A new report from SOMO (Centre for Research on Multinational Companies, a Dutch non-profit organization) has revealed that Greece’s economic recovery is being undermined by the Netherland’s tax-dodging laws.

SOMO’s report, ‘Fool’s Gold’, demonstrates that by setting up a mailbox company in Amsterdam the Canadian mining company Eldorado Gold has avoided paying the Greek government over €1.7 million ($1.8 million) in taxes. The report’s authors go on to suggest that this is not an isolated incident and that by allowing transnational companies like Eldorado Gold to use the Netherlands as a tax conduit, the Dutch government is responsible for millions of euros in lost tax to the Greek economy. Considering that Greece is currently undergoing austerity measures – measures which were strongly advocated for and supported by the Dutch government – the thundering hypocrisy of this situation is astonishing.

Eldorado Gold is currently planning to mine for gold in the Halkidiki area of Greece. Its operations will devastate forests, destroy the local tourism trade and, according to the report, encompass a piece of land the size of 250 American football fields. Protests against the mining by residents have been ruthlessly suppressed by the Greek government, and representatives of Amnesty International have repeatedly expressed concerns about police misconduct. There is some light at the end of the tunnel, however: the new Greek government has promised to review its contract with the mining company, but this will do little address Eldorado Gold’s tax shortfall.

Discussions around Greece’s budget deficit (the largest among EU countries) have tended to focus on the impact of the recession, but the relatively underreported issue of tax avoidance is far more concerning. ‘Fool’s Gold’ shows that nearly 80 per cent of direct investment in Greece from the Netherlands is routed through so-called ‘mailbox companies’ (a company with a postal address but no other business activity in the country). This staggering figure demonstrates the innate hypocrisy at the heart of the Netherland’s dealing with the Greek economy. By crafting tax-dodging laws that allow transnational companies to have a presence in the Netherlands without having any material operations in the country, the Dutch government leaves some of the EU’s most vulnerable economies open to abuse.

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

The rhetoric around imposing austerity measures on Greece has been predicated on the need to keep the Euro strong. The suggestion is that Greece’s (increasing) deficit poses a direct threat to the currency’s stability and there have been a glut of op-ed pieces asking if we can ‘afford’ to keep Greece in the EU. With the publication of ‘Fool’s Gold’, many will be asking if it is time for a different discussion.

SOMO is advocating for a change in Dutch tax laws: outlawing mailbox companies and demanding more accountability. At the official launch of ‘Fool’s Gold’ in Athens, politician Eva Joly (MEP for the Group of the Greens/European Free Alliance and vice chair of the European Parliament Special Committee on Tax Rulings) was quoted as saying: ‘We cannot ask Greece for more sacrifices for ordinary people while allowing tax-dodging by multinational companies in the EU.’

Watch SOMO's Fool's Gold video here. Follow SOMO on Twitter: @SOMO