The shareholders of Royal Dutch Shell will vote today whether the head office will permanently move from The Hague to London. The expectation is that the oil and gas company will leave and as a result will no longer be Royal and will no longer be so Dutch. It is then the second big name to leave the Netherlands after Unilever.
And with that, the discussion about the business climate in the Netherlands is getting underway again. The Netherlands is not doing badly in the rankings. But according to the VNO-NCW business association, this means looking in the rear-view mirror, because those lists are drawn up based on past performance. The association sent a manifesto to the informants.
“We are very concerned about the business climate. We receive many signals from companies that wonder whether they will still stay and whether they will still make their new investments in the Netherlands. This is partly due to the instability of government policy, great regulatory pressure, and negative sentiment against the business community. I often also get the question from abroad what is going on in the Netherlands,” says Ingrid Thijssen, chairman of VNO-NCW.
And Barbara Baarsma, professor at the University of Amsterdam, agrees. “The Netherlands must be much more active in improving the business climate, including predictable government policy. Regulatory uncertainty is the death in the pot for, for example, sustainability investments.”
Schiphol
According to Baarsma, the great pressure from the social debate may have played a role in Shell’s decision. “Shell is leaving mainly because it already had one foot in the UK. But Shell’s sustainability agenda was under pressure due to, among other things, the lost lawsuit against Milieudefensie.”
And according to Bas ter Weel, director of the economic research bureau SEO, considerations must also be made in this regard. “Look at Schiphol: it pollutes, but all those companies around it would never have been there without the airport. If a company establishes itself somewhere, it has a flywheel effect.”
Because large companies that establish themselves in the Netherlands usually also provide more employment, according to Ter Weel. And surrounding hotels or cultural facilities can also benefit from this.
And then good facilities such as education, care and defense are important. Ter Weel: “We are well off in the Netherlands, but the basics must remain in order. You can only achieve that with sufficient tax revenue. And that comes from productive companies that employ people and innovate.”
No mass exodus
Professor Baarsma thinks the departure of Unilever and Shell is a loss for the Netherlands, but according to her we need not worry about a mass exodus of companies. “After all, not only or even mainly the Dutch business climate has played a role at Shell and Unilever, but the Brexit because both companies are both British and Dutch. And tax reasons will have played a role in the choice between the Netherlands and the UK.”
Because for Unilever and Shell, the dividend tax was the culprit. For example, Shell would have opted for the Netherlands in 2005, because the cabinet had promised to abolish the dividend tax. But when it became clear that the dividend tax would still be in place, Unilever decided last year to move to London. And Shell is likely to follow suit.
Monique Pisters, partner at tax consultancy Grant Thornton, also does not expect other companies to leave immediately. “The Netherlands must be careful and I hope that politicians will wake up. Because where other European countries keep their corporate tax rate the same or even lower it, the Netherlands will take on the multinationals to balance the government budget. And if the tax situation becomes even more unfavorable, the Netherlands will eventually lose more often at that point.”
Fewer tax gifts
Because in recent years, the Netherlands has canceled several tax benefits. For example, multinationals can deduct less and less interest, which means that they have to pay more tax. And that while the United Kingdom no longer has to comply with European guidelines to prevent tax avoidance.
“Companies no longer choose the Netherlands for the tax advantages in profit tax, especially if we compare that with the UK. There is no deduction of dividend tax and the options for interest deduction are much more generous,” says Pisters.
But according to SEO director Ter Weel, we cannot yet say that the United Kingdom has emerged as the winner of Brexit. “The balance sheet is still in favor of the European Union. But not all financial companies come to Amsterdam. Frankfurt and Paris are also popular.”
The informants received the manifesto on improving the business climate. It is up to the new cabinet to do something about it.
