Changing tax rules and uncertainties surrounding government policy on cutting back nitrogen-based pollution may cause foreign companies to think twice about settling in the Netherlands, departing commissioner for foreign investments Jeroen Nijland has told the Financieele Dagblad.

Nijland, who after seven years with the Netherlands Foreign Investment Agency (NFIA) will be heading the Investment Promotion Agency of Qatar, said the Netherlands is still a popular destination for companies but that foreign investment may suffer in future if the politicisation of measures affecting foreign businesses continues.

Last year some 305 businesses moved to the Netherlands but foreign investment dropped by a quarter and the number of jobs by 40%. The coronavirus crisis contributed to the drop but so did tax measures and the nitrogen emissions issue, Nijland said.

The departing commissioner cited the Starbucks tax case of 2015 in which the European Commission accused the Dutch government of giving state support to the chain, a claim that was later refuted.

Another example of politics causing investor nervousness is the commotion over the abolition of dividend tax in 2017, Nijland said. Intended as a sweetener for Shell and Unilever, it stranded after fierce political opposition.  ‘That has caused much unrest regarding the fiscal part of our business climate,’ Nijland told the paper.

Nijland said  the worsening relationship between politics and business is not typically Dutch but has become slightly more polarised here. ‘Companies are asking themselves whether they are welcome,’ he said.

Political backtracking on a drop in corporate tax, the abolition of the tax break for expats and a GroenLinks draft proposal for an ‘exit fine’ for departing companies have also been damaging, he said.

Nitrogen pollution

The unsolved nitrogen compound pollution, which has paralysed thousands of building sites, is possibly even more damaging for foreign investment, Nijland said. The NFIA counted 140 big projects which have been affected. ‘People who want to build understand there are rules. But if you can’t explain what they are it becomes tricky,’ he told the FD.

Foreign investors have a choice of countries, said Nijland, who will be taking up his position in Qatar in March. ‘They compare countries and find things here to be unpredictable. Stability is key because these are long-term investment decisions. If parts of the business climate are volatile then it is not possible to make a proper comparison.’

For now Brexit is still propelling the number of businesses potentially seeking to settle in this country, Nijland said. ‘Last year the Netherlands welcomed 80 companies from Britain, the same as the year before. Brexit projects in the pipeline have shot up from 425 last year to 550 this year.’