UK claims €141 million Unilever tax money paid to Netherlands

The British tax authorities submitted a 141 million euros claim to Unilever for tax that the company wrongly paid in the Netherlands, according to the British authorities. The claim involves taxes paid in 2015, but could stretch over several years and reach 600 million euros, the company wrote in a previously unnoticed passage in its annual report, NOS reports.

Unilever opposed the claim and started a procedure in which the British and Dutch governments have to talk to each other to prevent the company paying tax on the same profits in both countries. Should the British win this battle, Unilever expects to have to reclaim at least 174 million euros from the Dutch tax authorities, the company said to NOS. The amount is higher, because the profit tax rate is higher in the Netherlands than in the United Kingdom.

The British tax claim revolves around whether a significant part of the Dutch branch of Unilever moved to the United Kingdom years ago. Unilever has always consisted of a Dutch part with food products and a British part with cleaning products and deodorant. Last month, Unilever decided to give up the two-country structure and become a completely British company with headquarters only in London. This decision was the apotheosis of a long discussion, in which Unilever first chose Rotterdam in 2018, and then decided to retract that decision.

According to the British tax authorities, an important part of the Dutch Unilever had been based in London all this time and therefore should have paid tax in the UK, not the Netherlands. Unilever told NOS that the British authorities believe that the permanent establishment of Unilever NV is in the UK because the NV management moved to the UK "due to the nature of the Unilever Group's composite board". Tax law professor Jan van de Streek explained it as such: "If a director of the Dutch business unit lives and works in London, and makes important decisions about the part there, the British tax authorities can regard this as a British branch of the company and Unilever has to settle with the UK tax authorities."

Neither Unilever nor the British tax authorities would tell NOS which part of the Dutch branch they believe moved to the UK in 2015. The Dutch Ministry of Finance also wouldn't comment on the matter, according to the broadcaster.

According to NOS, it is striking that the British authorities filed this claim for 2015 taxes only last year, when Unilever was dithering over the decision of whether to base the company in the UK or the Netherlands. Unilever said this tax claim played no part in its decision for London headquarters. But according to Van de Sneek, it is customary to have consultations with the tax authorities in the involved countries prior to such big decisions. Usually countries would try to lure a country there with pretty promises. "It is speculation, but the idea is tempting that the British have chosen an aggressive approach," Van de Sneek said to NOS. "Like: if you come to London you won't have these kinds of problems anymore."