LyondellBasell Industries NV (LYB:US), the world’s largest producer of polypropylene, said it’s moving its tax residence to the U.K. from the Netherlands to avoid payments on dividends and gain flexibility in managing cash.
The change is expected to take effect in the third quarter, Rotterdam-based LyondellBasell said today in a regulatory filing. The move eliminates a 15 percent withholding tax on payouts to shareholders, enables more flexibility to fund stock repurchases, and allows cash from more profitable U.S. operations to be moved around the world more easily, said David Harpole, a Houston-based company spokesman.
LyondellBasell joins Fiat Industrial SpA (FI) in seeking a U.K. tax residence for operations headquartered in the Netherlands. The U.K. has cut its corporate tax rate to 21 percent and to less than 6 percent on profit attributed to offshore arms that make loans to other units.
LyondellBasell got 57 percent of its 2012 revenue from the U.S., where it benefits from low-cost natural gas. It has paid special dividends in each of the past two years and plans to buy back 10 percent of its shares this year.
“The tax treaty between the U.S. and U.K. is more favorable than tax treaties with other countries,” Harpole said in a phone interview today.
LyondellBasell said it will be a dual resident in the U.K. and the Netherlands for tax purposes until its migration to the U.K. is completed. It will remain incorporated in the Netherlands and its European operations will remain headquartered in Rotterdam, the company said. Shareholders’ rights under Dutch law aren’t affected.
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