A hunters game: How policy can change to spot and sink letterbox-type practices

Mijke Houwerzijl, François Henneaux, Edoardo Traversa

    Research output: Book/ReportReport


    This ETUC report sets out a number of recommendations to combat the problem of “letterbox practices” whereby companies circumvent their obligations to not only to pay lower taxes, but also lower wages and to impose bad working conditions.
    Letterbox companies are legal entities established in an EU country, where they have no (or minor) economic activities, in order to “regime shop” for lower taxes, wages and social contributions. A key feature of letterbox companies is that they can be very quickly, simply and cheaply set-up and wound down. Indeed, such entities may be established and disbanded in a matter of a few hours, making supervision very difficult.
    The first report ‘The impact of letterbox-type practices on labour rights and public revenue’, featured case studies from Germany, the Netherlands, Italy and Sweden, covering the meat, road transport, car manufacturing and construction sectors. It showed how tax avoidance often combines with exploiting workers.
    This second report focuses on recommendations and approaches to address the problem by joining up the three dimensions of tax, social security and labour law. This horizontal approach highlights how the regulatory framework is stretched over various national and EU policy areas often with inconsistent, contradictory and even conflicting rules. The report argues that ‘silo thinking’ has led to the application of different approaches to lawfulness that has opened-up avenues that allow firms to circumvent rules and safeguards. Of particular
    concern is that regulatory action taken in one field is often quickly undermined by another – to give one example, the deregulation of company law doesn’t help a better definition of what constitutes a genuine company.
    Original languageEnglish
    Commissioning bodyEuropean Trade Union Confederation (ETUC)
    Number of pages125
    Publication statusPublished - 29 Mar 2017


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