Dutch Shell Companies and International Tax Planning

CentER Discussion Paper Series No. 2019-024

39 Pages Posted: 10 Jul 2019

See all articles by Arjan Lejour

Arjan Lejour

CPB Netherlands Bureau of Economic Policy Analysis; Tilburg University

Jan Möhlmann

CPB Netherlands Bureau of Economic Policy Analysis

Maarten van 't Riet

CPB Netherlands Bureau of Economic Policy Analysis

Thijs Benschop

CPB Netherlands Bureau of Economic Policy Analysis

Date Written: July 8, 2019

Abstract

This paper uses the financial statements of special purpose entities (SPEs) for explaining the origin and destination of dividend, interest, and royalty flows passing the Netherlands. We find that Bermuda is the most important destination for royalty flows. These flows come from Ireland, Singapore and the United States. For dividend and interest payments the geographical pattern is more widespread. We find a substantial tax reduction for royalties by using Dutch SPEs compared to a direct flow between the origin and destination country. However, we cannot find such tax savings for dividends and interest with an approximation based on statutory tax rates. When controlling for country characteristics in our regression analysis we do find that tax differentials partially explain the geographical patterns of income flows diverted through the Netherlands. This is the case for the likelihood that a route is used, as well as for the size of the flows. This paper is one of the first using bilateral income flows as dependent variables instead of bilateral FDI stocks or flows.

Keywords: corporate taxation, international tax planning, treaty shopping, bilateral dividend flows, bilateral interest flows, bilateral royalty flows

JEL Classification: G32, H25, H32

Suggested Citation

Lejour, Arjan M. and Möhlmann, Jan and van 't Riet, Maarten and Benschop, Thijs, Dutch Shell Companies and International Tax Planning (July 8, 2019). CentER Discussion Paper Series No. 2019-024. Available at SSRN: https://ssrn.com/abstract=3416459 or http://dx.doi.org/10.2139/ssrn.3416459

Arjan M. Lejour (Contact Author)

CPB Netherlands Bureau of Economic Policy Analysis ( email )

Bezuidenhoutseweg 30
po box 80510
The Hague, 2594AV
Netherlands
+31 652485843 (Phone)

HOME PAGE: http://www.cpb.nl/en/medewerkers/arjan-lejour

Tilburg University ( email )

PO Box 90153
Tilburg, 5000 LE Ti
Netherlands
+31 652485843 (Phone)

HOME PAGE: http://https://research.tilburguniversity.edu/en/persons/arjan-lejour

Jan Möhlmann

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

Maarten Van 't Riet

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

Thijs Benschop

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

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