Earlier today we reported that Shell is considering moving its tax residency from the Netherlands to the UK. (See our article titled: How is it possible that the Dutch Government is surprised by Royal Dutch Shell’s announcement that it intends to move its tax residency to the UK?) A voting on this matter will take place during Shell’s General Shareholders Meeting, which is to be held on December 10, 2021. Apparently this consideration has led to panic in the Dutch (caretaker) cabinet.

According to reports from several Dutch media, the caretaker cabinet that is currently in place in the Netherlands is franticly seeking support in the Dutch Parliament for the abolishment of the Dutch dividend withholding tax. Already in 2018 the ‘previous’ Dutch cabinet was considering abolishing the Dutch dividend withholding tax. However, this abolishment was then cancelled after strong opposition and a media campaign from left wing politicians and NGOs. These politicians and NGOs called the abolishment of the Dutch dividend withholding tax another gift to multinationals. Together with all the other unjustified criticism that left-wing politicians and NGOs had already expressed with respect to the Dutch tax system this led to so much pressure on the Dutch cabinet, that the Dutch cabinet decided not to continue with the idea to abolish the Dutch dividend withholding tax.

With Royal Dutch Shell being the second Dutch multinational considering changing residency (earlier Unilever already moved its tax residency to the UK), the abolishment of the Dutch dividend withholding tax at once became a top-priority for the Dutch caretaker cabinet. Obviously we will keep you posted on the developments.

The frantic reaction of the Dutch Government to Shell’s intention to move its tax residency from the Netherlands to the UK also might raise questions to what the future attitude of the Dutch Government will be towards the OECD two-pillar solution and the upcoming EU BEFIT proposal. Until now, and under pressure of left-wing populism, the Dutch Government has been very cooperative on these projects. However, until now it seems that, unlike for example the Irish Government, the Dutch Government has never made a proper impact assessment of what these projects might actually mean for the Dutch economy. And this is the exactly the mistake that they made when in 2018 they decided to not continue with the abolishment of the Dutch dividend withholding tax.

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