The Dutch government on Monday launched an eleventh-hour attempt to keep Shell in the Netherlands by seeking to abolish a controversial dividend tax cited by the energy group as reason to unify its share structure and move its headquarters to the UK.
Officials from the Dutch government told the Financial Times that the caretaker government of Mark Rutte was seeking to find a last-minute parliamentary majority to scrap a 15 per cent withholding tax that has long been a source of complaint for Shell and fellow Anglo-Dutch multinational Unilever.
The political machinations came hours after Shell announced it would end its dual share structure and shift its entire tax base to the UK, but the Dutch government said the announcement was an “unwelcome surprise” and is now scrambling to keep Shell from leaving.
Earlier this year, Shell chief executive Ben van Beurden cited the Netherlands’ failure to abolish the dividend tax as a potential reason for leaving the country. The UK is an exception among most European countries by not having a withholding dividend tax.
Under the plan, Shell would still be listed in Amsterdam, London and New York but with a single line of shares, widening the pool to which the 25 per cent cap is applied and so allowing it to boost its buybacks.
FT recalled that Rutte’s coalition government promised in 2017, to scrap the 15 per cent withholding tax to make the country more business-friendly, and encouraged both Unilever and Shell to relocate entirely to the Netherlands.
But the proposal was shelved after sparking political uproar among green and left parties, which objected to the government offering tax favours to multinationals worth about €1.9 billion a year. Unilever subsequently announced last year it was moving its headquarters from Rotterdam to London.
Shell has faced other problems in the Netherlands this year. In May, a court in The Hague ordered the company to make bigger and faster cuts to its carbon emissions than it had planned, a ruling against which Shell is appealing. Then last month Dutch pension fund ABP said it was divesting from all fossil fuel companies, including a significant stake in Shell.
The energy group was also under fire from US activist hedge fund Third Point, which after having built a large stake is calling for a split of the company, which it accuses it of being bogged down by an incoherent strategy.
Shell shareholders are set to vote on the company’s planned changes at a general meeting on December 10.
A Reuters report stated Monday that Shell’s chief executive announced that he was proposing to move the $170 billion oil giant’s headquarters, its corporate tax residency and himself from the Netherlands to the UK.
“Then there’s the recent Dutch court ruling obliging Shell to slash its annual emissions by 45 per cent by 2030. The company says it will do that regardless of where it’s based.
“But its own target only applies to the fraction of its 1.6 billion tonnes of annual emissions that come from its own operations, rather than those produced by its customers,” it had reported.
The departure and loss of the Dutch “royal” label will win Shell few friends in its former home. But with the Dutch government in post-election limbo and a parliamentary proposal to tax departing conglomerates stalled, the downside at least for now seems limited, Reuters said.
Earlier this year, Shell, which has been restructuring its operations in many parts of the world, also announced that it was selling off its onshore and shallow water assets in Nigeria, saying it could no longer cope with community issues in the Niger Delta.
Emmanuel Addeh
with agency report
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