A twenty-minute stroll through The Hague — The Netherlands’ pretty but low-key capital city — takes you from the prime minister’s office to the workplace of someone who’s arguably even more powerful: the CEO of Royal Dutch Shell Plc.
But when Ben van Beurden, who’s worked at Shell since he graduated from nearby Delft University in 1983, called Mark Rutte on Sunday afternoon, the conversation was anything but close. He rang to tell the PM that Europe’s biggest oil company was moving its headquarters to London, a step that would simplify its corporate structure and cut taxes for investors.
What’s more, the company would drop Royal Dutch from its name, discarding a link to the ruling House of Orange that goes back to its founding in the 19th century.
Rutte, head of a fragile caretaker government, reacted with dismay and embarked on a last-ditch effort to persuade Shell to stay, according to people briefed on the conversations. He lobbied coalition partners to back the abolition of a tax on dividends that was one of the main drivers for Van Beurden’s decision.
But the rushed plan never got off the ground: the idea of tax breaks for one of the world’s largest carbon emitters was too much for the leaders of several political parties.
The relationship between Shell and its home country had been under strain for some time. Hosting a company that pumps more than 3 million barrels equivalent of oil and gas each day is increasingly awkward for many in Dutch society, even though Van Beurden has committed the company to achieving net-zero carbon emissions by 2050.
The Netherlands — home to many multinationals that punch above the weight of the $900 billion economy — is traditionally seen as one of Europe’s most business-friendly nations. But Shell is not the first company to balk at the burdens of corporate life there. Unilever Plc, the Anglo-Dutch consumer goods giant, choose London for its headquarters last year.
In 2005, the longstanding corporate partnership underwent a reorganization to fully combine its two parents into a single firm. Yet the dual-nationality continued — its tax residence, headquarters, top executives and board meetings all resided in The Netherlands, even though its incorporation in the UK made it a British firm.
More than a decade later, Shell began to regard this dual status as a financial burden.
The company is embarking on a multi-decade transition from oil and gas to clean energy, and trying hard to keep its investors sweet while it does so. After aggressively cutting its dividend last year at the depths of the Covid-19 pandemic, Shell is now promising to return a torrent of cash to its shareholders. In these circumstances, the 15% withholding tax that the Netherlands imposes on dividends has become more onerous.
