Oil giant Shell chooses UK for tax residency and drops ‘Royal Dutch’ from name

Shell estimated that it might have to pay 400 million dollars to the Dutch taxman as part of the move.

August Graham
Monday 15 November 2021 15:27
The job of chief executive Ben van Beurden and other senior positions will move to the UK (Daniel Leal-Olivas/PA)
The job of chief executive Ben van Beurden and other senior positions will move to the UK (Daniel Leal-Olivas/PA)

Oil giant Royal Dutch Shell has announced a major overhaul to move its headquarters and tax residency to the UK, and abandoning its “royal” tag after 130 years.

The company stressed its commitment to the Netherlands, and has reportedly said only a few senior jobs will move.

It hopes that by simplifying its structure it can pay out cash to shareholders quicker than before.

But the move will likely strip the oil major of the right to its name, and Royal Dutch Shell plc will become plain old Shell plc, if shareholders agree to the changes next month.

Board meetings will be held in the UK, and Shell’s chief executives and finance bosses will be based in the country from now on.

It also plans to cancel its slightly confusing dual-share structure, which means that there are both A and B share categories in circulation.

The system was set up in 2005 when Shell brought its two arms under one company, choosing a UK incorporation and Dutch tax residency.

“It was not envisaged at the time of unification that the current A/B share structure would be permanent,” Shell said on Monday.

Business secretary Kwasi Kwarteng said the move was “welcome news”.

It is “a clear vote of confidence in the British economy as we work to strengthen competitiveness, attract investment and create jobs,” he tweeted.

But his counterparts across the North Sea called the move an “unpleasant surprise”.

The Dutch government said that Shell had promised that only a small number of high-level jobs would move from the country to the UK.

How beneficial the move will be to the UK Government’s coffers is unclear.

In 2019, the most recent year for which data is available, the company paid 212 million dollars (£158 million) to the Dutch taxman.

But in the UK, Shell was handed 116 million dollars (£86 million) by the Government in the same year.

Under British rules oil companies are able to get tax rebates for the cost of decommissioning old platforms in the North Sea.

Tony Bosworth, climate and energy campaigner at Friends of the Earth, said: “The oil giant’s had an easy ride with the UK tax system, so the draw of moving its headquarters here is abundantly clear.”

But the move could also be costly for the company. Shell said that it was a “reasonable estimate” it would have to pay corporate income tax of anything from zero to 400 million dollars to the Dutch Government as a result of moving its tax residency.

Proposals are also currently working their way through the Dutch Parliament which could charge companies for moving abroad.

Shell does not think it will face such charges, but that even if it did, the benefits of the move would outweigh them, it said.

A Shell logo at a petrol station (Anna Gowthorpe/PA)

Shell’s shares will still be listed in Amsterdam should the move go ahead, but the former dual-share structure will be abandoned.

The company has had a turbulent time in the Netherlands recently, and is appealing a court ruling that it must slash all of its emissions categories by 45% before the end of the decade, compared to 2019 levels.

In a video released on Shell’s website, chairman Sir Andrew Mackenzie said that the move would not allow the company to run away from the ruling, which was handed down in a legal case brought by environmental campaigners.

“The simplification will have no impact on legal proceedings related to the Dutch court ruling,” he said.

His comments were echoed by Peer de Rijk, a campaigner who has been leading the case against the oil major in the Netherlands.

“This news has no negative consequences for Milieudefensie’s climate case against Shell,” he said.

“In any case, this lawsuit will remain with the Dutch courts.

“In our view, this also has no implications for future cases at home and abroad.

“Around the world, companies have the responsibility to respect human rights and prevent dangerous climate change.”

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