Double-hatting in tax law still everywhere in the Netherlands
Half of all Dutch tax professors also have a paid job in the business community, according to a new census by Leiden University. Not all universities are equally transparent about this.
At the end of February, the House of Representatives was told “no” by Eppo Bruins. The Minister of Education could not tell senators how many tax professors have a commercial side job.
Leiden University can, it now appears. On Tuesday, full professor tax law Jan Vleggeert published a list of 68 tax professors and their secondary positions. More than seventy percent wear two hats: twenty percent work in public administration or law and fifty percent have a commercial side job.
Wealthy individuals
The latter group includes 35 tax professors who, for example, advise companies or wealthy individuals. They do this for the large consultancy firms, such as EY (with which four professors are affiliated), PwC (five) and KPMG (two). But also somewhat smaller firms like BDO, Mazars, BakerTilly and Loyens & Loeff like to have a connection to the university. The latter pays three tax professors for advice and employs another two.
At Erasmus University, they all wear two hats, but these are usually judges or members of the Council of State. Four of the nine tax professors in Rotterdam have a commercially-driven side job. The Vrije Universiteit also scores high with five out of six.
The tax law department at the UvA has relatively the most people with dual roles: eight out of nine. An earlier survey by Folia showed that the Zuidas business district exerts influence on publications by the tax law department. The UvA conducted research in the matter and came to an alternative conclusion. By no means does everyone at the UvA see these dual roles as a problem. In response to questions from HOP Agency, the UvA calls secondary positions “essentially a good thing: it ensures strong connections with society, enriches education and contributes to the impact of research”. Moreover, it is not easy to get full-time professors of tax law to come to the university. Salaries in the sector are “considerably higher” than those at the university, according to the UvA.
Gaps
Not all professors are clear about their additional positions, even if they are related to their academic work. Vleggeert and his student assistant found “gaps” in eight of the 68 professors on their list. They saw all kinds of additional positions in public sources that were not listed on the professors' university websites.
When asked, a number of professors had an explanation. One of them said that he is already retired from the PwC tax consultancy firm and emeritus professor. But that was not yet the case on his LinkedIn profile or his university's website when Vleggeert made his list.
Some professors have their additional positions listed in a special register, but not on their personal university website. Vleggeert: “It seems like the right thing to be as transparent as possible about this.”
Incomplete
Until this week, Nyenrode Business University thought otherwise. According to the private university, anyone who wanted to know what a professor does on the side had to go online to the register. In an initial response, Nyenrode said that the register is “centralised, transparent and accessible” and is “updated annually”m.
But even Nyenrode’s central register is not complete. For example, tax professor Rudolf de Vries has not listed his work at the consultancy firm EY. Nyenrode will rectify this “in the next update”. De Vries did not respond to questions from HOP Agency. However, his LinkedIn profile was updated last Monday.
Nyenrode has since announced that it will after all be listing the additional positions on the personal pages of its professors. The other universities were already doing this. It saves having to search for the register, but then the website and the register must show the same information.
Maastricht tax specialist Hans van den Hurk, for example, has not listed any commercial side jobs on his own UM page under “Work for third partyies”, while public sources indicate that he has at least two. His profile only states in general terms that he advises multinationals on their tax strategy (in the meantime his page has been updated, eds.).
According to Van den Hurk, “due to technical problems, not every role is visible”. He says he did indeed report his secondary activities. “They were approved by Maastricht University”. The technical problem will be solved as soon as possible (and has since been solved, eds.)
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Tax advisor
It seems to sting Van den Hurk that he is being called to account for his secondary positions. He emphasises in an email that he has “never sold tax-avoidance constructions”. In fact, he helps South American countries fight them. According to him, this does not apply to Jan Vleggeert, the creator of the list, who in the past helped companies and wealthy individuals avoid their taxes.
Vleggeert confirms that he worked as a tax advisor. “It is true that I collaborated on tax-avoidance structures. But at the age of fifty, I wondered what I had been doing. This is not right, I thought. That is why I made a conscious decision to switch to the university, to promote that multinationals and the rich pay a fair share of taxes.”
Vleggeert names professors in his research, but he does not intend to call their integrity into question, he emphasises. In 2020, he denounced the influence of consultancy firms on academia in his inaugural lecture. He says he was heavily criticised by people who felt personally attacked. “But I am concerned about the discipline as a whole.”
Independence
Vleggeert is concerned about the independence of his field. A professor who helps a client reduce their tax bill one moment should be critical of this as an independent academic the next. “If there are so many professors with dual roles who have to take the interests of their employer into account, then fiscal science in the Netherlands as a whole is not independent enough.”
That is also the fear of Daan Roovers, member of the House on behalf of GroenLinks-PvdA. “I am worried about the system, even if all individual professors behave with integrity,” the senator said to HOP last November.
Roovers, who is also a lecturer in public philosophy and a PhD candidate at the UvA, hopes that the ministry will come up with a target value in response to the Leiden study. “What percentage of professors affiliated with commercial consultancies is still able to guarantee academic independence? What are the ministry’s and the universities’ thoughts on this? I call on the minister to get to work on this issue.”
Multinationals
Concerns about the secondary positions of tax professors have been around for some time. In 2016, Oxfam Novib mapped out the ties between consultancy firms and universities. “In the Netherlands, tax consultancy firms, the academic world and political committees are so intertwined that there is at least a strong suspicion of conflicts of interest,” Oxfam wrote at the time. This has made the tax climate very favourable for multinationals.
But Bastiaan Starink, professor in Tilburg and partner at PwC, sees no problem with wearing two hats when asked. It’s all about how you deal with it, he argues. “What I don’t like about this discussion is that it suggests that wearing two hats automatically means you lack integrity. That’s far too easy and it’s not true.”
Starink cannot do much about the concerns about the entire system. “What I find important is that individual scientists behave with integrity. That is why we have a code of conduct and why we have to be almost ridiculously transparent about money flows and interests. Precisely to guarantee that integrity.”
To make it clear to everyone that Starink wears two hats, his profile page at Tilburg University clearly states that he is also a “tax lawyer” at “PwC Belastingadviseurs”. The same information is listed in the register of ancillary activities at his university.
Unpaid work
A side job in public administration can also lead to a conflict of interest. You can expect the same transparency there. For example, Arjen Schep is a professor specialising in the taxation of local authorities. His chair is financed by several large municipalities. He does not mention on his website or in the register that he also works for the international branch of the Association of Netherlands Municipalities (VNG). He was even a Scientist in residence there for a while, as his department calls it in an annual report.
Perhaps it could be more transparent, says Schep in response, but in this case it is work for which he is not paid himself. On behalf of VNG International, he helps developing countries reform their local taxes and the money goes to his faculty, which finances his chair. The large municipalities pay too little to fund his special chair, so Schep also does contract research. “It is my own, independent academic choice to work with VNG International.”
Sanctions
Senators are concerned that ancillary positions are not properly disclosed. Paul van Meenen (D66) advocates sanctions. “The minister, as the person responsible for the system, must be able to take action against this.” The code of scientific integrity asks academics to be transparent about “potential conflicts of interest”, but “without sanctions, too many people ignore such a code,” the senator thinks.
The VVD is also asking for more clarity, but considers sanctions to be going too far, Senator Paulien Geerdink says when asked. She still hopes that universities will see the light and ensure that all professors give up their secondary positions as soon as possible.
In recent years, opinions on the registration of secondary positions have slowly shifted. In 2008, there were still doubts about this due to the privacy of professors. All universities now have a register.
But what can be done if a professor does not report his or her part-time job? The responses from universities show that several do not make a problem of it. Maastricht University also seemed to be doing the same two weeks ago when the institution admitted to not having sufficiently monitored the side job of a professor of epidemiology who also worked part-time for the chemical industry. The university said that the professor still had to update the register, although this has not yet happened.
Ordinary people
A separate discussion has arisen about the side jobs of tax law professors. This is partly due to the benefits affair. NSC leader Pieter Omtzigt has often wondered aloud how it is possible that tax scientists have not raised the benefits affair. Is it because of their dual role? Are they too busy with taxes for companies and not enough with ‘ordinary’ people?
A few years ago, another reason was added. It turned out that members of the House of Representatives often forwarded tax consultants’ questions about tax laws in their entirety to the government, which was then forced to respond to the Dutch Association of Tax Consultants’ lobbying questions. Critics felt that they seemed to be using these questions to look for loopholes in the law.
Tax legislation is often complicated and professors are regularly asked to advise the government. The fact that they often have a commercial practice on the side makes their advice suspect. In whose interest are these scientists advising exactly?
Former state secretary for tax affairs Hans Vijlbrief ultimately decided to stop inviting double-hatting people to advisory committees altogether. However, he immediately added that this was difficult due to the high percentage of professors with a double position.
Endowed
The message seems to have got through at universities too. Erasmus University, for example, is in the process of making the tax law department a little more independent of external financiers. “Endowed professors (often financed by companies or foundations) are becoming ordinary employed full professors, says Arjen Schep, who is also chairman of the department. “This reduces the chance of influence.” The UvA is also actively looking for more tax law professors “with a full-time appointment,” a spokesperson says.
Jan Vleggeert has seen a slight improvement in the figures since 2021. Back then, 65 percent of professors had a commercial side job, compared to 51 percent now. This decrease is partly due to the fact that in the past few years, a number of professors have retired from their dual role as partner, while continuing as professor.
This year, a number of professors will retire without a commercial sideline. If universities do not take action, the percentage of tax-professors with a double hat may increase again, warns Vleggeert. He therefore advocates a ‘double-hat stop’ on new appointments of professors.
