Oil giant Shell faces having to pay €7 billion in backdated taxes after an MEP said he would ask the European Commission to investigate its deal with the Dutch authorities.

Paul Tang, leader of the Labour party’s (PvdA) group in the European Parliament, claimed the agreement was a clear breach of European rules on state aid for private companies.

The deal dates back to 2005, when Shell, previously an Anglo-Dutch concern, merged its two branches to establish a single headquarters in The Hague. The Dutch tax office allowed the company to exempt its UK-based shareholders from paying dividend tax by routing payments through an offshore trust in Jersey.

Tang said the tax service’s decision to approve the construction was similar to other officially sanctioned tax avoidance schemes, such as Apple’s deal with Ireland.

‘This is state aid, a tax construction solely intended to solve a problem for one company which other companies cannot take advantage of,’ he told Trouw.

In 2016 the European Commission ordered Apple to pay €13 billion in back taxes after ruling that its agreement with the Irish tax service was anti-competitive.

Around 40% of Shell’s shareholders are based in the UK. The remaining 60% are liable to pay dividend tax in the Netherlands. The current government has agreed to abolish dividend tax for foreign-based shareholders after being lobbied by Shell and Unilever during last year’s coalition negotiations.

Last year online retailer Amazon was ordered to pay €250 million in tax to Luxembourg after it was found to have gained an unfair competitive advantage through its tax arrangements, while Starbucks’s deal with the Dutch tax authorities also fell foul of European regulations. The coffee chain, which has its European headquarters in Amsterdam, was told to pay €25.7 million. Apple, Amazon and Starbucks have all appealed against their respective rulings.