The Dutch state railway, Nederlandse Spoorwegen (NS), has come under scrutiny there after it set up a new Irish company to avoid tax, two years after its government pushed it to begin the wind-down of another Irish tax avoidance entity.
NS last year established a new company, Disa Assets, which is registered to a small, Dublin south city office building that is also home to NS Financial Services Company (NSFSC).
NSFSC, which buys trains and leases them to the railway operator back in Holland, has helped NS avoid an estimated €270 million in Dutch taxes over more than a decade. Corporation tax in Ireland is half the Dutch 25 per cent rate.
The state-owned group's Irish tax avoidance structure led to heavy criticism from Dutch politicians, including its finance minister, Jeroen Dijsselbloem. He lambasted it for avoiding tax in the country in which it operates.
Following concerted pressure from the Dutch establishment, Mr Dijsselbloem told the Dutch parliament two years ago that the use of NSFSC, which owns more than €1 billion worth of trains, would be “phased out”.
It emerged this week in Dutch newspaper Trouw, however, that NS has since established Disa Assets to avoid tax using train leasing arrangements with Abellio, a NS subsidiary that mainly operates in Germany.
Abellio operates mainly in North Rhine-Westphalia, where it has won state tenders to operate a multitude of rail lines. It also operates a handful of services in Britain.
Sole shareholder
Disa’s annual return, filed with the Companies Registration Office recently, shows that its sole shareholder is fellow Irish company NSFSC Holdings. The board of the new company includes a large number of Dutch-based NS executives.
When contacted by The Irish Times, NS spokesman Erik Kroeze said the establishment of Disa was in line with the Dutch government's policy "that states we follow the rules in the country we ride the trains".
NS says its agreement with the Dutch government is that if it applies for a foreign concession, such as those won by Abellio in Germany, it is allowed to lease the trains from a foreign unit to make its bid more competitive, provided the awarding authority has no objection.
A Dutch finance ministry spokesman told The Irish Times that the situations regarding Disa and NSFSC are "totally different".
“In the Netherlands, NS gets to run concessions without tender. In this situation, we don’t want it to use an Irish company for tax reasons. The tax must be paid in the country in which it service is delivered.”
He added that because the German awarding authority confirmed to bidders that it did not object to them using Irish tax structures, so that their bids would be cheaper, then the Dutch government has no objections either.
“Everyone, including Abellio, who bid in Ireland could use whatever structure they wanted,” he said.
