FOUR EUROPEAN TAX HAVENS attracted a disproportionate share of US investment in Europe during the period 1996 to 2000, according to a study by Martin Sullivan in Tax Notes magazine.

The four countries are Holland, Luxembourg, Ireland and Switzerland.  US companies invested $330 billion through the four countries — or about 38% of their total investments during the period in Europe — even though the four countries together account for only 9% of the European economy.  The average effective tax rate in Europe during the period was 30%.  The effective tax rates in the four countries were as follows: Luxembourg 2.7%, Switzerland 4.5%, Ireland 7.6% and Holland 14.1%.  Sullivan speculates — no doubt correctly — that US companies were using the four countries as places to base holding companies and then shifting income from higher tax jurisdictions to the holding companies.

Keith Martin