File 5: Footing the legal bill

While Israel bombs, starves and displaces Palestinians in Gaza, and forcibly transfers and discriminates against Palestinians in the West Bank, the Netherlands refuses to impose real economic sanctions. As this investigation has shown, the Netherlands is the biggest offshore financial centre for Israel in the world. The Netherlands is home to European holding companies of Israel’s two largest arms producers and to the EU headquarters of two of Israel’s largest companies. Major cybersecurity companies use the Netherlands to hold their Israeli and global investments. This means that the Netherlands is in a unique position to exert leverage on Israel through economic sanctions, in an effort to ensure Israel’s adherence to the most basic principles of international law.

In the context of crimes under international law being committed by Israel, the Dutch investment relations with Israel are not simply an economic or political affair. The extensive investment relationship between the two countries has legal implications. This File sets out the legal obligations of the Netherlands in relation to the investment ties described in the preceding files.

Economic leverage to save lives

In November 2025, the Dutch Court of Appeal ruled(opens in new window) that there is a serious risk that Israel is committing genocide against the Palestinians in the Gaza Strip. This ruling follows earlier determinations by a UN Commission of Inquiry(opens in new window) , the UN Special Rapporteur(opens in new window) on the occupied Palestinian territories, and Amnesty International (opens in new window) concluding that Israel has committed genocide in Gaza.

The Netherlands, like all states, has the legal obligation to “employ all means reasonably available”(opens in new window) to it with the aim of preventing genocide. This obligation exists from the moment it becomes aware of a serious risk that acts of genocide will be committed. This awareness will certainly have existed from 26 January 2024, when the International Court of Justice determined(opens in new window) that there was a “real and imminent” risk of genocide being committed by Israel against the Palestinians in the Gaza Strip.

What a state is obliged to do to prevent genocide is determined(opens in new window) by its “capacity to influence effectively the actions of persons likely to commit, or already committing, genocide.” This capacity depends(opens in new window) on the strength of the different types of links that exist between the state and the genocidal actor, in this case, Israel. In August 2025, the Dutch Independent Advisory Committee on Public International Law (the CAVV), which provides advice to the Dutch state, published advice(opens in new window) on the state’s obligation to prevent genocide, noting that a state is expected to explain which measures it takes to prevent genocide, why they are considered effective, and – if they prove ineffective – to change course to further increase pressure. Discouraging investment, denying public contracts, suspending treaties, and freezing assets are specific measures(opens in new window) states can take.

In November 2025, the Dutch Court of Appeal determined that it is up to the state to decide which measures to take to prevent genocide. It also ruled (opens in new window) that the domestic “standard of care” obligation of the Dutch state must be informed by the obligation to prevent genocide, and that the state “in specific cases” can be held legally liable for violating that standard of care “by refraining from certain measures”. The Dutch state’s proximity to and potential leverage over Israel as a result of its investment relationship are undeniable.

By nature of being Israel’s key financial conduit abroad, the Netherlands has the power to impose effective measures on Israel’s economy and its largest and most powerful corporations. The Dutch government has stated that it has “limited influence”(opens in new window) on capital flows to Israel via the Netherlands. This is not true. For years, the Netherlands functioned as a major gateway(opens in new window) for capital into and out of Russia. Since Russia’s invasion of Ukraine and the imposition of economic sanctions by the EU, which targeted foreign investment, amongst other measures, and required EU member states to take action, Foreign Direct Investment (FDI) to and from Russia via the Netherlands has greatly decreased. Clearly, the Netherlands can take action. It does not have to wait for the EU. Several actions that amount to economic sanctions can be taken by member states without the need for an EU mandate, as set out below.

There is a range of measures the Netherlands can take to stop its role as an offshore financial centre for the Israeli economy. The Netherlands can(opens in new window) terminate its bilateral tax treaty (opens in new window) with Israel, which facilitates cross-border investment and reduces tax rates on payments between the two countries, such as on royalties and interest. It can stop providing any kind of diplomatic assistance to companies investing in and from Israel, and shut down its NFIA Israel office. The Netherlands can also stop providing any kind of tax ruling or tax advantage to companies affiliated with the State of Israel or involved in human rights abuses in the Occupied Palestinian Territory. It can freeze the Dutch assets of corporations that contribute to Israel’s genocide, occupation, and apartheid policy. It can prohibit the provision of tax advice, auditing, bookkeeping and accountancy services to corporations involved in Israel’s genocide, occupation, and apartheid. In the context of genocide, exercising economic leverage is not a tool subject to political discretion. It is the implementation of a far-reaching legal obligations that, if not complied with, carries a legal price the Netherlands will very likely have to pay in the future.

Investments bankrolling an unlawful occupation

The genocide against the Palestinians in Gaza takes place in the context of an illegal occupation, which gives rise to additional legal obligations for the Netherlands concerning its investment relations with Israel. In its advisory opinion of July 2024, the International Court of Justice determined(opens in new window) that Israel’s military and settler presence in the occupied Palestinian territory (the West Bank and Gaza Strip) is illegal. The Court set forth the consequent legal obligations resting on states, including that states must:

“abstain from entering into economic or trade dealings with Israel concerning the Occupied Palestinian Territory or parts thereof which may entrench its unlawful presence in the territory”, and;

“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.”

In order to comply with its obligations under international law, the Netherlands must prohibit all investment relations that bankroll or enable the Israeli military and settler presence or apartheid regime in the Occupied Palestinian Territory. The measures outlined above, aimed at preventing genocide, should effectively achieve this result.

Turning the tide

Throughout the genocide in Gaza, the Dutch government has used the lack of EU consensus on collective measures as an excuse for national inaction. But this is not a valid or tenable position, legally or morally.

In addition to the legal obligation, the Netherlands already has the legal means, as an individual state, to impose restrictions on capital flow to and from Israel.

Under Article 65 of the Treaty on the Functioning of the European Union (TFEU), EU member states are allowed(opens in new window) to restrict capital flow with another country “on grounds of public policy or public security”. Article 347 of the TFEU further stipulates that states can restrict capital flow “in order to carry out obligations it has accepted for the purpose of maintaining peace and international security”.

The bankrolling of the genocide and occupation must be stopped. The urgency, legal obligation, and the measures to be taken are clearly established.

The lack of political will must result in a legal and political reckoning and must be replaced with effective sanctions.