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U2 may have to pay tax as EU moves to shut down Dutch mailbox firms

Foreign companies may soon be barred from routing their business through the Netherlands as Europe seeks to root out tax avoidance schemes.

Pop bands U2 and The Rolling Stones, as well as Google and Ikea, are among the 20,000 international firms who have taken advantage of the favourable conditions for so-called ‘mailbox companies’.

On Thursday the European Parliament voted for a ban on mailbox firms across the EU. One of the supporters of the move was Dutch Socialist Party member Dennis De Jong.

The EU says tax avoidance costs European nations €1,000 billion a year, with much of the shortfall in the nations with the largest budget deficits.

Seventeen of the top 20 listed companies on the Portuguese stock exchange are registered in the Netherlands for tax purposes.

The Netherlands is also the second most popular overseas base for companies listed on the London stock exchange, well ahead of Jersey, the Cayman Islands and Singapore.

The loss of the mailbox firms would cost the Dutch economy an estimated €1.5 billion and several thousand jobs in the finance and accountancy sector.

But De Jong said the Netherlands would benefit if indebted countries were able to raise more money in tax, reducing the need for further bail-outs.

He told Algemeen Dagblad: ‘It will cost us money, but it will also bring in money if we no longer have to support these countries.’

U2 were at the centre of protests at the 2011 Glastonbury festival organised by the Art Uncut direct action group over their tax arrangements.

Although corporate income tax in the Netherlands stands at 25.5 per cent, several tax breaks exist exempting income from foreign subsidiaries, allowing companies that do most or all of their business elsewhere to cut their tax bills drastically.

Source: Algemeen Dagblad: Fiscus loopt 1,5 miljard euro mis door verbod postbus-bv's

Photo by Neal Whitehouse Piper