Why do we send international companies away?

The Netherlands has a centuries-long history as an internationally oriented nation. That has brought us much misery and much prosperity. It seems as if we want to deal with that international orientation.

Both the prime minister and the king publicly apologize for our slavery past. Commemorations regarding the police actions in Indonesia are widely attended and fully televised. Colonies and former colonies are financially compensated for the damage we caused.

But international business also takes the brunt. ASML is placed at the center of a geopolitical discussion between the U.S. and China. But the company is also slowed down in its growth spurts because we suddenly lump knowledge migrants together with asylum seekers.

Lobby groups for climate and the environment prey on large companies, sometimes even with very aggressive activist statements. In any case, there are ESG regulations requiring them to disclose on the environment, social dealings with employees and governance. The South Axis and the international banking world are being dismantled by strict regulations around terrorist financing and money laundering, but even more violently by fiscal interventions. On the latter I want to zoom in for a moment.

Fight against Base Erosion and Profit Shifting (BEPS) .

Governments and NGOs have long been signaling tax abuses by internationally operating companies. The EU has responded with directives, the OECD with the BEPS program. BEPS stands for Base Erosion and Profit Shifting. Base Erosion means erosion of the basis on which tax is levied. For example, making a loan and creating an interest burden, but having the interest income taxed in a low-tax (usually hot) country. Profit Shifting is the shifting of profits from one country to another. The latter country then has a lower tax burden. It is particularly the large economies that benefit from fighting this. Because it just so happens that those large economies also have high tax rates. The US leads the way in this. After all, someone has to finance their war machine.

We have been faced in recent years with implementation of legislation under EU directives or BEPS that affects all international companies. I refer for example to the earnings-stripping measure, the temporization of liquidation losses, limited loss compensation by earmarking as holding losses, limitation of liquidation losses by a non-continuation requirement, the intangible loan in the group context, all kinds of interest deduction limitations for intercompany financing, austerity of the 30% rule. And these are not empty words, tax officials are being sent out to strictly enforce these rules.

Regulatory pressure

In the ideal world of our politicians, companies conform to the new rules and pay themselves blue in taxes in the Netherlands. Not so. Companies see tax as a cost and want to control it. A fair share is not a discussion, but the contribution now being asked of them is perceived in board rooms as far too high. Shedding a negative light on their highly educated employees from abroad really hurts them, they feel very unfair. It leads irrevocably to repercussions.

That the government can dictate how international companies should behave is a farce. Companies really do have their compliance limits and Western countries have already far exceeded them. That companies have long been working to get out of the regulatory burden is not hard to imagine. If that means a company leaves our country, I am very critical of that. Is that really the intention now? When the top executive of ASML, Peter Wennink, refers at his farewell to opportunities to expand in other countries if it is not possible in the Netherlands, I get the jitters.

I belong to the group of Dutch people who embrace such top companies and value their international reputation as highly as that of Max Verstappen or Femke Bol.