Double Dutch sandwich
The “double Dutch sandwich” is a complex tax technique that is used by some large multinational companies to minimize their tax bill by exploiting the tax laws of the Netherlands.
The double Dutch sandwich involves the use of two intermediary Dutch companies to transfer funds from a subsidiary located in one country to another subsidiary located in another country. This technique helps reduce taxes paid on profits earned by these subsidiaries, as Dutch tax laws provide tax benefits such as tax credits for dividends and tax deductions for interest.
The first “sandwich” consists of a foreign subsidiary making payments to a Dutch intermediary company, which then transfers these payments to another foreign subsidiary. The second “sandwich” is formed by the second foreign subsidiary, which is owned by a second Dutch intermediary company, which in turn transfers payments to a third foreign subsidiary.
Using this technique, multinational companies can transfer funds from one country to another without paying as much tax on the profits made by their subsidiaries, because these payments are deducted from taxable profits in the different countries.
However, it is important to note that the use of the double Dutch sandwich is increasingly criticized by governments and international organizations, who consider this technique to be abusive and harmful to tax fairness. The Netherlands recently adopted new rules to limit the use of this technique.