Dutch exit tax could derail Unilever move
Consumer goods giant may be forced to abandon moving HQ to London due to €11bn departure levy
UNILEVER could be forced to scrap plans to shift its headquarters to Britain in the face of an €11bn (£9.7bn) “departure tax” raid by Netherlands MPs.
The Marmite maker warned that the move to abandon its Anglo-Dutch structure is under threat from a law proposed by the opposition Green Left (Groen Links) party that would impose a levy on firms with annual revenues of more than €750m if they relocate their headquarters abroad.
The proposals are intended to prevent large companies from leaving the Netherlands, and to make up for the loss of tax revenue if they do depart.
Unilever, which owns brands including Ben & Jerry’s ice cream and Dove soap, has had its dual-headed structure in place for close to a century after it was created by the merger of a Dutch margarine company and British soap maker Lever Brothers.
It is not clear whether the law – which was proposed in June, just days after Unilever revealed plans to exit Holland and move its legal base to London – is legally compliant with Dutch and European legislation, nor whether it would be passed by the Dutch parliament.
The Netherlands’ Council of State is considering the proposed law but has not set a date for its decision.
In shareholder documents outlining details of the proposed unification,
Unilever said it did not think the Green Left’s proposed bill was legal.
However, it added: “Nevertheless, if the bill were enacted in its present form, the boards believe that proceeding with unification, if it resulted in an exit tax charge of some €11bn, would not be in the best interests of Unilever.”
The FTSE 100 consumer goods titan said it could choose not to pursue its unification as a result.
Unilever hopes to complete the merger of its operations over the weekend of Nov 21 and 22, with Dutch shareholders set to vote on the proposals on Sept 21 and UK investors on Oct 12.
If the Green Left party’s law were to pass it would come as an embarrassing blow to Unilever two years after it scrapped plans to move its headquarters to Holland following uproar among investors. Unilever’s planned changes to its legal structure are intended to make it easier to carry out acquisitions or sell-offs – including a potential sale of its tea arm, which makes PG Tips.
The proposals also raise the possibility of a break-up of the business.
Dutch MP Bart Snels, who submitted the proposals on behalf of the Green Left party, said he is confident that the bill would secure the approval of MPs after Unilever warned it could derail its unification plans.
‘This is one of the most interesting moments for buses and public transport,” FirstGroup chairman David Martin boldly declared only last month. It is certainly that. A £500m coronavirus bailout in April kept the engine running for a few months but now the industry is back for a second refuel and it’s only August.
With passenger numbers still at a fraction of pre-pandemic levels, bus and tram operators will receive a further £218m to keep them afloat, split into instalments of £27m over eight weeks, along with an extraordinary pledge from the Department for Transport to continue supporting services “until a time when the funding is no longer needed”.
The case for ministers stepping in is pretty straightforward. Buses are a vital service to millions of people, including key workers, the elderly, poorer households and isolated communities across the country. Without the bus network, many of those people would struggle to get to work, buy food and get to the doctor.
Ensuring that doesn’t happen is obviously the right thing to do, especially during a crisis of this scale. And few would question whether support in some form is needed. Passenger numbers fell off a cliff in March as the nation was ordered inside but volumes have not magically recovered since the lifting of lockdown. They are still below half of pre-Covid levels despite face coverings being made mandatory on public transport and social distancing remaining in place.
Operators have also introduced a raft of safety measures, including rigorous cleaning regimes, and even mobile apps that allow customers to check how full each bus is, and yet people clearly continue to be reluctant to get on public transport. FirstGroup is only operating at about 40pc of previous levels. That is unsustainable.
Yet, taxpayers may wonder why they are the ones propping up services and not shareholders. After all this is a sector that has enjoyed vast profits over the years, largely through inflationbusting fare increases, but rather than save more for a rainy day, operators have chosen to lavish investors with generous dividends. Between 2008 and 2018, the five big bus firms Arriva, FirstGroup, Go-Ahead, National Express and Stagecoach paid out an estimated £1.5bn to shareholders, double what the industry has received in Covid-19 emergency money so far.
Taxpayers may also feel aggrieved at having to ride to the rescue of an industry that has been content to ratchet up fares while thousands of routes have either been cut or services withdrawn altogether. The number of journeys has been falling steadily for the last six years; mileage is down; there are fewer buses on the road; usage has also fallen; punctuality hasn’t improved; and yet last year fares went up 3.3pc on average, almost double the rate of inflation.
It is reassuring that the Government is willing to step in but it is clearly doing so on the basis that there will eventually be a recovery. Operators are warning that it will be 2021 “at the earliest” before there is, but it is really just one giant unknown.
A more realistic scenario is that the pandemic accelerates the demise of a fading industry, forcing the Government to fund a vital public service in perpetuity – a sort-of unintended backdoor nationalisation. After the Spanish quarantine fiasco, Grant Shapps, the Transport Secretary, seems determined to be remembered for all the wrong reasons during this crisis.
Not so fast for Unilever
Much excitement surrounds the news that Unilever’s plan to scrap its outdated Anglo-Dutch structure and establish a single headquarters in London is set to complete in November.
It will end a farcical saga that triggered a fierce investor rebellion and hastened the exit of both the chief executive and chairman after Unilever tried to go the other way to Rotterdam.
Not so fast. Buried in the 122-page shareholder prospectus is a stark warning that it could be scuttled by a new protectionist tax law proposed in the Netherlands by radical Green Party economist Bart Snels.
Snels wants companies that plan to leave the Netherlands to pay the country’s 15pc dividend tax on profits that have been kept in the country rather than paid out to Dutch shareholders.
It would obviously amount to an outrageous raid on Unilever by Left-wing politicians that want to force multinationals to remain in the country, but that doesn’t mean the law won’t be passed. Snels is on a crusade to change Dutch tax laws and has put forward a proposal that would eliminate tax breaks on corporate losses. The initiative could come in next year after it was reportedly backed by the ruling Dutch cabinet, hitting another UK corporate beast – Shell.
If his “Unilever tax” comes into force, the consumer goods giant says it could result in an eye watering exit bill of €11bn (£10bn), which would force it to shelve the entire process again, presumably for good.
Alan Jope became Unilever chief executive last year after a failed attempt to move its HQ to Rotterdam