Tax paradise in the Netherlands?

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For some reason we receive a lot of requests from abroad to assist setting up a BV company for persons or companies that are active abroad, are not and will not be active in the Netherlands, but would like to invoice from the Netherlands.

Tax paradise

The reason for these requests I can understand, as in the financial news the Netherlands is described as a fiscal paradise for Starbuck and Rolling Stone type of businesses. If you ask the regular Dutch company or Dutch fiscal resident whether they experience the Netherlands as a fiscal paradise, they might become very confused. You will learn immediately about the 52% tax rate we have in the Netherlands for income tax.

tax paradise BV

Licensee firms

The Starbuck and Rolling Stone type of companies make use of Dutch legislation and jurisprudence. The structure is not that complex. You incorporate on a tropical island a limited liability company and in that company you put the owning rights of the for instance the portrets of the pop group or the owning rights of the coffee chain franchise. This tropical Island provides a license to the Dutch BV company and the BV company provides this license to any country in the world.

As the Dutch BV company is regarded a surreal company, as the money comes in and goes out immediately, the Dutch tax office has ruled that there needs to be a margin left in that BV company to be taxed with corporate income tax. That implies that the incoming and outgoing flow is exempted from taxation. So more or less tax free the money flows to the tropical island with its 2% tax regime.

EU commission

The EU commission has investigated the matter and came to the conclusion that this product is in fact a support the Dutch Government provides to those businesses. As that is illegal, this type of structures should be illegal. The Netherlands finds it difficult to understand how such a structure can be illegal, when it is based on legislation we have maintained already for many years.

Set up tax evasion

Due to the above we are requested by companies located all over the world to set such a structure up. For the set up your Dutch BV company needs to have a presence in the Netherlands, and only renting an office will not do the trick. You need substance and substance matters are dealt with by so called Trust companies. These trust companies could assist you in the set up and arrangements you need to make with the Dutch tax office. That said, with the EU commission being very much aware of this structure, we doubt it is still possible.

Orange Tax services

Tax evasion and tropical islands are not among the services we provide. We provide services to genuine Dutch resident companies or to individuals that need assistance with their tax affairs.