Saturday 01 September 2012
The state-owned Dutch railway company NS has managed to cut its Dutch tax bill by at least €250m since 1999 by routing the cost of new trains through Ireland, the Volkskrant reported at the weekend.
The tax dodge means the treasury has lost out on income generated by a company it owns, the paper points out. The finance ministry, meanwhile, is said to be ‘unhappy’ about the arrangement, which it has been aware of from the beginning.
In effect, NS’s Irish subsidiary, NS Financial Services, has spent €1.7bn on new trains which it then rents to the NS in the Netherlands. None of the trains has ever been used on the Irish railways, the paper said.
Dividends
This allows the Dutch operation to avoid tax. In Ireland, railway companies have paid an average 9% tax on their profits in recent years. In the Netherlands, NS would have to pay 25% profit tax on the train rental. Some of the ‘missing’ cash does end up with the treasury in the form of dividends.
In a statement, the NS said the tax route had been developed to allow it to ‘better compete in the market’. Other large transport firms also use Ireland to reduce their tax liabilities and there is nothing illegal about this, the NS said.
The Volkskrant points out that there is effectively no competition on the Dutch railways and NS operates all intercity and most local train services.
Morals
Political party leaders were quick to react to the news. CDA leader Sybrand Buma told a Tros radio programme it showed a ‘lack of morals’. Labour leader Diederik Samsom said the NS had used a ‘bizarre construction which just is not right’, and an SP spokesman said the situation is ‘unacceptable’.
Caretaker tax minister Frans Weekers told the paper through a spokesman: 'Of course, we would rather have seen these activities take place in the Netherlands.'
Economist Martin Holterman, who is an expert on the Dutch railways, told the Volkskrant the NS is busy 'playing at being a company'. But the NS is not a company but a government service, he said.
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© DutchNews.nl
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