AMSTERDAM (Reuters) – Unilever’s withdrawal of plans to move its headquarters to Rotterdam looked likely on Friday to trigger political fallout for Dutch Prime Minister Mark Rutte over his unpopular proposal to scrap a withholding tax on dividends.
Unilever said it had given up on moving to Rotterdam for now under pressure from shareholders at its British arm who worried about the future tax treatment of Dutch dividends.
Rutte, who worked for Unilever from 1992-2002 before entering politics, had yet to respond to the news early on Friday.
But he could be bracing for a barrage of questions at his weekly press conference later in the day over whether the 15 percent dividend tax – earmarked for removal in theory to attract foreign investment – will now be retained after all.
Deputy Finance Minister Menno Snel said the cabinet was meeting to discuss consequences. “We would have liked to have seen this turn out differently,” he told reporters in The Hague.
Opposition parties called for an immediate debate. Green-Left leader Jesse Klaver said Unilever’s decision had removed the “very last argument in favor” of scrapping the tax.
Far-right lawmaker Geert Wilders, who leads the second-largest party in the country, tweeted that Rutte should give up on the idea or resign.
Unilever, a large consumer goods manufacturer, currently has dual headquarters in London and in Rotterdam, Europe’s biggest and busiest port.
While doubts have grown in recent weeks among dual-listed Unilever investors over the wisdom of the move to a sole HQ in the Netherlands, Rutte has been fighting an increasingly lonely battle in favor of scrapping the tax.
Opponents branded it a costly tax break for foreigners, a gift for foreign governments, and a boon for multinationals.
Unilever and a second Anglo-Dutch firm, Shell, had in particular lobbied for the tax cut. But a poll published early last month said just 11 percent of Dutch voters said they still supported getting rid of the tax, most of them from Rutte’s VVD Party.
His coalition partners have signaled they are only still backing the plan because they had agreed to it in their governing pact. The coalition holds a single-vote majority in both parliament and the senate.
Last month, Rutte defended the plan for the fourth time in parliament, saying a failure to approve it risked seeing Shell and Unilever abandon their Dutch headquarters.
“You could still opt to hold on to the tax, but there’s a large risk that these companies would then decide to leave,” he said.
Unilever’s UK shares were down around 1 percent in early morning trade, while its Dutch shares were flat.
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