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The Netherlands was long a well-known home base for multinationals. Now, firms are eyeing the exit.

Microchips darling ASML — at €360 billion the most highly valued technology firm in Europe — has rung the loudest alarm bell yet, delivering a <a href="https://www.politico.eu/article/europes-tech-champions-sound-the-alarm-over-migration-rhetoric/">threat</a> early March to politicians in The Hague that it might look across the border to find the space, engineering talent and political support it needs to expand.

The government of outgoing Prime Minister Mark Rutte got the message and last month announced a&nbsp;<a href="https://www.rijksoverheid.nl/actueel/nieuws/2024/03/28/nederland-investeert-25-miljard-euro-in-sterk-ondernemingsklimaat-voor-microchipsector-brainport-eindhoven" target="_blank">€2.5 billion support scheme</a>&nbsp;for the tech-heavy region where ASML and its spin-offs are based.

But it could be too little, too late.

“We’ll probably get a right-wing government, but not one that is pro-business,” Rem Korteweg, a senior researcher at Dutch think tank Clingendael, told POLITICO.

A wave of partial relocations, and threats thereof, have hit the country right in the middle of a political storm.

The Hague is bracing for a shift to the right after Geert Wilders’ far-right Party of Freedom (PVV) won last November’s <a href="https://www.politico.eu/article/far-right-leader-geert-wilders-wins-dutch-election-exit-poll/">general election</a>.

“The Netherlands is perhaps the most open economy in Europe or even the world — but we’re running into the limits of growth,” said Korteweg.

A Wilders-shaped government — if and when he finally forms one — would spell profound change on issues like taxation and immigration, where companies crave predictability to plan, invest, hire and grow for the long term. Other countries like France and Germany are taking better care of these “side conditions,” ASML CEO Peter Wennink <a href="https://x.com/Nieuwsuur/status/1765668570531283232?s=20" target="_blank">warned</a> in early March.

If ASML does pull the trigger, that could draw a line under four centuries of open trade and commerce that have brought unprecedented prosperity.

The Netherlands opened for business before any other European country —&nbsp;the Dutch East India Company was the world’s first joint-stock company and, as an imperial and commercial enterprise with a monopoly on trade with Asia through much of the 17th and 18th century, it is considered by some to have been the first multinational.

That was the start of centuries of companies settling in the open economy, as the country developed its strategic location as Europe&#8217;s port of entry. It even spawned the term “de B.V. Nederland,” translatable as “Netherlands, Inc.”

<h3 class="wp-block-heading">Pressure tactics</h3>

Big Corp. didn’t always put down deep roots.

Unilever, known for consumer brands Dove, Hellmann’s and Knorr, was created in the 1930s by a merger of a Dutch margarine company and a British soap maker. Oil company Shell is a similar creature, formed out of a 1907 tie-up by Dutch and U.K. rivals.

These dual Anglo-Dutch structures long benefited the Netherlands: the companies had their headquarters, stock listings and tax registries in the country.

But they also put pressure on politicians to keep the businesses onside —&nbsp;after all, their bosses could decide to shake up their corporate structure and locate their HQ abroad.

Unilever <a href="https://www.unilever.com/news/press-and-media/press-releases/2020/completion-of-unilevers-unification/" target="_blank">shifted</a> its operations in November 2020 to a single, U.K.-registered parent company. Shell, too, moved its headquarters from the Netherlands to the U.K. in 2021. The flight followed years of talks of how to placate these companies. But they left anyway.

ASML’s complaints diverge from those of Unilever or Shell, since they aren’t about where the companies are registered on paper. The threat entails something more economically significant: actual investment plans.

The global chips industry is poised to almost double in size by 2030 <a href="https://www.mckinsey.com/industries/semiconductors/our-insights/exploring-new-regions-the-greenfield-opportunity-in-semiconductors" target="_blank">with revenues passing the $1 trillion mark</a>, consultancy McKinsey forecasts. As a unique supplier to this industry, there’s no doubt that ASML will grow too.

The question is: where?

So far, the tech hub around the country’s fifth-largest city Eindhoven has been ASML’s base. Marketeers even invented the moniker “brainport” for it, to rival the Rotterdam port classification of “Mainport.” ASML has stayed close to its roots at household name Philips, in Eindhoven near a top-tier technical university.

But ASML CEO Wennink <a href="https://x.com/Nieuwsuur/status/1765668570531283232?s=20" target="_blank">questioned</a> if Eindhoven was still the right spot, after meetings in The Hague in early March. He lambasted a “significant gap” between the reality of what companies need to grow, and the perception of what politicians think companies need.

One issue that triggered ASML’s fury was an amendment last October by key lawmaker Pieter Omtzigt to curb a 30 percent expatriate tax break. Omtzigt is a kingmaker in the ongoing negotiations over a new Dutch national government: his startup political party, New Social Contract, could make or break the next coalition. That cripples ASML’s chances for the tax break to be restored.

Beyond the impact on ASML’s workforce in the Netherlands (around 40 percent is not Dutch), Wennink says it’s equally annoying how measures like these are rushed through—“in 24 hours” and “insufficiently thought through.”&nbsp;

<h3 class="wp-block-heading">‘Thoughtless policy making’ </h3>

Creating an attractive climate for companies should be boring and predictable. The current political climate in the Netherlands has been anything but —&nbsp;and Dutch employers federation VNO-NCW has been a vocal critic.

“A lot of publicly-traded companies are considering a possible departure of their headquarters abroad. You need at least two hands to count them all,” the federation&#8217;s chairwoman Ingrid Thijssen <a href="https://www.telegraaf.nl/financieel/1107628050/meer-dan-tien-grote-beursgenoteerde-bedrijven-denken-aan-vertrek-uit-nederland" target="_blank">told local newspaper De Telegraaf</a>.

The federation’s spokesperson Edwin van Scherrenburg singled out curbing expat advantages and limiting share buyback options as a “sign of unpredictable and thoughtless policy making,” in a statement shared with POLITICO.

Others have slammed the capriciousness of The Hague.

A stable government is a key requirement to grow companies, said Robert-Jan Smits, president of the executive board of the TU/Eindhoven and member of the Brainport Foundation supporting Eindhoven&#8217;s development.

Companies “don’t want to be confronted with continuous uncertainty, as is currently happening in the Netherlands, with all kinds of ad hoc measures, with regards to fiscal [policy],” Smits said in an interview.

Laurens Dassen, a Dutch lawmaker for pro-Europe party Volt, said policymakers were also short-sighted in funneling money from a €20 billion “National Growth Fund” earmarked for projects to drive long-term growth.&nbsp;

“You’re sacrificing your long-term investments, your future earning capacity, for short-term fun for the taxpayer,” he said.&nbsp;

<h3 class="wp-block-heading">Changing the guard</h3>

Adding to the concerns is the fact that Prime Minister Mark Rutte is on his way out. Rutte — himself a manager at Unilever until the early 2000s — has been credited with being open to some of the concerns voiced by big companies, like abolishing the dividend tax.&nbsp;

Rutte’s last government fell, triggering an election in which migration was a key issue and Wilders’ anti-immigrant party PVV emerged victorious. In its election program, the PVV vowed to “to restrict study migration” with a limit on international students on masters programs.

For multinationals, that has raised fears over how to attract global talent and house an often foreign workforce. &nbsp;

While the coalition talks have yet to achieve a breakthrough, companies like ASML are on high alert.

“Sixty-five percent of all the international students at the technical university in Eindhoven settle in this region,” ASML CEO Wennink said in January, adding that they are a source of talent that the company needs.

This story has been updated.

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title: How the Netherlands lost its shine for big business
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summary: Multinationals warn new migration rules and fiscal reforms could drive them
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