The Dutch government is facing questions over its handling of leaked Shell tax documents that have raised concerns about the company’s international tax arrangements. Despite the information becoming publicly available, the Ministry of Finance maintains that confidentiality rules prevent it from discussing individual tax affairs. Its response to parliamentary questions has renewed debate over corporate tax transparency and government oversight.
Shell’s tax arrangements questioned
The controversy began in July when research organisation SOMO and investigative platform Follow the Money published the Shell Files, examining the company’s transfer-pricing practices. Their findings raised questions about how profits were distributed among Shell entities operating in different countries.
One example involved Shell Western Supply and Trading in the Bahamas, which reportedly generated approximately $6.2 billion in profits between 2018 and 2023 with just 37 employees. SOMO calculated that its profit per employee was 104 times the average across Shell entities.
Further scrutiny focused on Dutch subsidiaries that allegedly provided services to affiliated companies without charging additional profit margins. A tax law professor questioned the legality of certain arrangements, although Shell maintains that its practices comply with applicable laws and OECD guidelines.
Government declines further investigation
Responding to parliamentary questions on October 5, the Ministry of Finance explained general transfer-pricing rules without confirming whether tax authorities had examined or approved Shell’s arrangements.
Officials clarified that routine services between affiliated companies generally require a profit margin, although exceptions exist. Certain low-value services qualify for a simplified 5% mark-up. Regarding Swiss trademark royalties, the government explained that a 25% calculation method alone cannot establish whether payments meet international pricing standards.
Questions about potentially unlawful state aid were referred to the European Commission, while officials reported no indications of wrongdoing. Nevertheless, the government declined to launch an independent investigation, citing existing oversight mechanisms. Its position leaves unanswered questions about how Shell’s specific arrangements were assessed.
