So how can you transfer the profits of your company to the Netherlands and pay less tax? Let's say you have a company that makes stylish swimsuits for dogs in Italy. You call it Rimini Dogsuits™
You set up a subsidiary in the Netherlands or Luxembourg who own the rights to the use of the name Rimini Dogsuits™. In order for Rimini Dogsuits™ Italy to sell swimsuits, it needs to pay the Dutch subsidiary for the right to sell them under that name.
How much the name is worth is a decision internal to the company. Of course, you have an interest in maximising that amount because you can file the sum as expenditure in Italy...
...and as income in the Netherlands, where it will be taxed at a preferential rate. But the only function of your Dutch company is to provide a service (the use of the name) which is essentially fictitious because *de facto* the seller and buyer of that service are the same.
You can also do the same by setting up a Dutch subsidiary from which you buy the nylon for the swimsuits at inflated prices. This is the construction that Starbucks used for its coffee, and avoid taxes in the UK.
uk.reuters.com/article/us-bri…
uk.reuters.com/article/us-bri…
I hate to say it but to me it feels like seeing a very skilled pickpocket: you know it's very wrong but it takes so much creativity and talent to come up with these contorted schemes that in some weird way it should be rewarded.
