A proposed ‘fine’ for moving its headquarters to London and becoming a purely British company would cost Unilever €11bn and would discourage the company from making the switch, the food to detergents group has told shareholders.
A note to shareholders ahead of the September vote on unification says the payment, proposed by left-wing green party GroenLinks, would add up to €11bn and that if the legislation is passed in its present form, a move to Britain would then no longer be ‘in the best interests of Unilever, its shareholders and other stakeholders.’
However, the company points out, the legality of such legislation may conflict with international treaties and Dutch-British tax arrangements. And, it says ‘the boards intend to proceed with their proposals provided that unification, in the boards’ view, remains in the best interests of Unilever, its shareholders and other stakeholders as a whole.’
The GroenLinks draft legislation will introduce an exit premium which large companies leaving the Netherlands would have pay to the tax office as compensation for tax income that would be lost by the move.
Unilever blaast unificatie af als GroenLinks-initiatiefwetsvoorstel exitheffing dividendbelasting door Tweede en Eerste Kamer wordt aangenomen. Unilever vindt het wetsvoorstel strijdig met EU-recht, EVRM en NL-Brits Belastingverdrag. pic.twitter.com/TPx8vVFls4
— Rients Abma (@rientsabma) August 10, 2020
The draft bill, which is currently being looked at by the Council of State advisory body is due to be debated by MPs in the autumn. Three of the four coalition parties support it.
Bart Snels, the GroenLinks MP responsible for the draft bill, told RTL that he is pleased by Unilever’s statement. ‘That is exactly the aim of the legislation,’ he said. ‘If the law is adopted, then they will stay and this news will help ensure majority support in parliament.’
Unilever said in June that unification will create ‘a simpler company with greater strategic flexibility, that is better positioned for future success’. Unilever shareholders will vote on the move on September 21 (Rotterdam) and October 12 in London.
The June decision came 18 months after Unilever dropped plans to consolidate its headquarter operations in Rotterdam following pressure from several large investors in the UK.
At the time, the decision had considerable political impact, particularly the Dutch government’s decision to scrap the tax on dividends which was seen as a sweetener to keep the company in the Netherlands. The dividend tax plan was eventually put on ice.
Since it was founded in 1930, the Anglo-Dutch soups-to-soaps giant has maintained two separate headquarters – in London and in Rotterdam – as well as dual bourse listings and dual fiscal entities. But Unilever has always operated as a single business with a single board of directors.
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