Smart TaxesSmart Taxes

Dutch boost audits of prostitutes

Crackdown aimed at making sure sex workers are paying their taxes, including required 19% sales tax on services.

By Teresa Mears Jan 12, 2011 3:31PM

This article is by Toby Sterling of The Associated Press.


Workers in the world's oldest profession are about to get a lesson in the harsh reality of Europe's new age of austerity.


The Dutch government has warned prostitutes who advertise their wares in the famed windows of Amsterdam's red light district to expect a business-only visit from the taxman.


Prostitution has flourished in Amsterdam since the 1600s, when the Netherlands was a major naval power and sailors swaggered into the port looking for a good time. The country legalized the practice a decade ago, but authorities are only now getting around to looking to sex workers for taxes.


"We began at the larger places, the brothels, so now we're moving on to the window landlords and the ladies," said Janneke Verheggen, spokeswoman for the country's Tax Service.


The move is meeting with little formal opposition, even among prostitutes -- though some are skeptical it can be enforced. But it marks yet another shift away from the permissive attitudes that once prevailed in the Netherlands.


"It's a good thing that they're doing this," said Samantha, a statuesque blond Dutchwoman in a white leather dress who offers her services from behind one of the hundreds of red-curtained windows in the heart of the city's ancient center.


"It's a job like any other and we should pay taxes," she said.


She said she has been paying her share for years and felt she was competing on unequal terms with women who didn't, many of them immigrants from Eastern Europe.


Although the Netherlands has weathered the fallout from the 2008 financial crisis better than many countries, the government ran a deficit of 6% in 2010 and is cutting spending and hiking taxes in hopes of balancing the budget by 2015.


Prostitutes were told they would be audited in typically bureaucratic fashion, with a notice addressed "to landlords and window prostitutes in Amsterdam" published last week in the city's main newspaper.


"Agents of the Tax Service will walk through various elements of your business administration with you, such as prices, staffing, agendas and calendars," the notice said. "The facts will be used at a later date in reviewing your returns."


Though the Dutch state is not going to fill its coffers just by squeezing prostitutes, the sex trade is a serious industry that went almost entirely untaxed until legalization.


The Central Bureau of Statistics estimates prostitution generates $865 million in annual turnover, or a little less than $65 per person in a country of 16 million -- though many customers are tourists.


Under Dutch law, prostitutes should be charging 19% sales tax on each transaction. Customers typically pay $65 for a 15-minute session. In addition, after-expense profits are personal income, taxed at anywhere from 33% for someone making less than $23,000 per year to 52% for people making more than $70,000.


Sex workers, who are almost all women, can fall beyond both ends of that range.


Nobody knows exactly how many prostitutes there are or how many of them pay taxes, since legal ones are registered as one-women businesses, not brothels. But an Amsterdam-chartered study in October estimated there are slightly fewer than 8,000 prostitutes of all kinds in the city, and 3,000 working behind windows. An industry think tank called the SOR Institute believes around 40% of window prostitutes already pay some income tax.


Metje Blaak, who heads a prostitute's labor union called The Red Thread, said she endorses taxation, though it will hurt businesswomen already struggling to pay rent.


"It's not that they're trying to terrorize us," she said. "They do everything under the guise of preventing human trafficking, but the real reason is simply a desire to keep things under control."


In 2008 the city of Amsterdam began shuttering a third of its brothels, saying it wanted to combat organized crime, reduce abuse of prostitutes and improve the city's image.


Experts are divided as to how many prostitutes are exploited by pimps, but they agree most of the women behind windows are now working legally: Their passports are checked daily by landlords who don't want to risk losing their increasingly scarce and valuable operating licenses.


But Samantha said the industry by its nature can never be problem-free -- or fully taxed.


"How can they tell how many people come inside each day or how much money changes hands once the curtain is drawn?" she said.


"Not many customers ask for a receipt."

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


More from MSN Money:

Tags: taxes


Jan 13, 2011 6:39PM

A woman once told me:


If you can pull my dress up as high as the taxes, lower my panties as low as my wages, then you can screw me as much as you want.

Mar 1, 2012 3:08PM

Since I am from the only state that Brothels are legal.  I believe that prostitution is a legitimate business.  It can be regulated and taxed like any other business.  The ladies here are required to be tested for STDS once a week.  

Mar 1, 2012 6:19PM
"Not many customers ask for a receipt."

No problem honey, 'cause I just gave you a tip.

Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.