File 1: Flag swapping capital: a Dutch investment service

The Netherlands is the world’s biggest recipient of Israeli foreign investment and the second-largest source of investment into Israel. This is not an accident. It is the result of the economic and legal architecture that has made the Netherlands a global hub for international capital flows. Here’s how it works.

The investment broker role

According to the latest data(opens in new window) from the Dutch Central Bank, in 2024, the Netherlands invested €27.3 billion into Israel. The vast majority of this amount came from foreign multinational corporations with some economic substance in the Netherlands, such as employees or production activities. While these companies are not Dutch-owned, by using the Netherlands as their base, they receive Dutch nationality . Over 20 per cent of Dutch investment in Israel comes from so-called “special purpose entities”, also known as letterbox companies, corporate entities with no economic substance in the Netherlands.

The Dutch Minister of Foreign Affairs acknowledges(opens in new window) that “many foreign capital flows run to Israel via the Netherlands”. The investment(opens in new window) into Israel from Dutch companies that are not foreign multinational corporations using the Netherlands as a base was less than €1 billion in 2024. The Netherlands, therefore, mainly acts as a conduit for international capital into Israel rather than a major direct investor itself.

Investment money also flows the other way.

The Netherlands is by far the largest destination for investment from Israel. In 2024, Israeli foreign direct investment in the Netherlands reached €44.9 billion(opens in new window) . This means that over half of all Israeli FDI(opens in new window) went to the Netherlands. This dwarfed Israel’s investments into the US, which amounted to approximately €11.1 billion that year . Most of this investment money does not stay in the Netherlands. It moves through Dutch companies, gains Dutch nationality, and is then invested across Europe and the world. But investing via the Netherlands gives companies a host of advantages.

Inward and outward investment data, 2020 – 2024

NOTE: The data above from the IMF in US dollars differs slightly from the data provided by the Dutch Central Bank in euros. This is likely due to differences in currency exchange rates. The investment figures are as reported by the Netherlands and the US in the IMF’s Direct Investment Positions by Counterpart Economy dataset. See more: https://data.imf.org/en/Dashboards/DIP%20Dashboard(opens in new window)

The tax haven effect

The Dutch Central Bank(opens in new window) states that “for legal and tax reasons, multinational corporations often channel large sums of money through Dutch financial holding companies”. That sounds innocuous. The Tax Justice Network speaks more plainly; it describes the Netherlands as part of the “Axis of Tax Avoidance” and, in 2025, ranked the country as the 7^th worst enabler of corporate tax abuse(opens in new window) and 7^th worst(opens in new window) enabler of financial secrecy in the world. A 2024 SOMO report shows in detail how the Netherlands operates as a tax haven.

IMF researchers have also called out the “‘phantom investments’”, or phantom FDI activity in the Netherlands, and clearly said that the main point of using Dutch letterbox companies is “minimising multinationals’ global tax bill”.(opens in new window)

The investment protection impact

The Netherlands has an extensive network of bilateral investment treaties (BITs) with investor-state dispute settlement (ISDS) provisions. These provisions allow multinational corporations to bring claims against governments if they believe (or can argue) that policies enacted by those governments harm their investments. The cases are adjudicated by supra-national courts and shrouded in secrecy. Criticism of the ISDS regime has been growing as companies repeatedly sue and threaten governments with multi-billion-dollar actions over policies that are manifestly in the public interest.

The Netherlands is a key architect of ISDS, and a significant proportion of ISDS claims globally are filed by Dutch-registered companies. Dutch treaties have been used in nearly 10 per cent of all cases worldwide, making the Netherlands second only to the US. Many are filed by so-called “letterbox” companies – entities with little or no employees or real economic activity in the Netherlands – set up to access its extensive and investor-friendly treaty network. The system has allowed companies from all over the world, including Israeli companies that gain Dutch nationality via FDI, to bring ISDS cases.

The Netherlands – a special economic zone for Israel

Israel is committing(opens in new window) genocide(opens in new window) . It has committed war crimes(opens in new window) . Its Prime Minister is the subject of an arrest warrant(opens in new window) issued by the International Criminal Court.

In July 2024, the International Court of Justice(opens in new window) (ICJ), determining that Israel’s occupation of the Gaza Strip and the West Bank, including East Jerusalem, was unlawful, made clear that third states must “abstain from entering into economic or trade dealings with Israel […] which may entrench its unlawful presence in the territory”. The Court also said that third states must “take steps to prevent trade or investment relations that assist in the maintenance of the illegal situation created by Israel in the Occupied Palestinian Territory”.

The Netherlands has clearly disregarded the ICJ, to which it is the host country. When it comes to Israeli investment, the Netherlands is not a passive recipient; it is an active pursuer. Dutch public funds are being spent to woo Israeli companies. They are also used to promote investment by Dutch entities into Israel. The nature of some of these investments is such that they assist in the maintenance of the illegal situation created by Israel, as examples in these Files show. Moreover, we cannot look only at individual investments – the cumulative picture is also important when it comes to the Netherlands’ obligations under the Genocide Convention. The Netherlands, like all states, has the legal obligation to “employ all means reasonably available” to it with the aim of preventing genocide. Economic leverage can be an important means of pressure for preventing the ongoing genocide in Gaza (see File 5 for more on this).

At the centre of the Dutch approach are agencies of the Ministry of Economic Affairs and Climate Policy.

The Netherlands Foreign Investment Agency

The Netherlands Foreign Investment Agency (NFIA), a body of the Ministry of Economic Affairs and Climate Policy, advertises itself as “Your FDI partner in the Netherlands”(opens in new window) and provides free services to foreign companies looking to invest in the country.

On its website, InvestInHolland.com(opens in new window) , the NFIA promotes(opens in new window) what have been described as the Dutch “crown jewels”(opens in new window) of tax avoidance: its tax treaty network, lack of withholding taxes, the participation exemption, and its ruling practice (also known as “sweetheart deals(opens in new window) ”).

According to the Minister of Foreign Affairs, there is no “proactive effort”(opens in new window) towards Israel within Dutch trade instrument policy (handelsinstrumentarium). However, the NFIA is highly active in promoting investment relations between the Netherlands and Israel.

NFIA has an office at the Dutch Embassy in Tel Aviv. It was opened in 2012(opens in new window) by the Minister of Economic Affairs. The purpose(opens in new window) of the NFIA is to help and advise foreign companies in investing and expanding in the Netherlands.

In April 2025, long after the International Court of Justice had stated there was a plausible risk Israel was committing genocide, long after the ICC had issued arrest warrants citing war crimes, and after more than 50,000 Palestinians had been killed(opens in new window) in Gaza, the vast majority of them civilians, this NFIA office, on behalf of the Dutch government, organized a “NL-Israel networking event”, “bringing together innovators, investors, and entrepreneurs”, so that “Dutch precision” can meet “Israeli boldness” . In a statement to SOMO, the NFIA stated it “does not promote nor facilitate tax avoidance” and that it upholds Dutch government policy, including its “discouragement policy” regarding investment and economic cooperation with companies in illegal Israeli settlements . The Dutch policy towards illegal settlements is hugely insufficient(opens in new window) and only addresses the tip of the iceberg. See File 5 for an overview of necessary economic sanctions and the legal obligations of the Netherlands to prevent genocide.

Netherlands Enterprise Agency

As of May 2025, while multiple(opens in new window) credible human rights reports(opens in new window) pointed to military and tech company’s products used in the commission of crimes under international law in Gaza, the Netherlands Enterprise Agency (RVO), a body of the Ministry of Economic Affairs, was lauding Israel as “the Start-Up Nation”(opens in new window) , highlighting the business opportunities in the country (i.e., promoting the Israeli economy to Dutch investors). The RVO specifically states Israel is “strong in cybersecurity”(opens in new window) and that “for Israeli companies the Netherlands offers an interesting testing grounds for applying new technologies”.

Sometime after May 2025, this page was taken offline. But the Dutch government continues to promote(opens in new window) business links between Israel and the Netherlands.

The Dutch Embassy and mission in Tel Aviv

The Dutch Embassy in Tel Aviv, in addition to hosting the NFIA Israel office, works to encourage Israeli companies to establish themselves in the Netherlands and to promote(opens in new window) Dutch business links with Israel. The Embassy’s only reference(opens in new window) to the risks of doing business in Israel or with Israeli companies is, again, that the “Dutch government discourages economic cooperation with companies in illegal Israeli settlements”.

The Netherlands has organised several trade missions and diplomatic visits to Israel with a trade component over the past ten years. In 2022, then Prime Minister Rutte visited Israel(opens in new window) and met with Israeli companies that were operating in or planned to invest in the Netherlands. In 2019, the then Minister for Foreign Trade and Development Cooperation, Sigrid Kaag, led a trade mission(opens in new window) to Israel, focusing on tech, among other sectors. Prince Constantijn van Oranje, the brother of King Willem-Alexander, led a 2018 trade mission that included angel investors looking to invest in companies at the early stages. In an interview(opens in new window) with Israeli media, the Prince explained he looked for investors and companies in “strategic areas, such as cybersecurity”.

The Dutch ‘Passport’

Attracting and facilitating global financial flows and, by extension, the multinational companies that are the main vehicles for such flows around the world, is central to the economic policy of the Netherlands. Within this framework, the Netherlands has made facilitating investment into and out of Israel a priority. The strategy has been highly successful, as evidenced by the scale of financial flows between the two countries.

A country cannot give its nationality to corporate actors and disassociate itself from their activities and impacts. One consequence of the Netherlands’ efforts to attract investment from Israel is that the country has given its national identity, and the benefits of its tax and legal system, to arms companies that are implicated in grave crimes under international law (see File 2). Refugees may struggle to obtain Dutch nationality. Corporations implicated in genocide appear to receive this with ease.

But the challenges are not limited to companies connected to atrocities. The broader economic ties between Israel and the Netherlands, evidenced by how many large Israeli companies use the country as a base for key operations, and how much third-country investment flows to Israel via the Netherlands, may trigger legal obligations for the Netherlands. Not all of the companies named in these Files have links to crimes and atrocities committed by the state of Israel. However, their operations via the Netherlands economic leverage, which it can, and must, use.

File 5 examines this issue in more depth.