Shell Defends 7 Billion Tax Bill From Dutch Government

; posted on
June 19th, 2018

Shell is exposed to a potential €7 billion tax payment, which is a possible consequence of a state aid. Paul Tang, a Dutch member of the European Parliament, requested European Commission to investigate a controversial deal that Dutch government made with Shell in 2005, which exempts the UK-based shareholders from dividend tax in the Netherlands and has cost Dutch treasure loss over 7 billion euros.

Tax Deal of Shell and Dutch Government

Back to 2005, two branches of the Anglo-Dutch company merged and established a new single headquarter in The Hague. Unlike the UK, the Netherlands levies a dividend withholding tax which pushes Shell lobbied Dutch tax authority to exempt the dividends paid to UK-based shareholders. In order to do so, the company created a structure of A (60%) and B shares (40%). The Dutch tax agreed to exempt distribution of B shares from dividends tax provided that they are paid via the so-called dividend access mechanism. According to Paul, this deal was clearly a breach of the EU State Aids rules since it was “solely intended to solve a problem for one company which other companies cannot take advantage of”.

Shell hits back at criticism

Marjan van Loon, the president director of Shell Netherlands, insisted that the relocation in The Hague brought benefits to Dutch treasury. She claims that around 2300 Dutch companies have “achieved an annual turnover of between $4bn and $6.5 through contracts with Shell since its move to The Hague”. Besides that, the tax deal is “fully in line with laws and regulations in the Netherlands”. Shell would not have decided to base in the Netherlands in the absence of such deal, the CEO said.

Sources: The Guardian, NL Times, Dutch News

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