How Shell uses Bermuda to turn tax into profit

Oil giant Shell makes clever use of the income tax rate in Bermuda: zero percent. Every euro that is made by one of Shell’s subsidiaries and flows to the island is used to propel the profit. The principal rule: keep it legal.


It was a few minutes past 10 am on April 29th, 2008, when insurance specialist Andrea Koroluk climbed the stage in San Diego to give an important speech. The Canadian Shell manager had a clear message to the dozens of insurance specialists that had come to listen to her contribution to the annual conference of the Risk Management Society.

Koroluk participated in the conference in San Diego as a worker of Solen Insurance, a major subsidiary of the Anglo-Dutch oil company Shell. She could not give away the detailed secrets of her employer’s tax strategy, but there was more than enough left to talk about.

The risk managers in the room pricked up their ears. Shell was one of the largest multinationals in the world, a company to keep an eye on. Just like how the oil company dictated the price of petrol at the pump, so it went with its fiscal policies. What Shell did was the standard for the way that other major oil companies would settle their tax affairs.

Solen Insurance, Andrea Koroluk’s formal employer, is more than simply one of Shell’s many subsidiaries – partly due to its location. Solen, which is engaged in the insurance of oil transportation, oil refining and ships, is officially located on the tropical island of Bermuda.

For the outside world, Shell shrouds itself in mystery, but the risk managers and tax experts that were present got the picture. Solen and Shell are located in Bermuda because of the very supple approach to taxes in the country. As the rate of the profit tax on the islet is 0 percent, the profits that Solen Insurance makes are transferred in its entirety – meaning tax free – to the parent company Shell in The Hague. 

It takes effort to achieve a profit transfer like that, Koroluk told the audience. To take full advantage of the tax on the island in the Atlantic Ocean the headquarters were not to interfere with the way that Solen calculated the insurance premiums. “Otherwise, tax authorities may think that the contributions do not reflect a fair market value and the costs cannot be deducted from the corporation”, said the Shell manager.

A copy of the presentation immediately makes clear the principal message of insurance agent Koroluk. “Staying legal in the 21st century”, is what her talk was about. Always stay within the bounds of the law.

The Shell employee told the crowd that in order to achieve this constant monitoring and market research is required. If somewhere in the world a tax rate was changed, Shell’s risk managers had to get started immediately. The route via Bermuda eminently suitable for this, she showed with a handy PowerPoint picture.

Shell is not the only multinational that has discovered Bermuda as a suitable hub for its insurance premiums. In the past decades the island has been embellished with a seemingly very large industry of internal insurance companies – captives in jargon. For Bermuda this industry is of vital importance as the insurance industry is just as important for the country as its tourism.

At least eight thousand major multinational companies now have their own insurance office in Bermuda. The few multinationals that have no presence in Bermuda, have opened branches in Cayman Islands, the Bahamas, or Guernsey. These four islands – all of which have a zero percent tax rate – house almost half the global market for internal insurance.

Letterbox companies disbanded
Alarmed by questions from de Volkskrant several Dutch multinationals announce that they are busy closing their letterbox companies in tax free countries. Akzo Nobel reports that the three firms in Bermuda and the Cayman Islands are inherited from the acquisition of paint company ICI. At the moment these “companies do not have any function within AkzoNobel”, the spokesman says. The company is busy liquidating these firms.
Unilever is even more energetic in closing its subsidiaries. Seven days after de Volkskrant asked questions about its holding on the Dutch Antilles – which, by the way, does not have a zero percent tax rate – Unilever’s holding was officially liquidated. And what is Phillips doing in the Bahamas? The electronics company is busy dismantling its businesses on the island, a spokesman said.

At first glance an internal insurance company operates just like an ordinary insurance company. If a company wants to insure its ships, cranes, cars, employees, buildings or loans, its subsidiaries pay premiums to the Bermuda-based company. If there is damage, for example because of a fire or an accident, the corporation’s own private insurance company pays the damage out of the big money jar funded by these premiums. That way companies do not have to use the services of commercial (re)insurers and the profits remain in the company. So far these practices are perfectly fine.

However, there is a second advantage to the internal insurance route via Bermuda.  Insurance premiums may be deducted from the revenues.  A Shell subsidiary in for example Gabon, Australia or Brazil would detract the premiums they pay to Solen from the profits they make in these countries. 

This way these subsidiaries have less tax to pay in the countries they are operating in. Subsequently Solen makes a bigger profit in Bermuda, and does not pay any taxes over these profits. From Bermuda the profit can, in turn, be piped back, wholly untaxed, to the headquarters in the homeland.

This means that every Euro that Shell can funnel through Bermuda will propel the profits of the oil company. And – and that is the beauty of the structure – these practices are completely legal.

The big question is how much Shell earns using this tax route. The company anxiously keeps the profits from Solen in Bermuda hidden. Whereas in most European countries the profits of large companies are made public, the Chamber of Commerce in Bermuda, even after several requests for information by de Volkskrant, is only prepared to share the most basic information. For a fee of $10 the Bermuda government will give the address and registration date of a company, but the profit and loss accounts remain secret.

From the sparse information that we could gather it appears that Solen is located on the fourth floor of the Cedar House, an orange-colored business complex on Hamilton’s Cedar Avenue in Bermuda, the self-described ‘risk capital of the world’. From the Cedar house the Shell employees get a nice view of the cedars on the boulevard.

The address turns out to hold another 44 subsidiaries of Shell, from all corners of the world where the company is located, from Shell Australia shipping to Kuwait Shell Limited. Shell is not willing to tell how profitable Solen Insurance and Shell’s 44 other companies in Bermuda are. When prompted, a spokesperson tells us that this financial information is only shared with the Bermuda government. Shell is “always prepared to give information about its presence and activities in a country, to the tax authorities concerned” a spokesman said. The company points out that in comparison with other multinationals it pays quite a lot of tax – “44 percent of the profits “.

Through its evasive answers and the lack information on Bermuda we cannot note with a hundred percent certainty how the Shell route works.  However, the impressive list of companies that Shell has registered in Bermuda does give an impression.

First of all, Shell has multiple holdings on Bermuda engaged in the company’s flow of funds. These holdings invest in or lend money to subsidiaries in other countries. For example, apparently Shell lets a portion of its investment in the Russian island of Sakhalin run through Bermuda. 

Billions of euros are invested in the development of this enormous oil and gas project on Sakhalin. The huge sums of money are sent to Russia via Bermuda. Interest on the loan is deductible from the expenses made in Russia, while the profits that Shell’s subsidiary in Bermuda makes remain untaxed. Presumably, a holding like Shell Overseas Finance is used for the same purposes, albeit for different projects. When Shell Overseas Finance’ interest margin is higher than the normal. market rate,  interest margin, a greater share of the profits ends up in tax haven Bermuda.

There are also letterbox firms, like Shell Shipping Australia, which act as a leasing company. The foreign subsidiaries can hire the cranes, vessels and other equipment that they use here.  These charges reduce the profit, and thus the tax, in the countries where Shell drills for its oil and gas.

Other letterbox companies, such as Shell International Trading Middle East Limited and Shell Trading (ME) Private limited, are set up to bundle the international trade in oil and gas. This suggests that on paper the internal trade of, for example, crude oil runs through Bermuda, allowing a portion of the gains to end up on the island.

All profits from the 45 Bermuda daughters eventually end up at the Shell headquarters in The Hague. However, even after a second attempt, Shell was not prepared to share information about the sums that are involved. “In our earlier extensive response, we stated that Shell is compliant with the applicable laws and regulations. Royal Dutch Shell’s annual report includes all relevant public information on taxes and tax payments. We will not elaborate on the supplementary questions regarding Bermuda.”

That Shell (with its 90.000 employees and an annual turnover of 470 billion euro’s) probably has the upper hand in negotiations with Bermuda (65.000 inhabitants and a national product of 4.5 billion) does not take anything away from it.   

This way the line of defense of Shell, which trumpets its commitment to corporate social responsibility, stays intact. Since, as the company emphasizes, they focus on the standards of the OECD, and the OESO is of the opinion that Bermuda is not a tax haven. Regardless of the fact that the country has a zero percent tax rate.

Professor of fiscal economics and director of the scientific bureau at Deloitte Tax, Peter Kavelaars, has great difficulty with the OECD guideline. With a tax rate of zero percent you can certainly label a country a tax haven, he says. “Looking at the tariffs from a Dutch perspective, a profit taxation of ten percent is really the bare and necessary minimum.”

He considers the OECD directive that Shell fences with a sham. “This is the wrong approach,” says Kavelaar. According to him, countries worldwide should, when taking all the taxes together, have a tax burden of at least 20 percent. He also calls for transparency. “Countries should be transparent about their information and know no banking secrecy. Companies should always be required to publish their commercial annual accounts.”

Researcher Mark van Dorp of Somo, an organization that advocates a fairer and more just taxation system, also criticizes the practices of multinationals in tax havens. “Companies are hiding behind the local regulations. Large firms, however, have the social responsibility to share more information about the consequences of their fiscal practices.  Just as a company must not harm the environment, it should not disadvantage governments by avoiding taxes.”

Andrea Koroluk still has a job as an insurance manager for Shell. As far as one could tell, she does her work well. Shell took note of the lessons that she put on paper back in 2008. Since her speech in San Diego the company did not have to deal with the ‘fines, penalties and imprisonment’ as a result of the violation of tax laws which she warned against in her talk.

Shell did, however, make a net profit of 22 billion euro’s in 2012. With help from Bermuda.

Tax havens popular among Dutch companies

Large Dutch multinationals make use of letterbox firms in tax havens such as Bermuda, the Bahamas and the Caymans. The corporations have a total of 237 subsidiaries located in the nine tax-free countries of the world. Shell and ABN AMRO have by far the most letter box firms in tax havens.


This is apparent from an investigation conducted by de Volkskrant of the subsidiaries of 26 large Dutch multinationals in Bermuda, the Caymans, the Bahamas, Bahrain, The Maldives, the Isle of Man, the British Virgin Islands and the two British Channel Islands. Foreign companies pay zero percent tax over profits, in these nine countries.

With 81 Dutch subsidiaries located on the island, Bermuda is the most popular fiscal refuge among the nine, followed closely by the Cayman Islands (66 subsidiaries), and the British Channel Island Jersey (37). The largest Dutch corporation, Shell, has a total of 85 subsidiaries in six tax havens. ABN AMRO is located in five of the nine tax havens, with 54 subsidiaries, and Vitol has 17 subsidiaries in five of the countries.

Most corporations give little information about their activities in these fiscal oases. Oil company Vitol and oilfield service company Fugro refused to answer at all.

ABN AMRO provided with more details.  According to the state-owned bank the subsidiaries in these countries have been set up for international clients, in relation to, among other things, special investment funds and arrangements for the shipping industry. ABN AMRO emphasizes, just as the other companies do, that there is no question of tax evasion.

Sometimes these companies actually have operational activities in these islands. For example, Heineken has a brewery located on the Bahamas, and Boskalis maintains the country’s harbor. Other multinationals, including Akzo Nobel, Philips and Unilever, responded to our questions by noting that they are currently in the process of liquidating (some of) their holdings in tax havens.

Out of the 26 companies included in the research, TomTom, PostNL and Wolters Kluwer are the only companies that do not own any subsidiaries in the nine tax havens. Navigation company TomTom does however own two subsidiaries in Cyprus.

Shell is not prepared to share any details about its tax routes. The company states that when requested it shares all information with the tax authorities of the countries concerned. Furthermore, the energy company does not agree with our definition of a tax haven and points to a directive by OECD which states that Bermuda and the Cayman Islands are not, in fact, to be considered as tax havens.

This directive is internationally seen as controversial. If a country has a minimum of six tax treaties with other nations, than this is according to the OECD already enough not to be considered a tax haven.

Professor of fiscal economics Peter Kavelaars considers such wordplay folly. According to the professor these nine countries that have no tax on profits are definitely tax havens. “Looking at the tariffs from a Dutch perspective, a profit taxation of ten percent is really the bare and necessary minimum.”

According to Kavelaars, a country needs to do two things it wants to lose the tax haven label. The tax pressure for companies, via profit tax and other forms of taxation, has to be minimally 20 percent.  Moreover, countries need to be transparent and share the information they have, as well as know no bank secrecy. Companies need to deposit their annual accounts.

“Multinationals need to be much more transparent about the payment of their taxes” echoes Mark van Dorp of SOMO, an organization that advocates a fairer tax system, “but companies hide behind the lack of local and international regulations”.

The Mailbox of Southern Europe

Many multinationals from Southern Europe have found the Dutch route to tax avoidance. Through letterbox firms established here by, amongst others, Zara and Fiat, large companies from Southern Europe evade the tax authorities.Image

Large companies from Southern Europe are using Dutch mailbox firms to avoid the payments of taxes. Over half of Italian, Greek, Spanish and Portuguese multinationals have a shell company established in the Netherlands. Most of these letterbox companies were registered in the Netherlands after the year 2000.

This is one of the conclusions of research done by de Volkskrant which looked at the 83 companies from Italy, Portugal, Spain and Greece that are part of the Forbes 2000 list of largest companies in the world. From the Dutch annual financial statements of these companies it was derived that 46 of these 83 companies are certain or very likely to have a special letterbox construction in the Netherlands in order to avoid taxes. Seven of these companies include the Portuguese, Italian or Spanish government as a shareholder.

The Dutch tax avoidance route allows the Southern European companies to pay less taxes over the revenues that their subsidiary firms all over the world have earned. Governments, especially those outside of the European Union, are missing potential revenues. But through this ingenious construction Portuguese, Spanish and Italian treasuries are also presumably missing out. It is impossible to determine the exact amounts using only the annual financial statements.

Portuguese companies in particular have descended in the Dutch cities these past few years. Eight out of nine large companies have a mail box firm in the Netherlands. Portugal Telecom, utility company EDP and shop operator Sonae are amongst the tax evaders.

18 out of the 34 large Italian companies employ a special tax construction in the Netherlands. 18 out of the 26 Spanish companies have a Dutch establishment. Greek companies are surprisingly absent, presumably because they a prefer a tax route that goes through Cyprus. Only 2 out of the 14 largest Greek companies have an establishment in Amsterdam.

The annual financial statements offer several clues that the mailbox firms are (legally) avoiding taxes. Most of these firms have no employed staff. The companies are channeling hundreds of millions in euros in dividends, royalties and interest through to the Netherlands, using constructions like foundations and corporations.

“In particular the Portuguese government appears to be at a disadvantage because of the Dutch tax avoidance route”, says researcher Rodrigo Fernandez of the University of Amsterdam and Somo.   “Companies are able to artificially heighten the cost levels of their subsidiary firms by charging slightly higher interests or royalties. By moving the interest levels through their subsidiary firms they are reducing their global tax output. Holland is the ideal candidate to gather capital and loan because there is no tax on outgoing interest.”

The increase of mailbox firms in the Netherlands is a negative development, according to professor Rick van der Ploeg. He thinks that tax agreements should only be used to attract companies with actual operations in the Netherlands. “Right now there is a race to the bottom, and a transition from taxing capital to taxing labor or consumption’.’  Europe needs to make better agreements regarding this, says Van der Ploeg. Spain and Portugal themselves are partly to blame for the tax avoidance, according to professor in fiscal economics Peter Kavelaars. He mentions the fact that the tax on royalties and dividends in European countries is dropping to zero. “Thanks to the numerous tax agreements the Southern European companies can now flow money through the Netherlands. Spain and Portugal, however, are entitled to make similar agreements themselves.”

Because of the worldwide reduction of taxes on royalties and dividends governments are forced to find other means of income, according to Kavelaars. “Capital is by nature very fugitive. One push on the button makes the money disappear. It is inevitable that these sources of income go down. Taxes on labor, consumption or real estate are easier to maintain.” Europe should form agreements on the minimal height of corporation tax, according to Kavelaars.

Fiscal avalanche in tax haven the Netherlands.

Increasingly, large international companies are using the Netherlands to avoid paying taxes in other countries. Using a web of letterbox companies, ‘royalty-routes’ and favorable legal structures, this network is used  to channel billion’s in and out of the Netherlands. Is that fair?


Those who make the effort to browse through last year’s annual reports of the 26 letterbox companies that the giant pharmaceutical company Pfizer has established in the Netherlands, will be rewarded. After looking at the sixth year report of the impressive pile of documents Pfizer’s predilection for the Netherlands suddenly becomes crystal clear.  On page 66 of 2011’s year report of C.P. Pharmaceuticals International CV — one of Pfizer’s many firms in the Netherlands — under heading 38 ‘Tax’, it clearly states that the company does not have to pay any taxes in the Netherlands.

“According to the tax ruling of December 1, CPPI CV is considered transparent for Dutch tax purposes and as such not subject to Dutch corporate income tax or dividend withholding tax”. The 10 billion that this limited partnership business entity runs through the Netherlands provides the national treasury with a grand total of zero euro’s in revenue.

And Pfizer can continue to use this comfortable tax ruling – a binding agreement between the tax authorities of the Netherlands and the foreign company – for some time to come. The year report states that this special agreement will continue until the 31st of December, 2013.

The search for tax avoidance schemes is hardly ever as simple as it is in the case of Pfizer. Most of the world’s 100 largest companies have created a web of letterbox companies to make best use of the tax advantages that the Netherlands may provide.  Not often is made explicit that the establishment of these entities in the Netherlands is exclusively for tax avoidance purposes.


De Volkskrant has taken the time over the last few months, to read the annual reports of all these letterbox firms, and we found many clues on the behavior of international firms. We found that these one hundred companies have over a thousand of such “empty” letterbox firms in the Netherlands.  Most of these firms do not have any employees. And some companies are depositing voluminous annual accounts in the Netherlands, without having any real operational activities in this country.

Another clue is the predilection of large foreign corporations for legal bodies that do not seem related to their commercial form of organization, such as limited partnerships (commanditaire vennootschappen), co-operatives (coöperaties) and foundations. Finally, the accustomed methods of tax avoidance pop up, when billions in dividends, interest payments or royalties appear in the annual reports.

Whatever the method or form of organization, in the end there is but one reason why these numerous mailbox firms are located in the Netherlands: the companies that own these letterbox companies end up paying less taxes for their global operations when using the Dutch tax shelters.

The Netherlands have been a Walhalla for tax avoidance for some time, yet this has seldom led to a political stir in The Hague. Now and again there is a public outcry, such as U2’s and the Rolling Stones’ tax avoidance, but the indignation about such practices mostly takes place in other countries. A recent example is the Irish outrage concerning the fact that U2, at the height of the Irish crisis, moved to Amsterdam for fiscal reasons. Whilst sheltering their income in this country, lead singer Bono kept searching for the spotlights all over the world in the guise of a philanthropist.

Even after a parliamentary inquiry in Great Britain sparked outrage over coffee chain Starbucks, which uses its letterbox companies in the Netherlands to avoid almost all tax payments in the country, Dutch politicians seemed not to take any interest in the issue of tax avoidance.0123vkgraphECbelastingontwijking-3-page-0

The tax shelters of the individual companies are one hundred percent legal, are said to provide for ‘high quality employment’, and bring in tax revenue.  About a thousand professionals are estimated to earn their daily bread in or around the tax avoidance business. The government is estimated to gain around a billion euros in tax revenues. For a few weeks now, Secretary of Finance Weekers comfortingly adds that he is ‘discussing the matter’ internationally.0123vkgraphECbelastingontwijking-4-page-0

Opponents of the tax routes, such as the international organization Tax Justice or the Dutch Somo, particularly criticize the ethical side of the Dutch approach to taxes. When multinationals pay less taxes by making use of Dutch tax regulations, other countries miss out on substantial tax revenues. And when corporations pay little in taxes, it is up to the consumers and employees to fill the treasury. According to Tax Justice and Somo, that is not fair.

Keeping silent
Until now Dutch politicians gave a wide berth to the question of fairness with respect to tax avoidance via the Netherlands.  The Ministry of Finance notes that all practices are in accordance with the law, and refrains from any further comments. A detailed overview of fiscal deals is not available, and most members of parliament are either uninformed or uninterested in the matter.

Even if examples of tax avoidance via the Netherlands appear, the Ministry keeps silent.  For example, when asked about the desirability of Nike’s tax structure in the Netherlands, the Ministry’s response was thus: “I cannot comment on individual taxpayers”.

The de Volkskrant research shows that meanwhile, tax avoidance via the Netherlands is steadily growing. In the last few years the world’s largest multinationals have established more and more letterbox firms in the Netherlands. Out of the 100 largest companies of the world, 84 now have fiscal subsidiaries in the Netherlands.

Until very recently, Chinese companies were practically the only companies that ignored the Netherlands as a fiscal refuge, but this has changed. On January 8th 2013 Petrochina — China’s biggest oil and gas producer – founded their third cooperative in the Netherlands, in two years’ time.

Some multinationals have been in the Netherlands for decades, such as the American oil company Exxon Mobil. The company uses as many as 64 Dutch subsidiaries to funnel dividend income from countries such as Venezuela, Nigeria, Russia and Angola trough the Netherlands and out to the United States. At least 38 of these letterbox firms have zero employees on the payroll. Exxon Mobil does pay taxes in the countries where the oil and gas is extracted. However, the profits that the energy concern makes and which travel back to the parent company, are not taxed in the Netherlands.


The Netherlands have created a favorable tax regime for dividend and interest. A company that funnels the dividend from a foreign subsidiary to the parent company’s country of residence, have to pay less taxes. Almost every multinational – from Microsoft to IBM and from Procter & Gamble to BHP Billiton – uses this route through the Netherlands.

Around the turn of the century the royalty method became popular. When a company registers its intellectual property in the Netherlands, and subsequently lets it foreign subsidiaries pay for the use of the property rights, the tax burden can be significantly reduced. There is no tax on royalties in the Netherlands.

The best known company that makes use of the Dutch tax regulations on royalties is Google. The search engine’s intellectual property is filed in the Netherlands. Via subsidiaries particularly in Ireland and Bermuda Google transfers a sum in excess of seven billion euro’s to the Dutch Google Netherlands Holding, whilst charging the same amount to this holding.

Google Netherlands Holding, with its zero employees, ends up paying a meager 2.7 million euro´s to the Dutch tax authorities. This allows Google to save more than 2 billion euro´s that would have otherwise been made out to the American treasury.

Since 2005 there has been a marked increase in the number of registered letter box companies. Companies that hitherto had no presence in the Netherlands – such as the American telecom provider Verizon and the British pharmaceutical company GlaxoSmithKline – erected holdings in our country.

Recently a seemingly odd legal structure, the co-operation (coöperatie), started to catch on. The cooperation was once designed as a legal form of cooperation for farmers and is generally used as a legal form for non-profits. In the last few years multinationals such as supermarket chain Wal-Mart, cable company Comcast and soda giant PepsiCo suddenly registered as a cooperation in the Netherlands.

The reason these corporations are registering as co-operations in the Netherlands is the following: co-operations do not have to pay taxes over the profits distributed to its members. Furthermore, the co-operation protects against Peeping Toms, since these  ‘partnerships’ publish very concise annual reports.

Huge sums

Co-operations, for example, are not required to inform the Dutch chamber of commerce of the profits that have been made. Nonetheless, it is clear that huge amounts are associated with these letter box entities. The asset value of Wal-Mart’s, Chevron’s and Samsung’s Dutch branches runs in the billions.

For Wal-Mart the anonymity that the cooperation provides apparently is not yet enough. With titles such as the Rhine American Holdings Coöperatie and Broadstreet European Holdings Coöperatie the supermarket chain gave its Dutch branches names that do not suggest any link to Wal-Mart. These until recently unknown letter box companies came into view by use of an international register of chambers of commerce that de Volkskrant consulted.

The final curious fiscal construction that emerged in the research is the use of the special kind of limited partnership (‘commanditaire vennootschap’ or CV) that was once conceived with the goal of creating a partnership between the shareholder that controls the company and its investors. The CV has been a popular vehicle for investments in ships and property for a few years now, as the profit distribution is fiscally favorable. Not only Pfizer but IBM, Wells Fargo, PepsiCo and Volkswagen now also have a CV in the Netherlands.

The global financial crisis was preceded by a unrestrained and barely regulated growth of credits and accompanying financial instruments. This de Volkskrant research shows a corresponding trend in fiscal routes through the Netherlands. The number is growing, the structures are getting more complex and more in transparent, and all the while politicians seem unaware of the expanding fiscal web that large businesses are spinning in the Netherlands.

Fiscal route through the Netherlands: 57 Billion Euro’s

Amsterdam – The world’s largest multinationals have set up hundreds of new financial entities  in the Netherlands since 2005. This is apparent from an examination, conducted by de Volkskrant, of the annual reports of the hundred largest multinationals and their subsidiaries in the Netherlands. 

In 2011 these multinationals managed to funnel at least 57 billion euro’s through the Netherlands, whilst hardly paying any taxes. Google, IBM, and ENI funneled the most through the Netherlands. The de Volkskrant research shows that the Dutch tax burden for these letterbox companies is not easily known, but it is certainly very low. Most of these companies have negotiated confidential agreements with the Dutch Tax authorities, resulting in payment at rates between zero and five percent tax for the money they booked in transactions from and to the Netherlands.

For these transactions the firms used around a thousand letterbox companies, most of which have been established in the Netherlands quite recently.  Moreover, the companies, such as Google, Microsoft, Gazprom and Wal-Mart, manage a variety of these entities to lower their tax burden.

Especially abroad there is much commotion about these Dutch financial offshoots. Because of the tax shelters, large corporations pay less and less taxes.  And fewer tax revenues have caused governments worldwide  to raise taxes on their citizens or to cut in public services.

The research shows that 91 out of the 100 largest international corporations operate in the Netherlands. At least sixty of those use the Netherlands for tax sheltering purposes;   another seventeen corporations there are strongly suspected of similar activity. .

For some time now, the Netherlands have been under fire because of the tax benefits that foreign companies can gain in our country. Last year, to the indignation of many British, it was shown that the coffee chain Starbucks used letterbox companies via the Netherlands to avoid payment on virtually all taxes in the United Kingdom.

Minister Weekers has to answer to the parliament today on the subject of these tax shelters.. Members of parliament are demanding insight into the size of tax avoidance in the Netherlands. However, the taxing authorities have not been very forthcoming in providing information up to now.

The de Volkskrant research reveals the enormous expansion of tax schemes in recent years. The Netherlands are considered a safe haven for the payment of dividends, interest and royalties (the income from intellectual property rights, including the rights to music, software and brands) which are not taxed in the Netherlands.

When compared to the enormous flows of money involved, the benefits to the Netherlands are small. Approximately a thousand people are employed in the tax-avoidance industry, and the estimated revenue for the treasury is a billion euros.