21/06/21

NETHERLANDS: Thousands of tax avoidance constructions reported this year.

As published on nltimes.nl, Monday 21 June, 2021.

Dutch tax advisors and other intermediaries reported 4,500 constructions that may be used for tax avoidance since it became law for them to do so. These involve constructions set up in the past three years, NOS reports based on an overview from the Tax Authority.

Since the start of this year, it is mandatory for tax advisors, accountants, intermediaries, notaries, and lawyers to report "potentially aggressive structures" they are involved in. This involves things like tricks with internal loans or payments or trademark rights that enable companies to channel their profits through the Netherlands to tax havens.

The number of reported constructions is much lower than the 40 thousand reports the Tax Authority expected. "It may of course be that fewer constructions fall under the reporting obligation than previously thought," lawyer Martijn Weijers, who is researching this reporting obligation at the University of Amsterdam, said to the broadcaster. "But it may also be that some of the intermediaries forget to report a structure." Or that they don't realize a structure they're involved in needs to be reported. He doesn't think failure to report is deliberate. "The fines and penalties for the providers are enormous," Weijers said. "They could be fined up to 870 thousand or even jailed for up to four years."

The goal of this reporting obligation is to identify and tackle tax avoidance. The definition of this is deliberately broad in Dutch law, to prevent shrewd intermediaries from setting up structures that fall outside the description, according to NOS. "The disadvantage of this is that many reports of non-aggressive structures now also have to be made," Weijers noted.