS Arnhem
Reaal 2A, 2353 TL
Leiderdorp
Avenue Ceramique 223,
6221 KX Maastricht
Herengracht 450, 1017
CA Amsterdam
Burgemeester Bosstraat
73 B, 3043 GC
Rotterdam
Wijnhaven 3B, 3011 WG
Rotterdam
Maassluisstraat 416A,
1062 GS Amsterdam
De Boelelaan 7, 1083 HJ
Amsterdam
Kleine Tocht 7 B, 1507
CB Zaandam
Strawinskylaan 1431,
1077 XX Amsterdam
Strawinskylaan 3105,
1077 ZX Amsterdam
Kabelweg 37, 1014 BA
Amsterdam
Prins Hendriklaan 21,
1075 AZ Amsterdam
Oosteinde 7-11, 1017 WT
Amsterdam
Drentestraat 24 BG, 1083
HK Amsterdam
Herculesplein 5, 3584 AA
Utrecht
Kleine Kade 45, 4461 AS
Goes
Claudius Prinsenlaan
142, 4818 CP Breda
A. Hofmanweg 5A, 2031
BH Haarlem
Claude Debussylaan 44,
1082 MD Amsterdam
Rokin 55, 1012 KK
Amsterdam
Spiegelgracht 15, 1017
JP Amsterdam
Weena 210-212, 3012 NJ
Rotterdam
Schiphol Boulevard 231,
1118 BH Luchthaven
Schiphol
van Cralingenstraat 17,
3267 BD Goudswaard
Vaartweg 74, 1217 SW
Hilversum
Independent
trust office
Independent
trust office
Valkenburgerweg 67,
6419 AP Heerlen
Nieuwe Schoolstraat 4,
2514 HX 's-Gravenhage
Coadit B.V.
Confitrust B.V.
Delfin Trust B.V.
Deutsche International
Trust Company N.V.
Docklands Trust &
Financial Services B.V.
Ducorp (6)
Dufisco N.V.
Duma Corporate Services
B.V.
Dunnewijk, mr. drs. M. Advocaat & Procureur
Dutch Trust Management
B.V.
EQ Management B.V. (7)
Equity Estate B.V.
Esmerald Corporate
Services B.V.
Euryton Trust
Management B.V.
Executive Management
Trust B.V.
F. van Lanschot Trust
Company B.V.
FF Services B.V.
Fidessa N.V.
Fiducorp B.V.
First Alliance (8)
Fortis Intertrust
(Netherlands) B.V.
Frassino Management
Services B.V.
Freeland Corporate
Advisors N.V.
FTC Trust B.V.
Gregory International
Consultants B.V.
H.F. Blik-Levy Holding
B.V. (h.o.d.n. Erez
Management)
HBA Trust Services B.V.
Hogeweg, mr. W.
76
Independent
trust office
Independent
trust office
Independent
trust office
Independent
trust office
Independent
trust office
Independent
trust office
Independent
trust office
Independent
trust office
Trust group
Independent
trust office
Independent
trust office
Independent
trust office
Trust group
Trust group
Independent
trust office
Independent
trust office
Independent
trust office
Trust group
Trust group
Independent
trust office
Independent
trust office
Trust group
# of
mailboxes
19
Arnhem
29
Leiderdorp
31
Maastricht
23
Amsterdam
227
Rotterdam
20
Rotterdam
140
Amsterdam
52
The Hague
268
29
Amsterdam
87
Amsterdam
1729
Amsterdam
259
Amsterdam
49
Amsterdam
43
Amsterdam
430
Utrecht
255
Rotterdam
15
Breda
22
Amsterdam
114
Amsterdam
583
Amsterdam
2583
Amsterdam
48
Rotterdam
70
Wassenaar
209
Goudswaard
37
Hilversum
22
Heerlen
43
6
135
Trust Office
Type
Address
Statutory seat
Holding & Finance
Company Rabobank Trust
B.V. (9)
Holender Ventures B.V.
Trust group
Croeselaan 18, 3521 CB
Utrecht
Utrecht
Independent
trust office
Independent
trust office
Independent
trust office
Trust group
Rapenburgerstraat 204,
Amsterdam
1011 MN Amsterdam
Bloemgracht 45, 1016 KD Amsterdam
Amsterdam
Strawinskylaan 29, 1077
Amsterdam
XW Amsterdam
Teleportboulevard 140,
Amsterdam
1043 EJ Amsterdam
Parklaan 60, 5613 BH
Amsterdam
Eindhoven
Nieuwe Uitleg 15, 2514
The Hague
BP 's-Gravenhage
Wormerhoek 14F, 2905
Capelle aan den
TX Capelle aan den
IJssel
IJssel
Beethovenstraat 300,
Amsterdam
1077 WZ Amsterdam
Nachtegaallaan 47, 1e
Rotterdam
etage vz, 3055 CP
Rotterdam
Saturnusstraat 25 i, 2132 Amsterdam
HB Hoofddorp
Maastricht Airport
Horsterweg 18 C, 6199
AC Maastricht Airport
Kruisdonk 66, 6222 PH
Heerlen
Maastricht
Polarisavenue 136, 2132
Hoofddorp
JX Hoofddorp
Veerplein 5, 1404 DA
Amsterdam
Bussum
Startbaan 5A, 1185 XP
Amstelveen
Amstelveen
Max Euwelaan 61, 3062
Rotterdam
MA Rotterdam
Lange Voorhout 82, 2514 The Hague
EJ 's-Gravenhage
Polarisavenue 45, 2132
Amsterdam
JH Hoofddorp
Herengracht 420, 1017
Amsterdam
BZ Amsterdam
Hyksos (10)
Independium B.V.
ING Management
(Nederland) B.V.
Insinger de Beaufort
Associates B.V.
ITPS (Netherlands) B.V.
JJ Trust B.V.
Independent
trust office
Independent
trust office
Independent
trust office
Kempen Deelnemingen
Trust group
B.V.
Larapide International B.V. Independent
trust office
LFS (11)
LPM Trust B.V.
Maprima Management
B.V.
Matcorp B.V.
Independent
trust office
Trust group
Trust group
Trust group
Meisch Verbier & Cie. B.V. Independent
trust office
Molade Trust
Trust group
Management B.V.
Monterey Management
Trust group
B.V.
Mr. N. Scholtens TrustIndependent
Maatschappij B.V.
trust office
Mutual Trust Netherlands
Trust group
B.V.
Trust group
N.V. Algemeen
Nederlands Trustkantoor
ANT
NC Trust B.V.
Trust group
New Amsterdam Cititrust
B.V.
NieboerSchouten Trust &
Participaties B.V.
Nieuwenhuis Services
B.V.
Noble Management B.V.
Noordbrabantse
Participatiemaatschappij
"De Kempen" B.V.
Nova Trust Group B.V.
P & M Financial Services
B.V.
Independent
trust office
Independent
trust office
Independent
trust office
Independent
trust office
Independent
trust office
Trust group
Trust group
# of
mailboxes
200
52
49
30
556
20
117
36
69
4
143
49
67
7
32
99
201
41
143
168
Leliegracht 10, 1015 DE
Amsterdam
Johannes Vermeerplein
11, 1071 DV Amsterdam
Overgoo 13, 2266 JZ
Leidschendam
Paasheuvelweg 16, 1105
BH Amsterdam Zuidoost
Watermanweg 90, 3067
GG Rotterdam
Aarle Rixtelseweg 14,
5707 GL Helmond
Amsterdam
114
Amsterdam
139
Oslo 24, 2993 LD
Barendrecht
Laagveen 17, 2461 HG
Ter Aar
's-Gravenhage
72
Noordwijk
148
Rotterdam
11
Nuenen
61
Rotterdam
87
Ter Aar
111
Annex 3 – List of regulated trust offices 77
The Netherlands: A Tax Haven?
136
Trust Office
Type
Address
Pan-Invest B.V.
Trust group
Pelican Trust B.V.
Independent
trust office
Independent
trust office
Trust group
Martinus Nijhofflaan 2,
Delft
2624 ES Delft
Torenstraat 2, 1981 BC
Velsen
Velsen-Zuid
Koningin Emmalaan 13,
Bussum
1405 CJ Bussum
Schothorsterlaan 11,
Amersfoort
3822 NA Amersfoort
Beethovenstraat 107,
Amsterdam
1077 HX Amsterdam
Herengracht 400, 1017
Amsterdam
BX Amsterdam
Van Heuven
Amsterdam
Goedhartlaan 937, 1181
LD Amstelveen
Koningslaan 17, 1075 AA Amsterdam
Amsterdam
Hollandsch Diep 63, 2904 Alphen aan den
EP Capelle aan den
Rijn
IJssel
Utrechtseweg 83, 1213
Hilversum
TM Hilversum
Baronielaan 139, 4818
Breda
PD Breda
Hoofdweg 52, 3067 GH
Rotterdam
Rotterdam
Bergweg 133A, 3037 EE
Rotterdam
Rotterdam
Voorstraat 5, 3633 BA
Amsterdam
Vreeland
Oostelijke Handelskade
Amersfoort
1169, 1019 DN
Amsterdam
Spoorhaven 88, 2651 AV Rotterdam
Berkel en Rodenrijs
Rapenburgerstraat 109,
Amsterdam
1011 VL Amsterdam
Keplerstraat 34, 1171 CD Amsterdam
Badhoevedorp
Woudenbergseweg 11,
Utrecht
3953 ME Maarsbergen
Schipholpoort 100, 2034
Haarlem
MC Haarlem
Phibren International
Management B.V.
Phoenix Management
Services B.V.
Pimm Services B.V.
Poliedro Services B.V.
Polyvesta Trust
Management B.V.
Independent
trust office
Independent
trust office
Trust group
Private Equity Services
(Amsterdam) B.V.
PTS Partner Trust
Services B.V.
Independent
trust office
Independent
trust office
Red Flag B.V.
Independent
trust office
Trust group
RijnHove Groep B.V.
Ro-Trust B.V.
Independent
trust office
Trust group
S.A. Business Partners
Services B.V.
Schimmelpenninck Trust & Independent
Management B.V.
trust office
Sin.Fid. B.V.
Independent
trust office
Sorato Trust B.V.
Stichting Trustee &
Representation Services
Temmes Management
Services B.V.
Teslin Trust Services B.V.
The Netherlands
Management and Trust
Company B.V.
TMF Management B.V.
Trident Consultants B.V.
Trofin B.V.
Trust Stichting Ruig &
Partners
Trustland B.V.
Independent
trust office
Independent
trust office
Independent
trust office
Independent
trust office
Trust group
Trust group
Independent
trust office
Trust group
Two B Management B.V.
Independent
trust office
Independent
trust office
Trust group
Tyche Groep Financiële
Dienstverlening B.V.
Unsworth & Associates
B.V.
Uplink Trust B.V.
Independent
trust office
Independent
trust office
Independent
78
Locatellikade 1, 1076 AZ
Amsterdam
Rosweydelaan 36, 3454
BN De Meern
Ringbaan Oost 8 - 14,
5013 CA Tilburg
Stadhouderslaan 100,
2517 JC 's-Gravenhage
Leeteinde 20-22, 1151
AK Broek in Waterland
Coolwijkseweg 1A, 3218
VC Heenvliet
Raamweg 1B, 2596 HL
's-Gravenhage
Herengracht 483, 1017
BT Amsterdam
Ginnekenweg 281, 4835
Statutory seat
# of
mailboxes
349
10
27
23
4
14
94
111
51
6
163
41
13
19
17
65
39
33
67
101
Amsterdam
1703
Amsterdam
4
Tilburg
23
The Hague
40
Broek in
Waterland
Heenvliet
6
32
The Hague
18
Amsterdam
60
Breda
12
137
Trust Office
Van Baerle Trust
Company B.V.
Van Beemen Beheer B.V.
VDV Trust Services B.V.
VE Management &
Investment B.V.
Veco Trust (NL) B.V. (12)
Vreewijk Management
B.V.
Zarf Trust Corporation
B.V.
Zenco Corporate Services
B.V.
Notes:
(1)
(2)
(3)
(4)
(5)
(6)
Type
Address
trust office
NC Breda
Independent
trust office
Independent
trust office
Independent
trust office
Independent
trust office
Trust group
Stadhouderskade 125 hs,
1074 AV Amsterdam
Koningslaan 51, 1406 KG
Bussum
Schoutstraat 63, 1315
EW Almere
Stadionweg 70, 1077 SP
Amsterdam
Weteringschans 26, 1017
SG Amsterdam
Kingsfordweg 151, 1043
GR Amsterdam
Zeemansstraat 13, 3016
CN Rotterdam
Weena 674, 3012 CN
Rotterdam
Independent
trust office
Independent
trust office
Trust group
Includes IMFC Management B.V. and
Intruad Management B.V.
Incudes Eversteijn Trusthouse B.V.
Includes Kas-Trust B.V.
Includes NCS Benelux B.V., RCS
Investments B.V. and Kaiton B.V.
Includes HIL Trust & Fiduciary
Services B.V.
Includes Modern Treuhand B.V.
Statutory seat
Amsterdam
# of
mailboxes
117
Bussum
3
Almere
9
Amsterdam
11
Amsterdam
144
Renkum
114
Rotterdam
187
Rotterdam
281
(7)
Includes Equity Trust Co. N.V. and BTM
Trust (Holland) B.V.
(8)
Includes Trust Company Amsterdam
(9)
Includes RCS Management B.V. Vestiging
Utrecht
(10)
Includes Sovereign Trust (Netherlands) B.V.
(11)
Includes Winchester Trust and Consultancy
B.V.
(12)
Excludes Kaiton B.V.
Sources: REACH and DNB register of trust offices.
Annex 3 – List of regulated trust offices 79
The Netherlands: A Tax Haven?
138
Annex 4
Tax planning sources
The following sources present specific information for tax planning using the Netherlands.
‡
‡
‡
‡
‡
‡
‡
80
http://www.dutchtax.net
http://taxci.nl/read/using_netherlands_tax_planning
http://lowtax.net/lowtax/html/offon/netherlands/nethhold.html
http://www.anglo-legal.com
http://www.amicorp.com
http://www.hjc.nl
Http://www.offshore-manual.com/taxhavens/Netherlands.html
139
Annex 5
Tax Havens
The Caribbean and
Americas
Anguilla
Antigua and Barbuda
Aruba
The Bahamas
Barbados
Belise
Bermuda
British Virgin Islands
Cayman Islands
Costa Rica
Domini
Grenada
Montserrat
Netherlands Antilles
New York
Panama
Saint Lucia
St. Kitts & Nevis
Saint Vincent and the
Grenadines
Turks and Caicos Islands
Uruguay
US Virgin Islands
Africa
Europe
Liberia
Mauritius
Melila
The Seychelles
Sao Tome e Principe
Somalia
South Africa
Aldernay
Andorra
Belgium
Campione d’Italia
City of London
Cyprus
Gibraltar
Guernsey
Hungary
Iceland
Ireland (Dublin)
Ingushetia
Isle of Man
Jersey
Liechtenstein
Luxembourg
Madeira
Malta
Monaco
Netherlands
Sark
Switzerland
Trieste
Turkish Republic of Northern
Cyprus
Midde East and Asia
Bahrain
Dubai
Hong Kong
Labuan
Lebanon
Macau
Singapore
Tel Aviv
Taipei
Indian and Pacific Oceans
The Cook Islands
The Maladives
The Marianas
Marshall Islands
Nauru
Niue
Samoa
Tonga
Vanuatu
Frankfurt
Source: Offshore Business Magazine, <http://www.magverlag.com/offshore_magazine09.pdf> (20
Sep 2006), p.66-67 and Tax Justice Network, “Tax us if you can”, ibid.
Annex 5 – Tax Havens 81
140
141
142
143