Double taxation threatens Unilever

BNR Nieuwsradio
Erasmus School of Economics

The British tax authorities and the Dutch tax authorities are at loggerheads over Unilever. The United Kingdom has filed a tax claim of 141 million euros against Unilever which the company already paid in the Netherlands. According to the British tax authorities, this money should not have been paid to the Dutch tax authorities. Peter Kavelaars, Professor of Economics of Taxation at Erasmus School of Economics, explains on the Dutch radio station BNR Nieuwsradio where the British tax claim comes from.

Discussions

Unilever is traditionally based in both countries. Therefore, Unilever has made good arrangements to avoid double taxation. The company strongly opposes the British claim and has started a procedure to ensure that the British and Dutch tax authorities enter into discussion with each other. By doing so, the company hopes that the two countries can reach an agreement and Unilever can avoid paying taxes on the same profit twice. However, if the countries do not reach an agreement, the company can expect to fall victim to double taxation. The discussion between the two tax authorities will take place without the involvement of Unilever. 

Uncertainty

According to Kavelaars, The United Kingdom states that for tax purposes, Unilever is based in the United Kingdom more than in the Netherlands. Therefore, more profit must be attributed to the United Kingdom. The tax claim is about 2015, but Kavelaars believes the same problem will occur in the coming years. The total claim can therefore increase to 600 million euros. If both countries fail to reach an agreement, Unilever still expects it can reclaim at least 174 million euros from the Dutch tax authorities. This amount is higher than the British claim of 141 million euros because the Netherlands applies a higher tax rate than the United Kingdom. How it will end is uncertain, says Kavelaars. The Netherlands does not necessarily have to agree with the United Kingdom. In this case, both parties can hold their ground which could cause even more problems in the future. 

Professor
More information

Listen to the entire broadcast of BNR Nieuwsradio here, 2 July 2020 (in Dutch)