It often comes down to the fact that multinationals bring a lot of jobs to a country, which means that there is a lot of money in the Treasury indirectly.Also, the presence of a multinational can increase the look of a country and make other companies more inclined to settle here. Examples include the suppliers of a car manufacturer.
Multinationals therefore have a strong negotiating position and would not consider without deals to be present in a country such as the Netherlands or Belgium.Given the benefits of the presence of such a multinational, it is often better to close a deal than to lose the benefits.
An obvious explanation for tax deals is that the one who has the power in the Netherlands have built a system that takes good advantage of them.Foreign companies must in principle meet stringent requirements and pay, among other things, high taxes, so that they do not even try to do business in the Netherlands if no exception is made for them. They are given the exception by pampering top officials and politicians. A dinner in an exclusive restaurant here, a weekend in a luxury resort there, and Hups, a new tax deal has been signed.
But does the taxpayer not vote for it?
Foreign companies have a number of things against themselves.Firstly, companies do not create any sympathy, because it is an abstract collection of people, where you do not quickly recognise a friendly face. Secondly, they are foreign, and some of the people find foreigners disgusting. Finally, the only companies that can pamper our leaders are rich, so that the foreign companies that do come in the Netherlands were already very successful abroad. That makes another part of the people favorable.
Because most people vote from gut feelings, politicians who have a harsh approach to foreign companies are gaining it always.If those politicians are then pampered by foreign companies in a backroom, then the people are no longer attentive. The minority who closely follows the politically is so biased that they find this kind of practice only wrong when it happens to other parties.
The surprising result is that the voting taxpayer chooses to do so again and again, without ever learning anything from his mistakes.But watch it from the bright side, as the top officials do: The people choose to let the elite pamper themselves and obey the elite. This is democracy at its very best!
But everything is always the fault of foreign companies?
In Nature It regularly occurs that species evolve to make use of their parasites.Take for example the soyaplant. It used to be fighting for his existence in the wilderness and was opposed by hungry people. A bit of evolution transformed it into a popular agricultural crop. Now many hectares of rainforest are cut down to make way for soyaplantages.
With foreign companies, something like that happens.Those who respond conveniently to the greed of our leaders or who use their marketing knowledge and resources to help helpful politicians get to the top, come beyond those who basically refuse to play with. Therefore, they are equally guilty of demagogy and bribery as Soyaplants are guilty of the canopy of the rainforests.
In addition to the hard facts, we naturally have to deal with the way in which top politicians and officials justify their actions towards the people.Of course, it’s not their fault that they’ve made those deals. After all, they were awed with Kobe steaks and afternoon snorkeling in the Caribbean. Surely you cannot expect anyone who is exposed to such a high pressure by foreign companies to take decisions in principle?
Probably the Netherlands is worse off because there are too high demands on foreign companies, but there is no change because the Dutch voters like politicians to be strict against foreign companies.The tax deals make it a little bit better, albeit at a high moral price. However, it does not make much sense to say this, because most people do not want to believe it. The cynical story above probably does a lot better.
It provides society with social returns (and money).
There you can look at it in several ways:
- Competition between states: retaining and or attracting tax funds).
- Attracting and/or retaining employment: contributes to GDP and is good for everyone.
1 A race to the bottom can be created from the point of view of the competition between states.Simply put, the country with the lowest tax rate will earn a preference from a large company. Often, moving from ‘ The head office ‘ is an administrative act and if you are yielding several million (or more) a year why not do it? Often it plays a direct rate and you can show as a multinational that you have not opted for the lower taxes, but for example ‘ a better business climate ‘:).
For the Netherlands, it means that there is a company that pays taxes in the Netherlands where you do not have to do anything.The Netherlands often does not even have to use the lowest fare in the immediate sense but has in the last hundreds of years (think VOC) prepared a wide range of bilateral trade agreements with (almost all) countries in the world, which also explicitly Tax agreements are included. In addition to the handling of any ‘ favourable ‘ direct tariff, the Netherlands also offers the possibility to ‘ use ‘ all those tax treaties that apply to Dutch companies.
The Netherlands is not a tax haven in direct sense (Foei!We are not Panama, Cayman Islands or some Banana Republic!) But in an indirect sense, with our tax specialists who have made the ‘ treaties ‘ own, you can realise a very low fiscal burden. Lower than in countries where the corporation tax is even lower. This must of course be well explained and implemented, and therefore our tax specialists earn gold money for themselves and their clients. As an American colleague who once described: Dutch Bananas are no peanuts
2 attracting and/or retaining employment is an argument that is often cited.If it concerns only head offices with some employees, that Kite does not go on of course. For this, a company looks much broader than just the tax infrastructure. But if all conditions of establishment prove to be excellent and on top of that you can also save on your taxes that is nicely taken.
With the case Unilever was said that if a lower rate was applied the head office would be moved to the Netherlands and thus would yield employment (and additional tax revenues) in the Netherlands.
That argument is cited in order to convince everyone of the need for a deal I understand, but I do not believe that.
But that’s me.
This question is strange.The multinational is also a taxpayer?
Appointments with the tax authorities you make when legally unclear, how the tax is going to be levied.In income taxes this is rarely a problem, although also here deductions are conceivable, where the law regulates nothing or insufficiently clear something. Then you make agreements with the Tax Office.
A multinational is an extremely complicated taxpayer, with untold many special issues where the law regulates nothing or anything vague.Then you have to make agreements with the tax authorities to avoid unexpected surprises, resp. To be subject to the arbitrariness of an official.