Combating the impact of shell companies, set up by multinationals to avoid tax, should take place mainly at an EU level, tax minister Marnix van Rij has told MPs.

‘The cabinet agrees there is a need for an EU-wide approach to prevent abuse by shell companies,’ he said. ‘There are limits to what is unilaterally possible to further tackle tax avoidance.’

Van Rij was reacting to the recommendations of a special commission, set up to examine ways of tackling letter box companies, thousands of which are based in the Netherlands.

That commission reported back in 2021 but none of its 15 suggestions have been implemented in any concrete way. Van Rij said in his reaction that many of them, such as improving the exchange of information between tax offices, needs to be organised at a European level.

Others, such as requiring subsidiaries to publish annual accounts, have been dismissed by the government. Currently, subsidiaries do not have to publish their accounts if their parent company files its accounts elsewhere in Europe and they include the Dutch subsidiary’s results.

The finance ministry, which has already introduced a tax on royalties, is bringing in a withholding tax on dividends in 2024. The EU is also currently working on guidelines to combat tax evasion via shell entities.