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Dialogue between Dutch politicians and Shell at a dead end

Translation of an FD article published today

How Shell disappeared from politics in The Hague

Shell CEO Van Beurden recently hinted at a possible departure of the multinational from the Netherlands. A signal that, according to those involved, can also be interpreted as an ultimate rapprochement attempt. Because the dialogue between politicians and Shell is at a dead end.

Ulko Jonker

In brief

  • Shell is considering leaving the Netherlands, partly because of the dividend tax that did not disappear.
  • GroenLinks now wants to impose a moving fine on companies that go abroad.
  • The multinational is said to have fallen into political isolation because of gas extraction in Groningen.

Jesse Klaver took the doctrine of debt and fine to a new level last week. The GroenLinks captain believes that Unilever and Shell should first ‘settle with Dutch society’ before they can move their headquarters. GroenLinks MP Bart Snels himself calls his initiative ‘Brutal’. It is also ominous, companies say.

GroenLinks MP Bart Snels Photo: Jonas van Impe

After the plan to abolish the dividend tax – a ‘stay premium’ – was dropped in 2018, a ‘moving fine’ would now follow for multinationals that leave the Netherlands because of that dividend tax. Converting from premium to fine does not seem like a political quickie. There is support from left to right. Moreover, economist and ‘group intellectual’ Snels is a formidable legislator. He previously urged the cabinet to carry out his blueprint to tackle the liquidation loss scheme favorable to Shell.

Once again, he has already worked out a major legislative amendment to tax the profit reserve upon departure, with the usual assistance from MPs from the Ministry of Finance, where he worked, and from UvA professor of Taxation of Jan van de Streek groups. This can then be added to the House’s agenda in September.

VNO-NCW, the envoy of the multinationals in The Hague, was shocked by the unexpected action during the summer break in The Hague. Dirk-Jan Sinke, head of tax affairs at the employers, believes that Snels ‘puts a big fence around the Netherlands, so that no one can get out’. But no one enters anymore. “Then the signal to potential investors is: The Netherlands is not open to business.”

‘Fence around tax havens’

Snels says he is not alone. “Since the financial crisis, most parties have been looking for a new balance between taxation in large companies and in SMEs and households.” He finds VNO-NCW’s rejection ‘a pavlov reaction’. What GroenLinks wants is ‘not a fence around the Netherlands, but about tax havens’. After all, the removal fine would only apply to countries without dividend tax, such as the United Kingdom.

Snels thinks that he only tackles a ‘mismatch’ between tax systems, with which he also seeks connection with the agreement within the OECD to stop the fiscal ‘race to the bottom’. It is exactly the same short-circuit between tax regimes that Ben van Beurden of Shell raised in conversation with the FD two weeks ago to justify a move.

Shell’s dual structure interferes

Shell is a British company with a head office in The Hague and two types of shares to smooth out the difference in dividend tax between The Hague and London. This dual structure hampers the tradability of the shares and the flexibility that Van Beurden needs to realize its ambitions. “It’s a problem I’d rather have solved,” he says.

Shell has been wanting this since 2004. But since the ultimate attempt to deal with it got stuck in Rutte III’s biggest political debacle and a trauma for its namesake, the solution is no longer there. For example, politicians and multinational companies have reached an impasse, in which the only way out for Shell seems to be leaving. “Nothing is permanent,” says Van Beurden, although it is now “out of the question.”

“Entrepreneurs and especially multinational companies are suspicious. Politics has completely clamped itself down in its relationship with large companies. ”

Business climate ruined

“It is a warning shot,” says Rob Meines, who has been a lobbyist in the corridors of The Hague for a quarter of a century, for Shell, among others. “Van Beurden could have done just like Unilever and just leave.” He wouldn’t be surprised if that happens now. Meines sees an accumulation of fiscal and political actions that are ruining the business climate for Shell in the Netherlands.

Instead of abolishing a tax disadvantage, Shell had a discussion about its tax advantages. The loss settlement and other deductions for head offices, as a result of which Shell and other multinationals in the Netherlands pay little or no corporate tax, ended up on the political chopping block. The Ter Haar Committee, in which tax professor Jan van de Streek reappears, proposes to drastically cut back these tax facilities.

Disdain towards Shell directors

The drama ‘Groningen’ is also attached to Shell. “Everyone has benefited, especially the state. But Shell is the scapegoat, ‘says Meines. The parliamentary survey about this actually becomes a parliamentary survey about Shell and the NAM, he predicts. In the meantime, a group of journalists is working hard on the ‘Shell Papers’, a ‘gigantic wob request’, in which 17 administrative bodies have to expose all their documents about contacts with Shell since 2005.

Added to the open doubts about their integrity and the disdain that Shell directors receive when they want to provide text and explanations about their tax returns in the House, Meines considers it ‘not surprising’ that Shell makes plans for relocation. But Van Beurden’s hint is, according to various parties involved, also an ultimate rapprochement, because the ever so intensive dialogue between the Hague politics and Shell is at a dead end.

Within the coalition, the aversion and suspicion towards Shell was also fueled when the group leaders passed the tax specialists in the formation. To their horror, the members of the Finance Committee single-handedly pleaded for the abolition of dividend tax in the coalition agreement. After that, much of the political discussion focused mainly on the supposed political machinations of Shell and Unilever.

Nobody dares to talk to Shell yet, says Meines. ‘Because everything is called up with an appeal to the Government Information (Public Access) Act. And entrepreneurs and especially multinational companies are suspect. Also at CDA, VVD and D66. Politics has completely clamped itself down in its relationship with large companies. ”

“Then came that political frame, especially from Jesse Klaver and his colleagues: those big boys don’t pay profit tax, it’s of no use to you. Yes, you get the cuckoo “

You get the cuckoo

Employer foreman Hans de Boer of VNO-NCW sees a pattern. When Akzo was besieged by PPG and Unilever by Kraft, a motion was passed in Broadloom: make sure these pearls are not snatched from the Orange Velvet. But then we just emerged from the crisis. ”

When the abolition of dividend tax comes on the agenda, the crisis is over and sentiment has turned. ‘Then came that political frame, especially from Jesse Klaver and his colleagues: those big boys don’t pay profit tax, it doesn’t help you. Yes, you get the cuckoo. With a small domestic market and a lot of costs due to the head office in the Netherlands, you make little profit here and pay little profit tax. But other taxes are paid generously, ‘De Boer snorts.

‘There were only three people in the Netherlands who opposed this: Mark Rutte, Sybrand Buma and Hans de Boer. All three of us have not gotten there unscathed. ” According to him, the group of MPs that still ‘sees the beauty of market forces and global entrepreneurship’ is now ‘far too small’.

“We shouldn’t be angry with companies like Shell and Unilever. If we want a fairer tax system, we just have to change the law. “

Love of politics especially applies to start-ups

Moreover, that love especially applies to the start-ups and the ‘warm-blooded independent entrepreneurship, the family businesses, the adventure stories around it’. Shell, Heineken, Philips, AkzoNobel and Unilever are far beyond that stage. ‘They are managed institutionally, and they must be. International investors demand spic & span management, without surprises, ”says De Boer.

As a result, the relationships have also become detached, with managers who ‘have worked all over the world and thereby become a bit detached from the old nest of the Netherlands’. On the other hand, there are politicians who have never been entrepreneurs, who shrug their shoulders about the importance of large companies and who, according to De Boer, mainly chase votes in the fragmented political landscape without wanting to explain the economic importance and complexity.

But GroenLinkser Snels is open to consultation and dialogue. He also conducts with the financial sector, up to the level of CEOs, ‘very good and useful discussions about what role they play in Dutch society’. But he does not see Shell and VNO. He regrets that. “We shouldn’t be angry with companies like Shell and Unilever. If we want a fairer tax system, we just have to change the law. ”


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