Credit: Jasper Rietman

Polluting pfas factory Chemours did not pay profit tax thanks to ‘cynical construction’

By Tim Luimes, | 5 February, 2024

US chemicals multinational Chemours in Dordrecht (the Netherlands) makes hundreds of millions in profits and is polluting the environment with toxic substances at the same time. And yet, they did not have to pay profit tax in the last few years.

Thanks to a ‘cynical construction’, Chemours was able to squeeze profits in the Netherlands and shift them to Switzerland by lowering prices internally and raising them externally. The sales office in Geneva made a nice profit, which flowed back to the Netherlands as a dividend. Since that profit was probably taxed in Switzerland (at a lower rate than in the Netherlands) the company did not have to pay tax.

‘A clear case of tax avoidance’, say tax professor Arjan Lejour and former FIOD inspector Jan van Koningsveld. ‘Even though the construction may not be illegal, it is immoral’, says Lejour. ‘This is a multinational that only cares about maximum profit, without taking society into account.’

Chemours says the construction was set up for business reasons and not to avoid taxes. ‘But regardless of whether it was deliberate…,’ says Van Koningsveld, ‘…the fact that such a plant causes such damage to the environment without paying profit tax in the Netherlands, is already very bad.’

Research report
In this research, The Investigative Desk analyzed the public annual reports of Chemours and DuPont from 2011 to the present. Because public annual reports do not contain all the information that the company or the tax authorities can see in tax financial statements, the figures may not be fully adequate.

The documents were analyzed for indicators of aggressive tax avoidance, identified by the Organization for Economic Cooperation and Development (OECD) and the European Union, among others.

Figures from the income statement on operating profit, total profit before tax, financial income and corporate income tax (profit tax) were then put into an Excel sheet to calculate totals. This showed that Chemours started paying significantly less corporate income tax since 2017 than before.

The analysis also showed that dividends received after 2019 were more than 95% from Switzerland. In 2018, it cannot be seen how much came from Switzerland and how much from other holdings. It is possible that Switzerland’s share was lower then.

The annual reports also show that Chemours Netherlands sells mainly internally, although it is not easy to see what percentage is sold to the Swiss subsidiary. The company does write that Chemours Switzerland is the main customer and confirmed this in a comment.

It was chosen to make the years between 2018 and 2022 as the starting point of the analysis, as the company announced in 2018 that it was lowering prices internally and raising them externally. From then on, it is also clear to see that operating profits from the plant fell, while profits from dividends rose. Although Chemours also did not pay but received profit tax in 2017, that year has not been included in the basic analysis for that reason.

Chemours did pay tax in 2015 and 2016. To reflect the full picture since DuPont’s spin-off, the total profit tax paid between 2015 and 2022 is also included in the article.

Read the full story at Follow the Money (in Dutch).

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