Unilever to also avoid Dutch dividend tax through special construction: report

Like Shell, Unilever also came up with a construction that should ensure that its British shareholders will not have to pay dividend tax now that the Dutch-British company will be based in the Netherlands, RTL Nieuws reports. 

Over the weekend newspaper Trouw revealed that Shell and its shareholders are avoiding paying dividend tax through a special tax ruling made with the Dutch Tax Authority in 2005 - when the Dutch and British branches of the oil and gas giant merged and its headquarters were established in the Netherlands. Great Britain doesn't have dividend tax, but the Netherlands does. This ruling was made so that British shareholders could continue to not pay this tax. 

Unilever is now faced with the same dilemma. The company is merging its British and Dutch offices, and moving to the Netherlands. But that means that its British shareholders will suddenly be subject to the Netherlands' dividend tax, at least until this tax is abolished in 2020 as the Rutte III government plans. 

The foodstuff company is tackling this problem somewhat differently than Shell did, but with the same outcome, according to RTL Nieuws. Shareholders who do not want to pay dividend tax, are offered a way out. In a statement on the company's website, Unilever wrote that shareholders of the new holding company will soon be given the opportunity to receive "distributions in the form of capital repayment", which are not subject to dividend tax. The company states that this measure will apply until dividend tax is abolished in the Netherlands.

In a response to RTL, Unilever wrote: "On the basis of the dividend tax law, any company with sufficient equity may choose to repay capital instead of paying out dividends. The repayment of capital is not subject to dividend tax."

Unilever and Shell were two of the biggest advocates for the abolishment of dividend tax in the Netherlands. The Rutte III government's decision to abolish this tax caused some controversy in the Netherlands, as the measure was not mentioned in any of the four coalition parties' election programs. According to AD, the measure was brought up by Unilever and Shell, among others, during the coalition negotiations.