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Large number of Portuguese multinationals shift activities to the Netherlands to avoid taxes

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The financial crisis has hit Portugal extremely hard. Government expenditure has been cut time and again, and taxes have been raised. Family households and small and medium enterprises suffer the consequences. Portuguese multinationals, however, have been shifting more and more of their economic activities to the Netherlands since the crisis began.



Meanwhile, 19 out of the 20 biggest Portuguese multinationals are using a letterbox company in the Netherlands in order to pay fewer taxes in their home country.

In a new report, the Centre for Research on Multinational Corporations (SOMO) brings together information from the IMF, the OECD and the Dutch Central Bank, and concludes that the Netherlands is the biggest tax sink for Portuguese corporate taxes.

Previously the European Commission estimated the amount of missed income through tax evasion, throughout Europe, at € 150 billion per year. This amount equals the entire annual EU budget. According to SOMO’s calculated estimate, Portuguese multinationals shifted at least € 2.5 billion in profits, in the period from 2009 to 2011.

The Dutch Connection
The large financial flows from Portugal to the Netherlands and back again, show that investments from and to Portugal are not real ‘investments’ but rather ‘round-trip’ investments, in which Dutch letterbox companies are used to avoid paying taxes in Portugal. In the SOMO report a case study is used to show how the Portuguese energy company EDP uses ‘The Dutch Connection’ to pay considerably less taxes in its home country.

SOMO researcher Rodrigo Fernandez explains: “The international fiscal architecture is outdated. In these times of globalisation and hyper-mobile capital, it is far too easy for large companies to avoid paying taxes. Leaving workers and small and medium enterprises with the consequences of this historical crisis.”

Download the report



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