Google under fire over €11bn Dutch royalty tax break

DutchNews, February 19, 2016

The tax avoidance tactics used by multinationals are again in the spotlight following claims by Dutch business magazine Quote that Google pushed €11bn in royalty payments through the Netherlands. 

Royalties are not subject to tax in the Dutch corporate taxation system. 

Quote bases its claim on analysis of Google’s 2014 accounts which show a letter box firm in Amsterdam with no employees had income of €10.7bn and paid just €2.7m in tax. That, Quote said, is one thousand times below what it should have been without the tax break. 

The income comes from the entire international Google operation, which transfers royalties to Google Netherlands Holding, based in Amsterdam’s Zuidas business district.

Ireland

From there, almost all the money transferred to an Irish Google company, which is actually based in Bermuda. Dutch corporation tax was paid on the €10.7m which remained in the Netherlands. 

Labour MP Ed Groot described the claim as ‘lunacy’. Small firms and private individuals are picking up the cost of building roads, of education and healthcare while international company profits head off to a tiny group of shareholders, he said. 

Tax minister Erik Wiebes refused to comment on Quote’s allegations because of confidentiality agreements. MPs are also pressuring him to come clean on Ikea’s tax arrangements in the Netherlands following claims it too is avoiding taxes via the Netherlands. 

Starbucks 

The Dutch finance ministry is currently appealing against a European Commission ruling which said it had given illegal state support to US coffee chain Starbucks. 

In October, the commission ordered the ministry to reclaim up to €30m in back taxes from Starbucks, which it said resulted from the illegal tax deal. 

The Dutch tax office has made 14,619 advance tax agreements with international companies since 1991 and refused a further 1,590, the Financieele Dagblad said in June.