On 5 October Unilever announced that it would not move its headquarters from London to Rotterdam because its stockholders opposed the move. Later that day the Dutch government, the Rutte III cabinet, stated that it would reconsider the abolition of the dividend tax. According to prime minister Mark Rutte it did not mean the dividend tax would be preserved definitively. He stated the plan to abolish it wasn’t launched for a single company, but that Unilever’s decision was relevant in the reassessment of the plan.
The words of Rutte don’t connect with reality. The announcement to reconsider the plan came directly after Unilever’s announcement. And the action of just Unilever, one company, was the motivation for the reassessment after all. The statement of Rutte doesn’t have any credibility. Once again it’s a smoke screen, because I think Rutte had been searching for an exit of the despised plan to abolish the tax. Unilever’s action is right up his alley because it enables him to cancel the abolition without much loss of face. That the reappraisal wouldn’t directly lead to preservation of the tax is unbelievable, because otherwise they wouldn’t be sowing doubt with such an announcement. I know for sure now that the dividend tax will stay.
Also consider that Unilever’s plan to abandon the move is a pitifully bad excuse for the reconsideration. The move of the headquarters to Rotterdam would have brought several dozen jobs to the Netherlands. Even if you add some indirect employment, such a small number is meaningless. Are we supposed to believe that this meager amount of jobs is influencing a decision on € 1,9 billion of potentially lost tax revenue? That is the amount lost if the dividend tax would be abolished.
In other news, the Supreme Court of the Netherlands thinks the dividend tax is legally sustainable and doesn’t discriminate against foreign investors. The news isn’t very clear about the arguments of the Supreme Court, but it does give a link to the detailed ruling. I don’t have knowledge about tax law, but after reading the summary I think I understand. Denmark was discriminating because it didn’t offer foreign investment funds the choice to be taxed on the exit instead of the entrance, just like Danish investment funds.
The tax on the entrance is apparently the tax which is paid to the state where the investment fund is located. The tax on the exit is paid to the state where the recipient of the dividend is located, as far as I understand. In practice the choice doesn’t offer any advantage, because exemption from the tax at the entrance is only granted if the tax is paid at the exit. The latter requires so much complex administration that in practice not a single investment fund would want this. If the Dutch Tax and Customs Administration would allow foreign investment funds to choose to pay tax on the exit and then offer them exemption on the tax at the entrance, they’ve got nothing on the Dutch state.
The summary is reasonably readable in this case which is so complex for laypeople. Yet, the unnecessary use of English directly caught my eye in the language used by advocate general P. J. Wattel. For example “zowel de lokale, if any, als de Deense bronbelasting” and “zal het niet-ingezeten fonds moeten tracen welke ontvangen dividenden hij dooruitdeelt”. Naar correct Nederlands vertaald “indien van toepassing” en “traceren”. These words were not English legal jargon without Dutch counterparts. Dutch people have a hand in polluting their own language with unnecessary English. It’s a pity to see that even the Supreme Court is affected by this disease.