Finance

Shell relocation plan: after 115 years, the shell will become British (again)

Shell once consisted of two separate companies: the Dutch Royal Oil and the British Shell Co. The origin of Dutch Royal Oil lies on the Indonesian island of Sumatra, where oil was discovered at the end of the nineteenth century.

lamp oil

Petroleum was then still a fairly insignificant substance, for example it was used as lamp oil. But that soon changed, with the arrival of the car and ships that could run on fuel oil.

It was striking that the company had been given the ‘Royal’ designation from its foundation in 1890. Rumors have it that King Willem III owned shares from the start, although this has never been officially proven.

Then the British Shell: that company has its origins in something completely different, namely the trade in Japanese decorative shells. Later, lamp oil was added. When a logo had to be devised, the company opted for a mussel shell in 1900. Four years later, that changed to the scallop shell, with the familiar ridges.

To combine forces

In 1907, the Dutch and British company decided to join forces. The name of the new company became Royal/Shell and the shell of the British became the joint logo. But the two companies did not become one completely. The British part remained a plc as a legal form and the Dutch part an NV. Both have their own listed shares.

The two head offices also continued to exist, one in London and one in The Hague. That remained the case for almost a hundred years, until it was decided in 2004 that it had to be simplified. Koninklijke/Shell was transformed into a British company, a plc, with only one head office, in The Hague. Because the head office is in the Netherlands, the Dutch tax regime applies to Shell.

That already worked a bit easier, but it had to be even easier, the board thought. That is why Shell will become fully British from next year: a British company with a head office in London. That is why the British tax regime will also apply.

An important part of this is that Great Britain does not levy dividend tax. That is the tax that shareholders have to pay on the annual dividend (say: the profit distribution) that they receive.

Abolish dividend tax

The Netherlands does levy dividend tax. Three years ago the cabinet had the plan to abolish this, but withdrew that plan after strong criticism. In other words: the Netherlands still levies dividend tax, Great Britain does not. Something that Shell will certainly have factored into their decision to move the whole lot to London.

Which makes that world famous shell completely British. Just like 115 years ago.

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