Shell evaded more than a billion in taxes for years
In the media image: Maverick Timorius via Unsplash
Oil and gas giant Shell avoided substantial amounts of tax in the Netherlands for many years by ensuring that its service operations did not generate taxable profits. Jan van de Streek, Professor of Tax Law, commented on the matter in various media: ‘That’s not allowed.’
Confidential documents obtained by the Centre for Research on Multinational Corporations (SOMO) show that, for many years, Shell provided a wide range of support services from the Netherlands to subsidiaries that extracted oil and gas around the world, without attributing any profit to those activities. In doing so, the energy company avoided paying corporate income tax in the Netherlands. SOMO estimates that, between 2002 and 2017, Shell avoided more than €1.1 billion in taxes through this arrangement.
These were high-value services, according to Jan van de Street: ‘Extremely important services, including technical services, strategic advisory services, research and development, and innovation. All these activities were carried out from the Netherlands for Shell subsidiaries around the world.’ It remains unclear how long this has been going on, but professor says he would not be surprised if the situation has existed for decades. Van de Streek: ‘This goes well beyond the boundaries of what can be considered acceptable.’
The Dutch Tax and Customs Administration, however, appears to have been aware of the arrangement and to have approved it. According to Van de Streek, it remains unclear why the tax authorities allowed this practice. One possible explanation is that the government sought to accommodate Shell in order to protect the Netherlands' business and investment climate. ‘I can understand the desire to maintain an attractive business climate, but illegally reducing profits to zero is clearly a step too far.’
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