13th Aug 2022

Dutch government's attempt to keep Shell fails

  • The caretaker government of prime minister Mark Rutte tried to find a majority to scrap the country's dividend tax in a last-minute effort to keep Shell (Photo: Council of the European Union)
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A last-ditch attempt to keep the oil and gas giant Shell in the Netherlands has failed.

Royal Dutch Shell announced on Monday (15 October) it wants to become fully British, citing restructuring and a failure to lift a dividend tax as reasons.

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Shell had pressured the Dutch government to drop its dividend tax for "16 years" chief executive Ben van Beurden told newspaper Het Financieele Dagblad.

The UK is one of a few countries in Europe that does not levy a dividend tax - and the UK maintains a lower corporate tax rate as well.

Hoping to persuade the oil major from leaving after more than a century, outgoing economic affairs minister Stef Blok and finance minister Hans Vijlbrief tried to barter a deal with representatives from other parties in a last-ditch effort to hastily scrap the dividend tax, before Shell's planned 10 December general shareholder meeting.

But on Tuesday Blok and Vijlbrief told Dutch parliament that "at the moment there are no concrete measures that we intend to take."

"Scrapping the dividend tax is no solution, it's blackmail," Green party leader Jesse Klaver tweeted ahead of the parliamentary debate on the topic. But Blok responded that it would be bad politics if they would have "sat back after that announcement and said: let it happen."

In 2018 the Dutch government decided to drop the dividend tax - but had to reverse course when civil society and MPs rebelled, after it became clear that it would cost about €1,9bn a year.

Soon after Unilever, another multinational that along with Shell has lobbied against the divided tax, left for the UK, with Shell now tentatively following suit.

Van Beurden cited the failure to lift the tax as one of the reasons for the move, but also stated the company wants to ditch its dual-share structure.

Under the current dual-share structure a dividend tax of 15 percent applies for Dutch A shares, while UK B shares are rate free. However, repurchases are capped at 25 percent of the average daily trading volume, or a little over €2bn.

Van Beurden wants to increase this by bringing all shares under the UK rules.

This would allow the company to increase the return of proceeds to shareholders from a little over €2bn a quarter to €6bn.

Shell has faced shareholder problems this year. Dutch pension fund ABP said it was divesting from all fossil-fuel companies, including its stake in Shell. And activist hedge fund Third Point has called for the company to be split up.

Shell earlier said it would need to increase stock buybacks to keep shareholders engaged during the energy transition.

In order to do that the company has borrowed heavily in recent years, increasing its annual long-term debt from €9bn in 2006 to €91bn in 2020 - more than any other company in the sector.

'Royal Dutch Shell' to ditch Netherlands for UK

Shell's CEO called the relocation "necessary" - saying it will simplify company structure, making stock buybacks easier, and prop up value. Shareholders will vote on the move at a general meeting on 10 December.


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