Young children often own businesses to avoid taxes

The now seven-year-old Pim van Rijswijk became a business owner when he was five days old. The baby tax consultant in Utrecht was thus the showcase for his father’s practice. “Inheritance tax is the most hated tax in the Netherlands. As a tax advisor, my job is to help entrepreneurs pay as little tax as possible in a legal way,” says Van Rijswijk senior. “Coming up with new buildings is the creative side of my job.”

The government is now also familiar with baby bv. In July, officials named Van Rijswijk’s idea on a list of “notable tax structures.” They explain how it works. First, the parents set up a company. Your child will receive the shares. The parents then go into paid employment in the BV and run the business. They simply get paid, but the profit they earn goes to the child. The advantage? “Giving children shares in a limited company prevents gift and inheritance tax.”

Pim van Rijswijk senior with junior, who became the owner of a company five days after his birth.Picture Shody Careman

Marketing stunt

It fills Van Rijswijk with a certain pride that, seven years later, officials are working on the building he put on the market. But his idea hardly produced anything commercial. “I mainly have SME entrepreneurs as clients, they’re not too worried about what you’re going to arrange thirty years from now.” He has now also dissolved his own son’s company. “It was primarily a marketing stunt.” However, he believes that ‘the big companies’ recommend the trick to more wealthy entrepreneurs.

The Chamber of Commerce’s UBO register shows that 110 children born after 2011 are registered as shareholders in a Dutch company. Together, they own at least 25 percent of the shares in 121 companies, according to the data Fidelity have requested. There is a chance that there are even more baby bosses in practice. Months after the introduction of the UBO register, a third of all Dutch companies had not yet provided information about the owners.

tax trick

It is certain that 104 minors are the full owners of a BV or NV. More than a fifth of them are ten years old or younger. Van Rijswijk’s tax trick may also be involved here. But joint investigation of the French newspaper Le Monde and the Luxembourgish reporter shows that baby bosses can also serve another purpose.

Early this year, the journalists discovered that the minors in Luxembourg were used to hide the true owner of billion-dollar companies. They found a one-year-old Mongolian toddler who owns part of a major coal company in the Gobi desert and discovered that the children of wealthy Azerbaijani businessman Baylar Mammadov own companies that have been awarded gas contracts worth $43 million.

Furthermore, the minor descendants of Russian telecom oligarch and convicted fraudster Sergei Adonyev surfaced. The Adonjev children’s Luxembourg company owns, among other things, a villa worth 25 million euros on the French Riviera. A few years earlier, the same company also appeared in a multi-million dollar fraud investigation by French authorities.

super rich

It cannot be determined whether the very young business owners in the Netherlands are also used for such concealments by the super-rich. Because the Luxembourg UBO register is freely available, it was possible for journalists there to build a database searchable by age. In the Netherlands, it will cost approximately one million euros to retrieve the data for such a database.

In response to the list of notable tax structures, the Cabinet announced on Budget Day that it wanted to tackle the structures. It would show how next spring.

Also read:

Our inheritance law increases inequality, real wealth remains almost untouched

Great wealth accrues to next generations virtually untouched, fueling wealth inequality. It is reason for a discussion about the law of inheritance, not a law of nature, but a made-up rule.

Leave a Comment