International Law

DUTCH MAILBOX COMPANIES

By Karel.Frielink

It?s not merely a mailbox

According to the OECD (Organization for Economic Co-operation and Development), a tax haven (or offshore jurisdiction) is a jurisdiction which actively makes itself available for the avoidance of taxes which would otherwise be paid in a higher tax jurisdiction. There are more and less advanced offshore jurisdictions. The concessions and benefits may come in different forms. It may be, e.g., zero tax on receipt and distribution of dividends (holding companies in Cyprus, Denmark and the Netherlands) or favorable tax treatment through treaties and agreements with the investor?s home country (Cyprus, the Netherlands and Malta).

In its November 2006 report ?The Netherlands: A Tax Haven?‘, SOMO (?Stichting Onderzoek Multinationale Ondernemingen?; Centre for Research on Multinational Corporations) concludes that the Netherlands is a tax-haven. The Netherlands hosts nearly 20,000 so-called ?mailbox companies? primarily for fiscal reasons, which companies do not have a substantial commercial presence. What are mailbox companies?

For example, Netherlands-based companies or institutions whose shares are held directly or indirectly by non-residents, which specialize in raising funds outside the Netherlands and on-lending or investing them outside the Netherlands are mailbox companies. Such companies are not ?mailbox companies?, in the sense, that they, e.g., do not use office space in the Netherlands and have no activities whatsoever in the Netherlands. Mailbox companies are companies that have no substantive connection with the country of incorporation.

Karel Frielink
Attorney (Lawyer) / Partner

Full post as published by Karel's Legal Blog on February 25, 2008 (boomark / email).