Dutch Cabinet To Reconsider Scrapping Dividend Tax After Unilever Pull Out

; posted on
October 12th, 2018

On 5 October, Unilever scrapped the planned move of its head office to Rotterdam due to growing protest from British shareholders. Later on the same day, Prime Minister Mark Rutte announced that the government would reconsider the abolition of the dividend tax.

Unilever Pull Out

Unilever is a British-Dutch company with two types of shares and two head offices, one in London and one in Rotterdam. In March the company announced it would become a purely Dutch company with one type of shares and its head office in Rotterdam. The move means that Unilever falls under Dutch law and is better protected against hostile takeovers. However, on October 5, Unilever pulled out the plan and remained with its current structure. According to the Unilever CEO Paul Polman, the dividend tax has been a factor in some shareholders’ decisions not to support the decision to be a purely Dutch Company.

Response

In response to the Unilever latest decision, the prime minister agrees to look again at the entire corporate tax plan, including reconsidering the abolition of dividend tax. The purpose of scrapping dividend tax is to keep several multinationals in the Netherlands and to make the Netherlands a more attractive place to do business. However, such consideration is strongly opposed by the cabinet itself and by many Dutch people who see it as a 1.9 billion euro tax cut for foreign investors. Furthermore, Brexit is one of the most important reasons for The Netherlands to remain an attractive place of business for foreign companies and shareholders. Therefore, the abolition is considered unnecessary.

Despite the controversy, the Abolition of withholding tax on dividends is expected to enforce on January 1, 2020, as stipulated in the 2019 budget proposals.

Sources: nltimes, DutchNews, Reuters

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