The Netherlands has more foreign direct investment abroad than any other country. How did this happen? Is it a lingering effect of the Dutch East India Company?

by iwanttobepart
Beepbeepbooppanda

Most of this FDI is foreign money that is routed via the Netherlands. There are two common explanations for this phenomenon.

The first is tax avoidance (or tax optimisation). In the period 1950 - 1970, many Dutch international cooperations moved their headquarters to the Caribbean because there were more favourable tax laws in place. At the end of 1970s, the Dutch government wanted to draw those companies back by creating such laws themselves (better less than nothing was the idea). This worked quite well, so well that foreign international companies moved their head quarters to the Netherlands as well. This way the Netherlands became a link in an international chain for tax avoidance.

The second reason is that the Netherlands has a quite clear and easy accessible system for tax law. Foreigners have the same rights and there is little red tape. This means that rich foreign nationals from countries were wealth is less secure (Russia, China, etc.) create companies in the Netherlands and then use to those companies to invest in their own or other countries. This way their wealth is secured via Dutch laws.

As you see, both reasons are very much connected to each other and both are, as so often, partially true. Depending on where you stand on the issue of tax avoidance one weighs more than the other.