Headquarters and central functions provide business support in communications, finance, health, human resources, information technology, legal services, real estate and security. We centralise services to support our businesses and these are located where the required skills and expertise are available. Centralised services could include a human resources team developing global training programmes or the purchase of software used across Shell.
Centralising services enables us to bring together and share specialised expertise and advice, while reducing costs. Most costs related to headquarters and central functions are recovered from the different Shell businesses.
The costs of centralised services are incurred in direct support of business operations and need to be fairly charged to the Group entities benefiting from these activities. This is known as transfer pricing and is closely monitored by governments and tax authorities.
They check that group costs like these are charged appropriately and not overinflated or excessively charged to high-tax jurisdictions where they can be deducted from revenues and used to lower taxable profit. Operating companies using centralised services pay a fee in line with industry practice. This is typically based on the actual cost of providing these services, using methods endorsed by the OECD.