Multinational Energy Company Royal Dutch Shell Moves Headquarters to UK to Avoid Taxes

[Image source=EPA Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Royal Dutch Shell (Shell), a global energy company jointly established by the UK and the Netherlands, is relocating its headquarters from the Netherlands to the UK to avoid taxes. Shell states that this decision aims to increase the company's value in response to investors' persistent demands to unify the dual structure of the UK and the Netherlands. However, industry experts largely view this move as a way to avoid dividend taxes in the Netherlands.

According to major foreign media including The Wall Street Journal (WSJ) on the 15th (local time), Shell announced that it will move its tax-paying headquarters from The Hague, Netherlands, to London, UK. It also added that the company name will change from 'Royal Dutch Shell' to 'Shell' Limited Liability Company. The existing dual-class share structure will also be abolished.

Shell explained that this decision is to unify the dual structure divided between the UK and the Netherlands to enhance corporate value. In particular, the US activist hedge fund 'Third Point,' which holds shares in Shell, has been pressuring Shell to split the company into two, so this is seen as a measure to increase shareholder value.

Shell stated, "The current complex shareholding structure may not be sustainable in the long term," adding, "This is to strengthen Shell's competitiveness, accelerate shareholder returns, and advance the zero-emission business strategy."

However, the industry views the Netherlands government's dividend withholding tax issue as the main reason for Shell's decision to leave the Netherlands. The Dutch government withholds a 15% dividend tax in advance for those who are not residents of the European Union (EU). In 2018, Dutch Prime Minister Mark Rutte withdrew the 15% dividend tax withholding exemption, citing that the tax benefits were favoring foreigners. Following this decision, multinational company Unilever also announced it would move its headquarters from Rotterdam, Netherlands, to London, UK. Shell has consistently requested the withdrawal of the dividend tax imposition policy, but when it was not accepted, it is understood that Shell made this decision.

The ruling of the Dutch court is also believed to have influenced Shell's decision. The Dutch court ordered Shell to reduce carbon emissions by half by 2030 and achieve 'carbon neutrality' by 2050.

Shell plans to hold a shareholders' meeting on the 10th of next month to seek shareholders' approval for this proposal. At least 75% approval is required to implement this measure.

This content was produced with the assistance of AI translation services.