Members of the Dutch parliament are wondering how Uber’s billions can be reconciled with anti-tax avoidance policies: the national tax authorities are accused of providing Uber with a last minute certainty of a deal (‘ruling’) when the ride-hailing company left Bermuda in March.
The ride-hailing company Uber moves part of its intellectual property and brand to the Netherlands as an alternative to the tax haven Bermuda. The recent quarterly annual report shows that the Netherlands is the new hub in a tax regime that will allow the American multinational to reduce its tax payments by 5.5 billion euros.
Uber moves to the Netherlands because the European Union makes it increasingly difficult for multinational companies to do business in tax havens. Until recently, the company had parked its intellectual property in Bermuda. There was a good reason for this: there is no income tax on this island off the US coast. In the fight against tax evasion, the European Union has blacklisted the island with other tax havens.
Members of the Dutch Parliament in The Hague have reacted indignantly to the tax benefit received by the technology company through this relocation. Several Members of Parliament questioned Finance Minister Menno Snel on the deduction of Dutch income tax in the region of 5.5 billion euros.
Uber brought its intellectual property, like its brand, to the Netherlands in March, because the European Union is making it increasingly difficult for companies to do business in tax-free havens like Bermuda. But The Netherlands also takes action against tax avoidance. For example, from 2020, the government will introduce a withholding tax on interest and royalties paid to countries that have little or no profit tax. Amongst other things, a parliamentarian wants to know whether the tax authorities have promised the American transport company in advance the exact deductible amount in a so-called ‘tax ruling’. But the Dutch tax service does not want to confirm or deny that such an agreement has been made, as the tax authorities cannot say anything about individual taxpayers. However, it is almost certain that Uber has consulted the tax authorities, as otherwise the company may not include the future tax benefit of 5.5 billion euros in its books. So far Uber makes losses. The Dutch tax deduction can only be redeemed if Uber makes a profit. This does not have to be in the Netherlands, but in non-US countries where Uber is active. Activities outside the US are covered by Uber International BV in Amsterdam. Another parliamentarian believes that the tax deduction shows that the Netherlands has to tackle this form of tax circumvention much harder. His colleague was outraged about the cooperation, which the tax authorities must have provided for some time. Healso referred to the criticisms made in Parliament when other companies were given certainty about their tax obligations while circumventing them. Because of this practice, the Netherlands is also under the microscope in Europe, said the Member of Parliament.
According to these politicians, the timing of the alleged tax deal with Uber is remarkable in that Minister Snel banned such agreements from 1 July 2019 onwards when tax havens are affected. “Each time we say at the very last minute that we will improve our lives, and such a mega-deal is concocted last-minute,” said a Dutch politician. The deduction item is disputed in the Netherlands, as no tax is paid in another country. If this were the case, Uber could not include the future tax benefit in its books. How exactly tax payment is avoided elsewhere is unknown. Representatives want to know from Minister Snel which method Uber used to achieve this. Uber refused to comment, apart from saying “that is adheres to the Dutch law.”
• As recently as March Uber brought part of its intellectual property rights and brand to the Netherlands. Photo Uber.