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AN IRISH COMPANY being used by the Dutch railway service to reduce its tax bill has built up profits of almost €1 billion.
Irish company NS Financial Services Company was set up by state-owned railway operator Netherlands Railways (NS) in 1998. As it is based in Dublin, profits are taxed at the Irish rate of 12.5% – as opposed to the Dutch headline rate of 25%.
The Dutch state is the only shareholder of the company. Since the firm has made hundreds of millions of euro of profits since its establishment, the lower tax rate has potentially saved it more than €250 million.
However, the firm has caused controversy for the Dutch government, which has been accused of facilitating tax avoidance. In 2014, NS Financial Services noted that its leasing activities were “the subject of criticism by the Dutch parliament”.
NS previously said that the Irish entity was set up so that the company could “be more competitive, lower costs and invest in services”.
The business orders new trains and then leases them back to its parent company, NS.
Dutch finance minister Jeroen Dijsselbloem pledged in March 2015 that the government would stop making use of the Irish offshoot.
Profits
As a result of the controversy, some 90% of the trains used by NS in its home country will be covered under the Dutch tax regime by 2024.
However the state-owned company also has interests outside the Netherlands, in Germany, and based on new accounts filed for NS Financial Services Company it appears the firm is here to stay.
NS Financial Services Company had operating income of about €200 million during the year to the end of December 2015, down slightly on the €201 million it reported in 2014.
After operating costs were accounted for, the firm made an operating profit of €107.2 million. The company paid €13.2 million in tax at the headline Irish rate of 12.5%.
The records also show that the firm has almost a billion euro in accumulated profits and has not paid a dividend in years – a move that would return some of the cash to the Dutch state.
‘Profits are required’
When contacted by Fora, a spokesman for the Dutch finance ministry directed the query to an NS spokesman.
When asked if the company plans to pay out a dividend to its shareholders, a spokesman for NS Financial Services told Fora that the “majority of this profit is required for the running of NSFSC, to finance investments in new train series”.
The spokesman also said that the NS Financial Services is currently leasing to an NS entity that is owned by the Dutch government, and to another subsidiary that is 100% owned by NS. He added that the Irish company is now looking to focus on Germany.
“In 2016, NSFSC entered into a purchase and lease of trains for German operations of Abellio (an NS subsidiary),” he said.
As of the end of 2015, NS Financial Services employed eight people. Staff costs amounted to €835,000, an average of just under €104,000 per person.
Written by Paul O’Donoghue and posted on Fora.ie
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since we can show the Dutch how to circumvent taxes, perhaps they can show us how to run a railroad?
It would help if we had 4 times as many people in an area half the size of Ireland.
Sounds like a well run operation that knows what it is doing. Runs a great service AND makes A billion euro in profit for its owner the Dutch state…
Our bus and train services have to be subsidized to the tune of a billion and still offer terrible, infrequent, unreliable service with poor, unclean trains and is overstaffed with overpaid and incompetent management and staff…
Pity Irish state agencies don’t have the same nationalistic tendencies.
@iohanx: They do. Both NAMA and IBRC use section 110 charity status to dodge their taxes and make their balance sheets look more favourable for propaganda purposes. I wonder how the establishment mouthpiece above would try to spin that accounting 3 card trickery?
@Drew TheChinaman :): I don’t know where you get you figures from but the annual contract between the NTA and Irish Rail was €117 million last year.
The reason our trains aren’t as profitable is we are a stone age society when it comes to high rise. You need high density high rise in urban centres to make public transport work.
Our muppet politicians reduced maximum height from six to four storeys.
@Irish Spider-Man: and the Dutch railway company had an operating profit of 107mil this year and accumulated profits totaling a billion.
So assuming similar levels of profit for the Dutch and subsidy for the Irish over the last number of years. One has made the state a billion while running a very good service and the other cost the state a billion while running a poor service.
What the Dutch are doing is legal just exactly the same as Apple does, except unlike Apple the Dutch pay the full 12.5 % tax. So Apple does legally owe us the difference so that they are tax compliant in Ireland.
@Paul Lane:
It’s nothing like Apple. Apple sells products to other countries and these other countries quite rightly would like to charge tax to organisations trading within their jurisdiction. Any tax liability to Apple should be to the all the countries Apple is trading in and not just Ireland.
@Nick Allen: And what about the tax that the Dutch government would like to receive as their railway trades there. Holland is outside Ireland just like those countries Apple does business with…So no difference at all, and completely legal except Apple did not pay the full 12.5% which is due to us.
U2′s conglomerate moved to The Netherlands a few years ago avoiding paying Irish taxes. The Dutch Railway moved to Ireland. We’re even.
@Juan Venegas: two wrongs don’t make a right.
@Ian Moloney: You’re right. Two wrongs make a we’re even.
Let me get this straight. The Dutch state is paying us €13 million a year rather than paying itself €26 million while keeping €1 billion hidden under the bed. I’m sure the Dutch people would like to see better use made of their savings.
A reverse U2.
Somethign about the Dutch – maybe that Turkish guy isn’t too far off the truth – remember Rabo Direct the straight talking bank? that was fined billions!! Imagine these clowns had the hard neck to lecture us.
And u 2 invest in holland to avoid tax
have your say