Pharmaceutical Pfizer funneled 15 billion dollars in profit through a Dutch letterbox company last year. Some of that money comes from vaccine profits. This is evident from the latest annual report of the Dutch Pfizer subsidiary CP Pharmaceuticals International CV
That employee-less subsidiary played a central role in a Pfizer tax structure for decades. As long as the pharmaceutical company – until the corona crisis mainly known for Viagra – hoarded its worldwide billions of profits in the Netherlands, it did not have to pay profit tax on it.
Due to changes in legislation in both the Netherlands and the United States, this form of tax avoidance no longer works since last year. But due to a new tax law that was passed under then-President Trump in 2017, American multinationals were still able to get their hoarded profits back to the US at a temporary favorable rate.
Pfizer withdrew nearly $130 billion of those profits from its Dutch subsidiary in two years, reported NRC earlier. In theory, this resulted in a tax benefit of at least $25 billion compared to the period before the new tax law. But Pfizer denies that CP Pharmaceuticals International CV was ever used for tax avoidance.
Still in use
“Those benefits will soon disappear,” says Jan van de Streek, professor of tax law at Leiden University. Some of it has already been deleted. “From next year it will no longer be a tax-free piggy bank.”
Yet Pfizer has not closed the Dutch route. The turnover of the Dutch branch in the period November 2019 to November 2020 was still 34 billion dollars (for comparison: the total turnover of Pfizer in 2020 was almost 42 billion dollars – about three quarters went through the Netherlands).
“After the end of the year, the partners withdrew $15 billion from the reserves,” the company wrote in its annual report. This means that the company took that money to the United States. In its own words, Pfizer also has no tax advantage here.
No return
It is not entirely clear why Pfizer still allows the money flows to flow through the Netherlands. “It probably won’t hurt much,” says Van de Streek. “There is no tax advantage, but also no disadvantage.”
However, from January 1, it is possible. Limited partnerships such as the Pfizer subsidiary would then have to pay tax on the returns on their money deposited in the Netherlands. Van de Streek: “But the money does not yield anything on a savings account, so if Pfizer does not invest the money, there is no return either.”
Vaccine profits via the Netherlands
Part of the billions that will go through the Netherlands this year will come from the profits that Pfizer makes from the sale of its corona vaccine. The turnover of the Dutch branch in 2021 will therefore be higher than in 2020 due to vaccine sales, the company writes. Exactly how high that turnover and profit are will become clear when the annual report for 2021 is submitted to the Dutch Chamber of Commerce next year.
from a Overview Leaked vaccine contracts from the American action group Public Citizen already showed that several countries had concluded contracts with the Dutch Pfizer Export bv. This includes Brazil, Albania in Colombia.
According to a Pfizer spokesperson, it is a “normal distribution entity”. The BV sells the vaccine in countries where Pfizer does not have a sales subsidiary, such as Albania, or where it does not have a license to sell, such as Brazil. The Netherlands was chosen “because of the expertise here. We simply pay tax.”
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