The Netherlands will block any EU trade deal with the UK unless it signs up to tough tax avoidance regulations preventing it from becoming an attractive offshore haven for multinationals and the rich, the Dutch deputy prime minister has said.

Lodewijk Asscher, who was recently elected leader of the Dutch Labour party (PvdA), which is currently a partner in the ruling coalition government, has written to socialist leaders across the continent stipulating his party’s red lines in coming talks.

Last Sunday Theresa May suggested that the UK would leave the single market when it leaves the EU in 2019, but seek to agree a trade deal with the remaining EU member states on triggering article 50 negotiations on the terms of Britain’s exit.

The vision of a low-tax Britain that enforces fewer regulations in terms of workers’ rights has been a motivating force for a number of high-profile supporters of Brexit. However, in a letter seen by the Observer, Asscher writes that it is in the interests of both the UK and the remaining 27 EU member states that May’s government is prevented from creating a low-tax “neoliberal” outpost.

In a sign of the complexity of the trade negotiations to come, Asscher writes: “If you and I pay taxes, so should the large enterprises. Let’s fight the race to the bottom for profits taxation together, which threatens to come into existence if it is up to the Conservative UK government.

“This will affect all Europeans, as it deteriorates our support for our social security system and leaves ordinary people to bear the costs. This is why I propose to come to a new trade agreement with Great Britain, but only if we can agree firmly upon tackling tax avoidance and stopping the fiscal race to the bottom.”

In his letter to all the leaders of the left-of-centre grouping in the European parliament, known as the Party of European Socialists, Asscher also calls for parties of the left to respond to the rise of “xenophobic politics” – which, he says, is gaining the “upper hand” – with a form of “progressive patriotism”.

The letter also calls for radical reform of the current rules on EU immigration. “Wage-lowering labour migration in Europe nowadays leads to unequal competition between workers,” he says. “Migration leads to tension within and between communities. And this lack of control cannot be diminished by making forced efforts to emphasise a European identity. For this we need unity in diversity.” A spokesman said that Jeremy Corbyn’s response had been “very positive” on receiving the letter from Asscher.

Labour’s shadow chancellor, John McDonnell, said: “After six years of the Tories opposing every Labour proposal to clamp down on tax avoidance, this reveals what our European neighbours believe is the main priority for Theresa May’s government. It also gives an insight into what a Tory Brexit would truly look like – a tax haven off the coast of Europe.”