Large recipients of wage support in the Netherlands pay profits abroad

Foreign parent companies of companies that have received high wage support in the Netherlands are distributing hundreds of millions of profits to shareholders.

Of the 25 largest recipients of the so-called NOW scheme, the Swiss parent company of temporary employment agency Adecco, the US parent company of truck manufacturer DAF Trucks and the French parent company of IT company Atos. This is evidenced by an inventory of DeccEit. With a number of other foreign parent companies, it is still unclear whether they are going to distribute profits.

Earlier, documents requested by DeccEit showed that the Ministry initially wanted to prohibit foreign parent companies from distributing profits if their Dutch branch has received wage support from public money. Following pressure from business, the Ministry waived such a ban, because a ban would be at the expense of employment. So these foreign parent companies are not officially doing something that is not allowed.

Among other things, the parent company of temporary employment agency Adecco distributes profits. In total, the group received an advance of almost 55 million euros in wage support in the Netherlands in 2020. At the same time, the parent company (Adecco Invest S.A.) plans to distribute profits to shareholders for around 365 million euros in the same corona year. Also bonuses have been paid out at the top of the company. This is evidenced by the company‘s annual figures. In terms of content, both Adecco Nederland and the parent company did not want to respond.

DAF Trucks received almost 49 million euros in wage support here. The American mother (Paccar Inc) was making profits and distributing profits to shareholders. Based on the profit distribution per share and the number of outstanding shares, this will amount to 576 million euros. Also bonuses have been paid out at the top of the company. Paccar Inc has not responded to questions from DeccEit.

DAF responded to questions and informed that the wage support received has remained in the Netherlands and is used to maintain employment. DAF thinks that their foreign mother has paid out profits is an understandable choice. โ€œThe confidence of shareholders in the company is important and that includes a stable dividend policy,โ€ says a spokesman.

IT company Atos received more than 22 million euros in support in the Netherlands, while the French mother (Atos SE) made a profit. Some 97 million euros of profit will be distributed by Atos SE to shareholders on the results of 2020, which will be transferred later this year. A spokesman emphasises that the parent company did not pay a dividend due to corona during 2020. She also announced that in 2020, among other things, the salary of top management was reduced by 30 percent for three months, and that the NOW has ensured that no redundancies were made in the Netherlands.

Of the other large recipients, Air France-KLM, the parent company of KLM, the largest recipient of wage aid (some 851 million euros in total), the steel company Tata Steel (almost 77 million euros) and the security company I-Sec Netherlands (more than 19 million euros) say that it is still unclear is whether they are going to pay dividends, pay out bonuses and buy their own shares in 2020.

These three companies refer to an annual report that has yet to be published. In the case of Air France-KLM there was earlier discussion about the long-year bonus that top man Ben Smith gets, despite the coronacrisis.

Prohibition of dividend distribution

Dutch companies are not allowed to distribute profits to shareholders, buy their own shares or pay bonuses if they have received wage support from June onwards. The idea behind it is that if things go so well that you can pay a dividend, you don’t need public money to pay the wages. This rule came at the request of the House of Representatives.

But the ban does not apply to foreign parent companies: if their Dutch branch has received wage support, the foreign mother can simply pay dividends. How the officials and minister changed their position on a dividend ban for foreign mothers is stated in this article.

Minister Koolmees says in a reaction that with a dividend ban, the risk was too high that foreign headquarters would close their Dutch branch first. โ€œWe didn‘t want to do that, because we wanted to keep employment in the Netherlands alive.โ€

And in a written response, the Ministry stresses: โ€œAlthough it seems attractive to ban foreign parent companies of companies in the Netherlands from distributing dividends, our estimation was ultimately that the costs of such a strict requirement do not outweigh the benefits.โ€ Experts previously told DeccEit that such a dividend ban on foreign companies would not be legally feasible either.

Great tit thinks it’s a‘undesirable situation’ means that foreign parent companies of companies that have received high wage support in the Netherlands pay large amounts of profits to shareholders. โ€œBut this scheme is to keep jobs in the Netherlands and keep people living their income. That worked very well. Unemployment rates are still low, fortunately.โ€

No dividend

There are also large recipients with foreign parent companies that do not pay dividends, buy their own shares and pay bonuses for 2020. TUI Group, the German mother of TUI Netherlands (27 million euro wage support), says that this is not allowed in connection with the financing packages that they received from the German government have received., which is a US parent company, has used the aid in the first three months. This arose a fuss because the publicly traded company made a profit of 5 billion dollars a year earlier and had more than 12 billion dollars in cash. After the fuss, the company waived subsequent rounds of aid. Moreover, the parent company did not pay a dividend for 2020, paid out bonuses or repurchased its own shares.

Randstad, a completely Dutch company, does pay dividends. This is officially allowed, because they only made use of wage support for the group in March, April and May. In those months, there was no dividend ban for Dutch companies.