Shell changes page: Moves its tax headquarters to London, leaves ‘Royal Dutch’

LAST UPDATE: 13.23

Royal Dutch Shell has announced plans to simplify its shareholder structure, ending its current dual-share division, and moving its tax headquarters to the United Kingdom.

Since its consolidation in 2005, the oil and gas company has been incorporated in the United Kingdom with a Dutch tax headquarters and a dual A / B shareholding structure.

Shell is now asking its shareholders to approve the simplification of the company’s structure, at its general meeting to be held on December 10 in Rotterdam.

The company said that the structure of a single share will allow it to accelerate share repurchase programs, manage its portfolio more flexibly and reduce risk for shareholders.

“The simplification will make Shell more competitive, enable it to accelerate payments to shareholders and accelerate the transition to zero-emission energy activities,” said President Andrew Mackenzie.

The single-share structure will lift restrictions on the company’s share repurchase program, according to RBC Capital Markets analysts.

There is currently a $ 2.5 billion limit on buying equity per quarter, while moving to a single share class will double that amount.

Shell stressed that the simplification could lead to tax costs of more than $ 400 million.

As part of the process, CEO Ben van Beurden and CFO Jessica Uhl will be transferred to the United Kingdom, where the Board meetings will take place.

In addition, Shell will change its name to Shell PLC, as it will no longer qualify for the use of the Royal name.

The Dutch government was “unpleasantly surprised” by Shell’s decision to move its headquarters to Britain

The Dutch government said today that it was “unpleasantly surprised” by the announcement by Royal Dutch Shell PLC that it planned to move its headquarters from The Hague to London.

“The government deeply regrets that Shell wants to move its headquarters to the United Kingdom,” said Finance and Climate Minister Steve Block.

“We are in dialogue with Shell’s management about the implications of this plan for jobs, critical investment decisions and sustainability.”

The move was announced a few months after a Dutch court ordered Shell to speed up its plans to reduce its greenhouse gas emissions, a decision against which Shell has appealed. It also follows chronic questions in the Netherlands about Shell’s unusual tax structure and dual share rating system, which has been in place since 2005.

While the Netherlands withholds 15% of the dividend tax on companies based in the Netherlands, Britain does not have such a tax.

Under Shell’s dual system, holders of “A” shares receive regular dividends and are subject to tax.

However, payments for the “B” shares are distributed through a “Dividend Access Mechanism”, essentially through a trust registered in the Channel Islands Jersey, avoiding Dutch tax withholding.

Although the settlement was approved by the Dutch tax authorities in a confidential agreement, its legality under European Union law has been challenged by tax experts.

Shell and Unilever both pushed for exemption from dividend withholding tax in the Netherlands. Legends released by the Dutch government in 2018 revealed that the tax was a “decisive” factor for Unilever when it made a similar decision to set up its sole headquarters in London that year.

Meanwhile, the environmental group that won the lawsuit in the Netherlands against Shell forcing the oil giant to reduce its carbon dioxide emissions said today that the company’s plans to move its headquarters to London will not affect the case.

“The news has no negative consequences for the Milieudefensie v. Shell climate case,” the organization, known internationally as Friends of the Earth, said in a statement. “Rather, relocation to the UK opens up a new front, including for future affairs.”