Dutch gov't under fire over tax deal with Shell

The Tweede Kamer, the lower house of Dutch parliament, wants the government to explain a controversial deal that Shell made with the Dutch tax authorities in 2005. As a result of this deal, Shell's British shareholders are exempt from dividend tax in the Netherlands, through which the Dutch treasury lost out on over 7 billion euros, newspaper Trouw reported on Saturday.

The Kamer now wants to know whether this tax deal is allowed under Dutch law, and whether any politicians were involved in making it, according to newspaper AD. SP leader Lilian Marijnissen called it a "stinky" deal. GroenLinks wants a parliamentary inquiry into dividend tax. And the four coalition parties - VVD, CDA, D66 and ChristenUnie - jointly submitted questions to State Secretary Menno Snel of Finance. 

The revelation of this tax deal comes at a bad time for the Rutte III government, as the government is already facing scrutiny over its decision to abolish dividend tax - the tax companies and their shareholders pay on profits. The decision to scrap dividend tax was made during the government formation process. None of the coalition parties had this measure in their election programs. According to AD, it later turned out that the measure was brought to the negotiation table by, among others, Unilver and Shell - one of the largest supporters of abolishing dividend tax. This abolishment will cost 4 billion euros.

An interesting detail is that Gerrit Zalm acted as mediator for the government formation talks when dividend tax was discussed, according to AD. He's been on Shell's supervisory board since 2013. Between 2003 and 2007 Zalm was Minister of Finance in the Balkenende II government. The deal with Shell was thus made when he was Minister. In 2006 his State Secretary, Joop Wijn (CDA), reduced dividend tax from 25 percent to 15 percent. 

The tax deal with Shell was made in 2005 when the British and Dutch branches merged into Royal Dutch Shell, and the Netherlands was chosen for the company's head office. Great Britain does not have dividend tax. Thanks to the deal, British shareholders remained exempt from this tax after the merger. 

According to Shell's CEO Marjan van Loon, the tax deal is "fully in line with laws and regulations in the Netherlands". Without the deal, Shell shareholders may not have chosen to base the company's head office in The Hague, the CEO said, according to AD.