Irish cog in Dutch-German rail tax avoidance scheme racks up €5m profit

A Dublin company set up to avoid tax on a German railway concession run by the Netherlands’s state rail company, Nederlandse Spoorwegen (NS), recorded profits last year of €5 million. Irish-registered Disa Assets owns 54 trains worth €150 million, which are listed on an Irish balance sheet but are in operation in northern Germany on a route run by a subsidiary of NS, Disa’s accounts show.

The use by the Dutch state-owned railway company of Dublin as a centre to cut its tax bills in the Netherlands by €270 million became a major source of controversy there several years ago, forcing its then finance minister Jeroen Dijsselbloem to order NS to wind up its Irish structure.

However, Dublin has continued to be used as a centre of tax avoidance for companies linked to NS’s German rail concessions, which are run by its subsidiary Abellio. NS has said that it has the permission of the Dutch finance ministry to continue to use overseas tax avoidance schemes to lower its tender bids on foreign rail contracts. This was backed up by the Dutch finance ministry, which said the situation with Disa Assets is “totally different” to the previous tax avoidance schemes run in Ireland by NS.

Disa was established by NS in 2017 to buy and own the trains, which are then leased back to the Abellio operating company in Germany for use on a network in Saxony-Anhalt. The Irish train-owning unit was subsequently sold to infrastructure group 3i, although it continues to lease them to Abellio. Disa’s latest accounts reveal that control of the Irish unit was recently shifted to Luxembourg.

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The accounts show the unit paid €620,000 in Irish corporation tax last year, at Ireland’s 12.5 per cent rate. Corporate taxes in the Netherlands and also Germany are far higher, when German regional trade taxes on income are included. Disa Assets had €17.1 million in its Irish bank account at the end of last year, the accounts show.

A note to the accounts outlines how the Abellio company that leases the trains went bust in Germany last October. The directors of Disa state, however, that the rail company and German public transport authorities have reached agreement for a new entity to take over the Saxony service in 2024 on the same terms.

While the Dutch-owned Abellio group has retained the Saxony service whose trains are paper-owned in Ireland, local reports suggest Abellio has lost most of its other German rail concessions.

Company documents filed for NS entities linked to its previously controversial Irish tax avoidance scheme on trains operated in the Netherlands show that the Dublin structure was formally dissolved last November. Eamonn Richardson, an insolvency partner with KPMG, wound up NS Financial Services and an associated intermediate holding company, generating a cash dividend for the Dutch state company of €231 million, filings suggest.