Canadian company Eldorado Gold devastates local communities and avoids tax through the Netherlands

30/03/2015 5852 views

Cluj-Napoca, Romania, 31 March 2015 – A new report by the Centre for Research on Multinational Corporations (SOMO) reveals that while Greece endures harsh austerity measures, Greece’s economic recovery is being undermined by large-scale tax avoidance – enabled by the Netherlands. The report Fool’s Gold reveals that tax avoidance by Canadian mining company Eldorado Gold, which uses mailbox companies in the Netherlands, has led to tax losses of at least €1.7 million for Greece in the past two years. There are also serious environmental and human right concerns related to the company’s operations.

The tax avoidance scheme involving Dutch mailbox companies is the perfect example of how Eldorado operates worldwide, Romania included.

Eldorado Gold avoids tax in Greece

Eldorado Gold uses Dutch mailbox companies to avoid paying taxes while having no material operations in the Netherlands. Fool’s Gold has found that Eldorado Gold has a loan-financing structure that shifts interest payments from Greek subsidiary Hellas Gold SA, via Dutch mailbox companies to a Barbados entity where this income remains untaxed. If this financing structure persists, future profits from the project and related income tax can be expected to be substantially reduced, especially if practised in combination with other tax avoidance techniques widely used by extractive sector firms.

The European Union and the Netherlands have double standards. On the one hand they impose harsh austerity measures which have devastating social and economic impacts in Greece; on the other hand they actively facilitate tax avoidance which costs the Greek state millions of euros,” says SOMO researcher Katrin McGauran.

What does this mean for Romania?

The report shows that the company uses the same structure for Romania. The Dutch mailbox company Eldorado Gold (Romania) BV, with an asset of US$ 15 million but no employees, is the direct owner of Deva Gold that plans to operate the Certej mine. Deva Gold is financed by a credit facility worth US$ 200 million from another Dutch mailbox company, Eldorado Gold Treasury BV, which in turn is being financed through promissory notes issued to its Dutch shareholder (Eldorado Gold Coöperatief). Financial statements reveal that Eldorado Gold Coöperatief received loans from two Barbados subsidiaries in 2013, amounting to US$ 100 million and US$ 25 million. The Romanian Certej mine is therefore ultimately financed from Barbados.

No in-depth research has yet been done into the financing of the Certej mine. Nevertheless, it appears that the interest payments from Romania to the Netherlands, which should be taxed elsewhere as income for the corporate group, are not taxed there but in the tax haven Barbados. This would reduce profits in Romania and corresponding corporate income tax in case the Certej mine would ever start.

Tax avoidance, a structural problem

Fool’s Gold shows that the case of Eldorado Gold is not an isolated one – rather, the Netherlands and Luxembourg are widely used tax conduit countries for foreign companies investing in Greece. The report shows that a staggering 80 per cent of direct investments from the Netherlands to Greece are routed through mailbox companies – an underreported issue in discussions on the causes of Greece’s budget deficit.

SOMO infographic 1

SOMO researcher Indra Römgens: “Tax abuse by large corporations operating in Greece and the facilitating role that EU law and Member States’ fiscal regimes play therein should be closely scrutinised by the new European Parliament’s special committee on tax rulings.”

Again, Romania is comparable to Greece. The Netherlands is the biggest investor in Romania, with US$ 20.149 million in 2013 out of a total of inward direct investment of US$ 82.606 million. This means 24 per cent of all FDI in Romania originates from the Netherlands. But if we assume that 80 per cent of this investment is rerouted via the Netherlands to avoid tax in Romania, 19 per cent of all investments in Romania (US$ 16.119 million) are attributable to Dutch mailbox companies and corresponding profits are thus not fairly taxed.

SOMO infographic 2

Roxana Pencea from Mining Watch Romania: “The Romanian government should conduct a cost-benefit analysis of Eldorado Gold’s Certej project that scrutinises the company’s aggressive tax planning structure for legality, and quantifies not only expected future tax revenues and job creation, but also environmental, social and job losses expected to incur from the operations”.

Note for editors


Roxana Pencea (Mining Watch Romania): +40 723024300,

For specific questions regarding the SOMO report:

Indra Römgens (SOMO):

Katrin McGauran (SOMO): (in Greece on 1 April)


  • The report can be downloaded from here.
  • The summary can be downloaded from here.

Mining Watch Romania

Mining Watch Romania is a network of organizations joining local communities in their efforts to stop destructive industrial-scale mining projects.

About SOMO

SOMO is an independent not-for-profit research and network organisation. SOMO works on sustainable development, in social, environmental and economic terms. Since 1973 SOMO has been researching multinational enterprises and the consequences of their activities for people and environment around the world.