Ferrovial’s recent decision to move its headquarters to the Netherlands has reignited the old controversy over tax competition between European countries. Surely there are several reasons behind this decision, but the key is to know what weight the company has put on gaining tax advantages.

There is currently a strong global trend towards international coordination in tax matters, which has resulted in the signing of an important international tax agreement, led by the OECD, in October 2021. The second of the two pillars of this agreement establishes a global minimum taxation of 15% for large companies. This sets a floor for tax competition and aims to change a dynamic of more than 30 years of a race to the bottom regarding corporate tax rates.

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Janet Yellen’s words on the signing of this international agreement are quite eloquent: 'having chosen to compete on taxes, we have neglected to compete according to the skills of workers or the excellence of our infrastructure. This is a competition where everybody loses, and neither President Biden nor I are interested in participating in it any further.'

On the other hand, one of the features taken into account when identifying aggressive corporate tax planning practices is the strategic location of the multinational group’s headquarters or holding company in a tax-advantageous territory. This, combined with the execution of certain intra-group operations, allows certain corporations to allocate a significant portion of the income they earn to the location that offers them the greatest tax advantages. This location is not always the same as the one where the company carries out the bulk of its operations.

The Netherlands has traditionally offered a very favourable regime for international holding companies, from which subsidiaries operating in the most important European markets are managed and held. This is one of the reasons that have made the country a key player in the design of numerous corporate structures.

Two other reasons for this privileged position are the Netherlands’ membership of the European Union and the jurisdiction’s vast network of tax treaties. The first point makes them beneficiaries of advantages from the single market such as the free movement of capital and freedom of establishment. The second aspect favours the use of this jurisdiction by some companies to avoid the payment of withholding taxes for certain types of income (for example, foreign-source dividends). The combination of these two aspects has made the Netherlands an essential part of the corporate frameworks of a plethora of large companies.

Thus, one of the consequences of Ferrovial’s holding company being located in the Netherlands is that the taxation of dividends and capital gains from its subsidiaries abroad will no longer have to pass through Spain. This taxation will take place directly in the Netherlands, where such revenue is credited at 100%, whereas in Spain it is only 95%.

The Netherlands has long since become a bridging jurisdiction, through which large flows of money are transiting, for the most part, to classic tax havens (with a zero or close-to-zero rate).

It is true that recent legislative reforms approved in the Netherlands have eliminated some of the substantial tax benefits offered by this country for a long time. But the reality is that there still remain important loopholes that are exploited by some large companies to drastically reduce their tax obligation.



Pending the effective implementation of the aforementioned international initiatives, tax competition remains an unresolved global problem. Its intensity is even accentuated within Europe by the persistence of certain imbalances. In effect, the construction of the European market so far has prioritised the establishment of the four freedoms that make up the single market without imposing as a counterweight a minimum of fiscal convergence at the community level. 

Hence arises the importance of revisiting the European Commission’s old corporate tax harmonisation proposal, which has been blocked for some time due to a lack of consensus in the Council. This initiative, now renamed the Befit proposal, would imply that the tax base on which the new overall minimum rate of 15% is to be applied be calculated in accordance with a set of rules defined at European level. It would also mean that this base would be the result of a compensation between all the profits and losses obtained by the multinational in EU territory.

This ultimately would discourage a large part of corporate relocation operations for tax reasons in Europe, while at the same time producing a considerable increase in corporate tax revenue. This increase could be used, among other things, to repay the debt contracted as a result of the NextGenerationEU funding strategy, from which large companies in our country have benefited so much.