U.S. multinational corporations have found a safe haven in the Netherlands for tax-free earnings, but now that President Barack Obama is making a stand, it could have an impact on their economy.
So long as U.S. multinational corporations keep their earnings overseas, they are legally safe from paying taxes toward their home base. Netherlands is a corporate tax haven for U.S. multinationals, and together with Ireland and Bermuda, it is sheltering companies’ earnings from the U.S. tax authorities, so says Barack Obama.
This practice is fully legal but the trade-off is a detriment to the U.S. economy, reports Associated Press on Dutch News. U.S. companies typically pay a 35% tax for corporate earnings, or around 22% after certain allowances.
Obama is working on a proposal to cut overseas tax benefits for U.S. multinationals.The idea is to cut tax benefits for those U.S. corporations that invest overseas and use some of their forecasted revenue to gain tax credits for investment in research and development, reports Quentin Fottrell for The Wall Street Journal.
The worst-case scenario for places such as Ireland is less foreign development as well as less attractiveness for multinationals. Despite this speculation, the consumer confidence remains solid within the European Union. A monthly survey of companies and shoppers across the European Union and in the 16 countries that share the euro showed renewed optimism for the first time since May 2007, reports Aoife White for San Diego Union Tribune.
- iShares MSCI Netherlands Investable Market Index (EWN): up 0.1% year-to-date
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.