Today, Unilever said that its proposal to unify its London headquarters and eliminate its Dutch base would not be taken forward if a law enacting an “exit tax” is enforced in the Netherlands.
If the law is passed, the Anglo-Dutch consumer goods firm would have to pay the Netherlands government a whopping $12.94 billion.
It is not clear if the bill, proposed by the opposition Green Left political party, is in line with Dutch and European legislation, or whether the Dutch parliament will gain majority support. Unilever said it did not think the Green Left plan was legal.
The Netherlands’ Council of State is reviewing the proposed legislation and will issue an advisory opinion on whether it is legal. It has not set a date for its decision.
“Nevertheless, if the bill were enacted in its present form, the boards believe that proceeding with unification, if it resulted in an exit tax charge of some 11 billion euros, would not be in the best interests of Unilever,” it said.
The remarks were released today as part of a shareholders’ circular to approve the merger in an extraordinary meeting to be held on September 21.
Taxes have always played a key role in Unilever’s decision making as it seeks to simplify its dual structure. It had initially decided to unify headquarters in Rotterdam (a city in Netherlands) in 2018. But those plans were scrapped after the Dutch government decided to impose a 15% dividend on withholding tax.
Withholding taxes are the way to tax at the source of income, rather than attempting to raise income tax after wages are earned.
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