Europe & Central Asia
Netherlands risk report
Corruption does not represent a significant constraint to business in the Netherlands. Petty corruption is almost non-existent, and the public administration is transparent, efficient and holds itself to high ethical standards.The Netherlands ranks 4th globally and has in 2018 overtaken Germany as Europe’s most competitive country (GCR 2019). The Dutch Penal Code makes it illegal for anyone to give or receive a bribe in the public or private sector, including a foreign public official. In most cases Dutch and foreign companies as well as their subsidiaries can be held liable for corruption offenses committed by individuals working on their behalf and can be ordered to pay up to 10% of their turnover (CMS 2021). Facilitation payments are not permitted, while gifts and hospitality may be considered illegal depending on the intent and benefit obtained. The legal framework to fight corruption generally complies with the provisions of the major anti-corruption conventions. According to the OECD, the Netherlands has made significant progress in investigating and punishing foreign bribery since it criticized the country for lagging enforcement in 2013, the country has since reorganized its efforts and redelegated tasks which has led to an increase of detected foreign bribery cases and investigations opened (OECD 2020).
Judicial system Very low risk
There is a low risk of corruption in the Netherlands. Companies consider the judiciary very independent and effective in settling disputes and challenging government regulations (GCR 2019). Three-quarters of citizens consider the degree to which the judiciary is independent as either good or very good (ECJS 2021). Very few judges believed that within the last two years individual judges had taken bribes or engaged in corruption, furthermore, judges express confidence that appointments and promotions in the judiciary are based on merit (ENCJ 2018-2019). Only very few judges express concerns about facing inappropriate pressure in their work (ENCJ 2018-2019). The Enterprise Chamber, a special court established and dedicated to commercial disputes, , plays an important role in resolving shareholder conflicts (Minerva Advocaten 2020. When it comes to legal certainty, the Netherlands ranks highly, with its authorities having internalized legal certainty on all levels in their decisions and actions (SGI 2020). There have been cuts to funding of lawyer fees, making the judiciary less accessible to citizens with minimal or average resources(SGI 2020). Enforcing a contract in the Netherlands takes slightly less time but is slightly costlier than the OECD high-income average (DB 2020).
The Netherlands is a member of the International Centre for Settlement of Investment Disputes (ICSID) and is a signatory to the New York Convention 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
Police Very low risk
There is a low risk of corruption when dealing with the Dutch police in day-to-day operations. However, about one-third of respondents perceive bribery and abuse of power as widespread in the police forces, but 60% of respondents have trust in the police dealing with corruption cases (RLR, 2020). The government has effective mechanisms to investigate and punish police abuse and corruption;) .The reliability of police services to protect companies from crime is considered very high (GCR 2019).
A large-scale investigation has indicated corrupt behaviour among the police. Reportedly, police information was leaked to criminal organizations through the encrypted chat service Encochat. The Dutch National Police set up a dedicated team in the National Investigations Service to lead the investigation (HRR 2020). In July 2020, the Operational Taskforce (EMMA) dismantled the platform EncroChat (Europol, Jun. 2021). No further updates into the case were published at the time of review.
Public services Very low risk
The Dutch public administration does not pose any significant corruption risks for companies. The Netherlands scores high on its ability to Ensure public institutions embed strong governance principles and its ability to build a long-term vision and establish trust by serving their citizens (GRC 2020). The integrity of service provision throughout the public administration is very high, with very few reported incidents of corruption between citizens, businesses and public authorities (EUACR 2014). Companies report that irregular payments and bribes almost never occur when obtaining public utilities, business permits, licenses and other related services (GCR 2015-2016; European Commission, Feb. 2014). Companies, however, complain of burdensome government bureaucracy (GCR 2017-2018). But the perceived burden imposed on firms by government regulation is low compared to other countries (GCR 2019). Furthermore, the country’s legal framework’s adaptability to digital business models is highly regarded (GCR 2019).
Starting a business in the Netherlands takes four steps, which is in line with other OECD high-income countries; the time required is only half of the average (DB 2020). The steps and time required to obtain a construction permit are in line with the OECD high-income average, however, the cost of obtaining permits is about twice as high as average (DB 2020).
Land administration Low risk
There is a moderate to low risk of corruption in the land administration; risks are particularly related to the real estate sector. Very few surveyed companies rely on bribes to obtain building permits (European Commission, Feb. 2014). Property rights are well protected and the Netherlands shares a first place with 4 other nations in terms of the quality of its land administration (GCR 2019). Expropriation or nationalization require a special act of parliament and the Netherlands generally follows customary international law, resulting in prompt, adequate, and effective compensation as well as ample process for legal recourse (ICS 2020). While companies are not likely to encounter corruption when dealing with the Dutch land authorities, findings reveal that the building and real estate sectors are more vulnerable to corrupt practices, especially to money laundering (Transparency International, Feb. 2019). Amsterdam is now pushing for more transparency in the sector to combat money laundering (Transparency International, Feb 2019). In the past decade, a number of high profile corruption cases have come to light in the country involving real estate agencies and housing corporations involving embezzlement and kickbacks among other issues. Most recently, a former member of the parliament of Sint Maarten was sentenced to 5 years in prison for accepting bribes related to construction projects (ICS 2020).
Tax administration Very low risk
The Dutch tax administration is not affected by corruption and does not constitute a constraint for investors. Companies indicate that bribes and irregular payments are almost never exchanged when meeting with tax officials (GCR 2015-2016). Likewise, citizens perceive the tax administration to be free from corruption and abuse of power (European Commission, Feb. 2014). While tax regulations and tax rates are considered a problematic factor to doing business (GCR 2017-2018), tax authorities provide a high degree of customer service to foreign investors in the form of transparent and precise guidance regarding long-term tax obligations (ICS 2021). Companies should note that Dutch law prohibits the tax deductibility of bribes and facilitation payments (OECD 2021). The Dutch tax administration is considered almost free from corruption and abuse of power by citizens (European Commission, Feb. 2014).
The number of annual tax payments required in the Netherlands is slightly lower than the OECD high-income average, and the time required is significantly lower than the average (DB 2020).
The otherwise clean reputation of the Dutch tax administration has been stained by a scandal that eventually led to the resignation of the national government. Years of mismanagement within the tax administration led to the wrongful labelling of around 10.000 families who were receiving child support as fraudulent, causing severe financial issues within these families (Reuters, Jan. 2021).
Customs administration Very low risk
Corruption risks in the Dutch customs administration are low. Bribes and irregular payments are very rare (GETR 2016). More than one-third of citizens consider the customs administration to be affected by corruption and abuse of power, but survey respondents do not report paying bribes to customs officials (European Commission, Feb. 2014). Burdensome procedures and tariffs are among the main constraints for importing and exporting in the Netherlands (GETR 2016). Businesses rate the efficiency and time-predictability of the clearance process very highly (GETR 2016). The costs and time required for border compliance in The Netherlands are almost negligible (DB 2020)
There have been individual cases of corruption among Dutch customs officers, recently 7 customs officers working at Schiphol Airport were arrested on charges of money laundering and drugs trafficking (Telegraaf, Aug.2021) and in the harbour of Rotterdam a father and son, who worked as a security guard and customs officers were arrested for corruption, as the duo was allegedly involved in drugs trafficking (Nu.nl, Feb.2021). According to a recent investigation the Dutch customs authority is lacking in combating cases of corruption among its officials (AD, Jul. 2021).
Public procurement Low risk
There is a moderate to low risk of corruption in the procurement sector. The Ministry of the Interior and Kingdom Relations and Ministry of Justice and Security have both taken steps to enhance regulations to combat bribery in the processes of public procurement (ICS 2021). Companies perceive diversion of public funds to be very rare and favoritism in decisions of government officials is seen as uncommon (GCR 2017-2018). However, around one-fifth of businesses believe that corruption has prevented their company from winning a public tender in the past three years (European Commission, Feb. 2014). The Netherlands is ranked among the best countries in the EU in its ability to develop mechanisms to control corruption in public procurement (European Commission, Feb. 2014). While procurement corruption does not impede doing business in the country, risks of corruption are reportedly largest in the construction sector and real estate sector (Transparency International, Nov. 2015). It is recommended for businesses to implement special due diligence procedures to reduce the likelihood of encountering corruption in the procurement process. The Netherlands scores high on its ability to rethink competition and antitrust frameworks, which is essential in ensuring both local and international market access in the near future and it scores high on its ability to facilitate future markets especially in areas that require public-private collaboration (GCR 2020).
During the Covid-19 pandemic the Dutch government has faced scrutiny over a face mask deal worth EUR 100M. The Dutch government had ordered 40 million masks from China on what was supposed to be a not-for-profit contract, but the suppliers of the masks ended up making EUR 20M in profit (The Guardian Jun. 2021). Another Covid-19 related procurement dispute involves 5 laboratories that missed out on a government contract of processing PCR-tests, suing the Dutch government on the allegation that the government favored smaller laboratories for these contracts and that the government had outsourced testing to Belgium, even though there would have been enough capacity within the Netherlands (Volkskrant Nov. 2021).
The Dutch Penal Code makes it illegal for anyone to give or receive a bribe in either the public or private sector, as well as bribing a foreign public official. It criminalizes extortion, abuse of office, fraud and money laundering. Dutch law does not require income and asset disclosure by officials, prospective members of parliament are however expected to disclose any potential conflict of interest to their future Prime Minister (ICS 2020). Dutch and foreign companies and their subsidiaries can be held liable for corruption offenses committed by individuals working on their behalf (CMS 2021). There is a dual criminality requirement; meaning that the offense has to also be criminalized in the country where it took place, before it may be prosecuted by Dutch authorities (CMS 2016). There exists no corporate liability defenses which could mitigate sentencing (CMS 2016). Individuals can be fined up to EUR 87000 and/or sentenced with up to six years imprisonment; and a maximum sentence of twelve years for the bribery of judges and 20 years if the latter serves to obtain a criminal conviction (OECD 2020). The maximum corporate fine possible is up to EUR 870.000 or 10% of the given organization’s annual turnover (CMS 2021). Private bribery is also criminalized with a maximum sentence of four years (CMS 2021). The government has effectively enforced its anti-corruption laws, and the country has stepped up its efforts in investigating and prosecuting foreign bribery cases (OECD 2020). Dutch law does not distinguish between bribes and facilitation payments, and bribes do not have to be of monetary value, but encompass material and immaterial benefits for the recipient (CMS 2021). Although illegal, facilitation payments are not prosecuted on the condition that these only represent small amounts, do not distort competition, are provided at the initiative of the foreign official, represent payments to junior public officials, and are included in the company’s financial accounts (OECD 2020). Protection for whistleblowers is not guaranteed by a single law, but a new agency called the House for Whistleblowers (Huis voor Klokkenluiders) has been set up in 2016. Whistleblowers may turn to the house for advice and assistance; the house may also conduct its own independent investigation into any complaint (World Law Group 2016). The House for Whistleblowers bill (in Dutch) has also introduced an obligation for companies to introduce an internal policy for dealing with reports of abuse and misconduct (World Law Group, 2016). The Netherlands was one of the few European countries that already had comprehensive whistleblower legislation, but the country has faced criticism to its ´minimalist´ approach to implementing the new EU whistleblower directive, which according to the Whistleblowers house means that even though whistleblowers get recognition, the Netherlands is still lacking in offering concrete help (Huis voor Klokkenluiders, Oct.2021).
The Netherlands is a signatory to the OECD Anti-Bribery Convention, the United Nations Convention Against Corruption (UNCAC), the Council of Europe’s Civil and Criminal Law Conventions against Corruption, and the Group of States Against Corruption (GRECO).
The Dutch media environment is free and independent, a wide range of views is expressed, and censorship is very rare (HRR 2020). The government rarely interferes in the press and does not restrict or censor online content. No credible reports have been presented that the Dutch government monitored private online communications without the appropriate legal authority (HRR 2020). The Government Information Act allows individuals and the press to demand information from the public administration or from private companies conducting work for a public body; however journalists have frequently complained that the system does not function well enough to provide for adequate transparency, a problem that persists regardless of promises of a more transparent culture within the government (VPRO, Nov. 2021). The Dutch media environment is considered ‘free’ and the Netherlands ranks 6th in the world press freedom index (RSF 2021). The murder of prominent crime journalist Peter R. de Vries in 2021, which was allegedly ordered by a criminal organization which de Vries was investigating (New York Times, Jul.2021), shocked the country and led to unprecedented security measures to protect Dutch media organizations (AD, Jul.2021).
Freedom of assembly is guaranteed and generally respected by the government in practice (HRR 2021). Many national and international civil society organizations (CSOs) are registered in the Netherlands and enjoy a high degree of independence, the Dutch government actively works together with these organizations. (NISA 2012)(Ministry of foreign affairs 2019).
- OECD: Phase 4 Report: Netherlands 2021.
- European Commission: EU Justice Scoreboard 2021.
- CMS: CMS Guide to Anti-Bribery and Corruption Laws 2021.
- Europol: 800 CRIMINALS ARRESTED IN BIGGEST EVER LAW ENFORCEMENT OPERATION AGAINST ENCRYPTED COMMUNICATION 8 June 2021
- U.S. Department of State: Investment Climate Statements: Netherlands 2021
- Reuters: Dutch government quits over 'colossal stain' of tax subsidy scandal 15 January 2021
- Telegraaf: Corruptie op Schiphol: medewerkers beticht van witwassen en drugssmokkel 3 August 2021.
- Nu.nl: Vader als beveiliger en zoon als douanier verdacht van corruptie in haven 18 February 2021.
- AD: Onderzoek: Douane schiet flink tekort bij aanpak corruptie 1 July 2021.
- Volkskrant: Strijd om testmiljarden escaleert: vijf labs spannen kort geding aan tegen de staat om aanbesteding 8 November 2021.
- The Guardian: Dutch to investigate business trio’s €100m face mask deal 8 June 2021.’
- Huis voor Klokkenluiders: Implementatie EU-richtlijn klokkenluiders ‘gemiste kans’ 1 October 2021.
- VPRO: Onderzoeksjournalisten: transparante overheid nog ver te zoeken 6 November 2021.
- RSF: Netherlands 2021
- New York Times: Dutch Crime Reporter Dies After Being Shot Outside TV Studio 15 July 2021.
- AD: Mediapark Hilversum voor onbepaalde tijd veiligheidsrisicogebied om RTL Boulevard 14 July 2021.
- OECD: Phase 4 Report: Netherlands 2020.
- European Commission: Rule of Law Report 2020.
- Minerva Advocaten: What is the Dutch Enterprise Chamber? 10 April 2020.
- Sustainable Governance Indicators: Netherlands Report 2020.
- Doing Business: Netherlands 2020.
- U.S. Department of State: Country Reports on Human Rights Practices: The Netherlands 2020.
- World Economic Forum: Global Competitiveness Report 2020.
- World Economic Forum: Global Competitiveness Report 2019.
- World Economic Forum: Global Competitiveness Report 2019.
- Transparency International: Amsterdam wil witwassen via vastgoed aanpakken 19 February 2019
- Ministry of Foreign affairs: Policy Framework Strengthening Civil Society 2019.
- European Network of Councils for the Judiciary: Independence, Accountability and Quality of the Judiciary.2018-2019
- World Economic Forum: Global Competitiveness Report 2017-2018.
- World Economic Forum: Global Competitiveness Report 2015-2016.
- CMS: Guide to Anti-Bribery and Corruption Laws 2016.
- World Economic Forum: Global Enabling Trade Report 2016.
- World Law Group: Global Guide to Whistleblowing Programs 2016.
- Transparency International: “Integriteit Vastgoedsector”, 25 November 2015.
- European Commission: EU Anti-Corruption Report: Annex 19, Netherlands, Feb. 2014.
- Transparency International: National Integrity System Assessment, Netherlands 2012.