International Business Foundation Amsterdam

Toespraak van staatssecretaris Weekers van Financiën tijdens de IBFA-lunch.

Ladies and gentlemen, I’m delighted that the International Business Foundation Amsterdam has given me the chance to share my vision of the tax climate for international businesses in the Netherlands. That vision is set against the backdrop of stormy financial and economic weather. My government, which took office late last year, has the difficult task of steering this country into calmer waters. As you can imagine, the tax side of that task is extremely important.

The pillars of my tax policy are very clear: Here you can do business successfully and fairly, on a level playing field.Dutch corporation tax is 25 per cent. And it’s non-negotiable. But our Tax and Customs Administration is very happy to offer clarity upfront so that companies know exactly where they stand. We have an extensive system of tax treaties that can help in this regard. And we take firm action when we encounter fraud or abuse.

Before I say more about these points, let me mention a crucial place for international business in the Netherlands: Amsterdam Schiphol Airport. For business travellers like yourselves, Schiphol is the main gateway to the Netherlands, and so it is also my country’s calling card. The atmosphere in the airport is open and international, it offers first-class services and there is a clear spirit of enterprise. In short: Schiphol is the Netherlands at its best. So what else can the Netherlands at its best offer? First: a great location. It borders on the sea, yet lies in the heart of Europe. Brussels, Berlin, London and Paris are all within easy reach.Of course, the important thing is what you do with your location. And the Netherlands takes full advantage. You may have heard the saying: ‘God created the Earth, but the Dutch created the Netherlands.’ To a large extent this is true. The Dutch started fighting centuries ago to reclaim the land from the sea using pumps, dykes and dunes. And if we hadn’t, then Amersfoort in the east would be on the coast by now. But we didn’t stop there.

We took this dry land and built a network of roads, railways and canals. And then we built world-class digital networks too. Still, the Dutch are also modest enough to recognise that global companies and travellers are interested not only in our country but also in the continent beyond. That’s why we are always working to improve our connections with the European hinterland. Our main hubs are the port of Rotterdam and Schiphol Airport, which I’ve already mentioned. And from these gateways we roll out the red carpet for the international business community.

We’ve done the same thing in the area of tax policy. Over the years the Netherlands has built up a network of more than one hundred tax treaties with individual countries. This means that the financial consequences of doing business with – and in – the Netherlands are crystal clear. And at the same time it is easier for Dutch businesses to spread their wings and discover your countries. Above all, these treaties help international companies avoid double taxation. This is also the aim of the participation exemption and the reason we don’t levy withholding tax on interest or royalties.In addition, the Netherlands has attractive tax arrangements for foreign employees and promotes innovation through various tax incentives. For example, we promote research and development in the Netherlands by offering tax relief on R&D wage costs. We also offer a similar facility for R&D operating costs and investments. But it’s our tax relief for innovation, known as the ‘innovation box’, which gives innovative businesses a really great deal: profits earned from research and development in the Netherlands are taxed at only five per cent. In addition, foreign employees enjoy a 30 per cent deduction facility.This innovation package is aimed mainly at high value companies – represented here today – which can help develop the Dutch knowledge economy.

Finally, our Tax and Customs Administration has a great international reputation. This is thanks to the quick and efficient way it gives clarity upfront, as well as its international investors desk and its APA-ATR team. So, as I’m sure you’ve already discovered, you won’t get any unpleasant surprises.

The qualities I’ve covered so far are all fairly tangible. But I haven’t yet mentioned the Dutch national character or our customs and habits, which also help set the tone in this country. If you are not from the Netherlands some things might take getting used to. That’s how it is when you do business in another country. I’m familiar, for example, with the term ‘Dutch uncle’! I’m afraid the Dutch are sometimes rather too direct. Of course, that is a generalisation. And of course all 16 million Dutch people are not the same. In fact, they would all defend their individuality to the last! But in fact, that is exactly what we have in common: the Dutch usually have an opinion, and they see no reason to hide it. Whether it’s the national football team or politics, Amsterdam or global trade, melting ice caps or Europe. And yes, they also have an opinion about each other. And about you and me. Loud, open discussions are clearly part of our national character. And I can imagine that this behaviour may make people from slightly more reserved cultures uncomfortable.

As you know, there is currently a lively debate going on in this country about our tax climate for international business. The issue is whether international companies pay enough tax. Whether they contribute enough towards costly public services. In the Netherlands and in other countries where we do business. I think a few remarks on this topic are appropriate given the present company. First, it is understandable that this issue should arise now, at a time when the government has to cut spending and many people have to tighten their belts. But let me be clear: the decisions on our tax climate will be made by Parliament. Not by people in the street. A few weeks back I defended our tax climate and got strong support from a great majority of MPs. They understand that the Netherlands owes much of its prosperity and employment to large international companies like yours. With our open economy we have always relied on trade and international contacts. And for centuries we have been good at maintaining them. So it would be foolish, in these difficult times, to target multinationals without good reason. As I’ve said, that is not only my opinion. I have the support of a large majority in Parliament.

So could the current debate on tax legislation put our fine tax and business climate in jeopardy? Absolutely not! But having said that, I want to make one last point on this issue. And I want to introduce it with an observation by British historian Simon Schama, a world expert on seventeenth-century Holland. Schama points out the sense of solidarity which prevailed even in the Dutch Golden Age, with a story about a real estate tax known as the ‘honderdste penning’, levied when war was looming. The local authorities appointed ordinary members of the public to collect this tax. And as these people went from door to door they encountered no hostility at all. Everyone simply filled in the forms and calculated the value of their houses and furniture. To Schama this is typically Dutch behaviour: a great expression of ‘fiscal solidarity’. Four centuries later, fiscal solidarity is still the norm in this country. Solidarity is vital if our society is to function effectively. And so I don’t want to place it in jeopardy either. We all know that multinationals have far more scope for lowering their tax burden than local SMEs. And that has raised protests – both here and in other countries – among those who find their burden hard to bear. We cannot deny that there is something wrong when the largest companies have the smallest tax burden. We must not endanger the fiscal solidarity that Simon Schama spoke of so highly. It is one of the things that makes this country what it is. And you benefit from it, too. That is why I am actively engaged in talks in the OECD and the EU on how we can prevent badly aligned tax legislation from offering too much fiscal freedom. I believe there is no point in making unilateral changes. For me, the level playing field is a fundamental principle. Meddling with that will only make international companies feel less welcome here. You can rest assured that the Dutch government will never go down that road.

Ladies and gentlemen,
The Netherlands is, and will remain, a country that rolls out the red carpet for international companies. With excellent services, first-class transport and digital networks, and an attractive tax climate. Please forgive us if we are sometimes a bit too direct. We don’t mean any harm, and at least you always know where you stand with us. I can’t deny that the ‘Dutch uncle’ exists. But don’t let him put you off, because his heart’s in the right place.

Thank you.