Psst... Here’s another billion euros!

19 March 2012

Psst... Here’s another billion euros!

There are gaps in our tax laws, loopholes which have been created over time. For example, major corporations and multinationals have dreamed up fiscal constructions and in response the government has done nothing to make these constructions impossible. One of these gaps is so wide that closing it would bring in a billion euros.

By: Farshad Bashir

This loophole is known as the ‘Bosal Gap’, and it was brought about by a decision of the European Court of Justice (ECJ). It is responsible for the fact that the costs incurred by a Dutch multinational in establishing itself in another EU member state are tax-deductible in the Netherlands. At the same time, however, the profits made by the multinational’s establishment abroad are not taxed in the Netherlands, but in the member state where the subsidiary establishment is located. This is totally warped, as it means that the Dutch tax authorities are footing the bill when it comes to the multinationals’ costs incurred abroad, but collecting no taxes when profits are made. This costs the Netherlands around a billion euros!

The SP has been trying for many years to have this gap plugged. As long ago as 2006 my predecessor as SP parliamentary spokesperson on fiscal affairs Ewout Irrgang was promised by the government of the day that proposals would be brought forward to close the loophole. Nothing happened. Last year I got fed up of waiting and together with my fellow Member of Parliament Roland van Vliet of the PVV lodged a motion that the loophole be closed. The motion was passed without a single vote against.

Yet the government refused to act on it. The most bizarre aspect of this is that ministers asked for advice as to how to implement the motion from some sort of shadowy club called ‘Topteam Hoofdkantoren', which translates as ‘Head Offices Top Team’. Their advice was negative. And so the government’s answer was as follows: “We will implement the motion in such a way that only the most serious misuse of the Bosal ruling will be addressed, but in other cases we will allow the loophole to remain.”

Unbelievable! This was not what the motion demanded, which was rather the complete closure of the loophole. This government thus apparently finds a unanimous pronouncement of the nation’s Parliament calling for the closure of the Bosal Gap of less importance than the opinion of a shadowy, undemocratic talking shop called the ‘Head Offices Top Team’!

Right now the PVV, which signed the motion along with the SP, is in negotiation with the two centre-right governing parties (whose minority government it ‘tolerates’), the VVD and the CDA, over a new round of spending cuts. Closing the Bosal Gap would be a step forward. And closing this loophole isn’t even a cut, but the justified tackling of an undesirable piece of tax avoidance by multinationals that should have been ended years ago. The question then is how important the PVV finds the motion which it signed with the SP to be. Will the motion be put into practice and thus a billion euros brought into the Treasury, or will cuts once again be aimed exclusively at health care, education and people on low- or middle incomes?

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