Helsinki (31.01.2014 - Heikki Jokinen) Twenty top Finnish companies have 225 subsidiaries in tax havens, the Finnish watchdog Finnwatch reveal in a new report. Of these 79 are in the Netherlands and 22 in Belgium.
Though the Netherlands is not usually cited as a tax heaven, Finnwatch says that it offers several possibilities for companies to avoid taxes and repatriate profits i.e. return profits back to their home countries.
The OECD has set four criteria for tax havens, and one of these is the absence of requirement that there must be substantial activity in the company. In the Netherlands there are 11,500 foreign holding companies, more than in any other European country, Finnwatch says.
In 2009 these "special financial institutions" with foreign parent companies routed 5,500 billion euro though the Netherlands, according to the Tax Justice Network. This amounts to roughly ten times the GNP of the Netherlands.
Researchers made use of the statistics of the Netherlands National Bank to find out the nature of Finnish holding companies in Holland. In the years 2008 - 2012 almost 90 per cent of the direct investments from Finland to the Netherlands were going into these holding companies.
"In practice, these investments are just bypassing the holding companies on their way to their final investment targets", the report says. It also works the other way round: 70 per cent of the direct investment from the Netherlands to Finland comes from holding companies. Ironically, this makes the Netherlands one of the biggest trading partners of Finland.
Finnwatch also used the Orbis financial database to search for Finnish subsidiaries in tax havens abroad. They found 438 such Finnish companies. Out of these, 205 were in the Netherlands or Belgium.
However, information in Orbis is not fully comprehensive as researchers are keen to point out. In order to get more reliable information Finnwatch has been carefully looking into the financial accounts of 20 Finnish companies with the biggest turnover.
It is difficult is to get any information from places like the British Virgin Islands, Cayman Islands, US state of Delaware and Hong Kong. Finnish companies do have a lot of subsidiaries in tax havens like these, too.
The Bank of Finland estimates that by 2012, Finnish companies had invested 5.8 billion euro in holding companies abroad, which was then rerouted back to Finland.
The Confederation of Finnish Industries EK, were quick to criticise the report, protesting that the Netherlands cannot be viewed as a tax haven. Finnwatch’s retort was that even President Obama has criticised the Netherlands and Ireland for assisting foreign companies in avoiding tax.
The three trade union confederations Akava, SAK and STTK support Finnwatch. It also has the support of the Ministry of foreign affairs.
Finnwatch report with abstract in English (on page 5)