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State-owned railway group NS uses Ireland to dodge Dutch taxes

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.


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.


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.

Is the NS right to try to cut its tax bill? Have your say using the comment form below.

© DutchNews.nl

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Readers' comments (16)

Rather than the Dutch (and everyone else for that matter) complaining about Ireland's low corporate tax rates, maybe they should look internally at their own tax regimes and find out a way to make their own countries more competitive from a tax point of view.

I applaud the Irish and the position they have taken to persuade more business pass their profits through Ireland.

Ireland benefits, and businesses benefit. It's so typical for Cloggies to cry foul, rather than look inward and question if what their draconian tax system makes sense or not.

And now we have a VAT increase to look forward to here. Glad I'm leaving this God forsaken country.

By Disgruntled NS Passenger | September 1, 2012 7:47 PM

Well folks.. if the guv cared anything about fairness it would have intervened by now..

That 250M could have helped many of the underprivileged, but as we already know, there is always a bad egg that's willing to look the other way:P

The most annoying of all is that the large corporations can get away with an affordable fine & stay healthy and even get free guv support like the banksters, but the little guy that got caught painting his neighbor's kitchen unofficially (To pay a tax debt or whatever.) often ends up ruined for years..kind of sucks right?

(Heads they win, tales we lose syndrome?:P)

By The visitor | September 1, 2012 8:21 PM

Why is the government charging taxes to a company it owns? Why is the government worried about lost income? If the government owns the company, then the government owns the company's income too.

This entire scenario sounds ridiculous.

By Chris V | September 1, 2012 10:26 PM

Funny. NS uses Ireland to dodge Dutch taxes. U2 uses the Netherlands to dodge Irish taxes.

By pepe | September 1, 2012 10:44 PM

If they have to pay the full rate of tax, our will mean that the fares would have to rise. So either way, we can't be happy. Tax dodging isn't morally right. However, public services like the NS should be run on a not for profit basis.

By Man | September 1, 2012 11:48 PM

Funny... Most of the top companies in my country are registered in the Netherlands exactly to have some tax benefits and not pay them in Portugal.
It seems Ireland is somehow even more attractive. What goes around, comes around...

By Carlos Silva | September 2, 2012 12:44 AM

I don't see the Netherlands crying foul over those who use the Netherlands 'special little tax agreements', such as Bono/U2 (http://www.irishcentral.com/news/Director-of-charity-One-says-U2s-Bonos-tax-strategy-is-perfectly-legal--160356085.html), or companies like Apple (http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html?pagewanted=all).

I guess it's convenient to forget these things when the boot is on the other foot.

By osita | September 2, 2012 11:19 AM

Tha fact remains that more you impose the burden of tax on your own people the more would be the people desperate and innovative in finding ways to reduce taxes - this is always true. Increase tax, the people will immdiately reduce their expenses who will suffer then?? The Dutch govt can do one thing instead - take 100% taxes and give everything for free to all its people - the ideal communist philosophy !!!

By CEP | September 2, 2012 10:44 PM

Seriously pretentious article. The company is owned by state, and taxes are collected by state. If state would have issued a loan to this company, the interest also would go to state (and reduce taxable income). Only thing what NS has done, it has maintained some residual income that it can invest back in its business, instead of asking for some extra state support. No one from a side could have taken the money, it is still with Dutch government! Seriously, how smart these politicians really are...

By Mojo | September 3, 2012 8:15 AM

There are numerous non-Dutch companies (Zara, Google, Ikea, Facebook, just to name a few) that have a holding entity or a regional headquarter office in the Netherlands as part of their tax efficiency structure because they benefit from a good tax ruling given to them by the Belastingdienst. So this is the Dutch receiving a bit of their own medicine. It is also the way the corporate world works. However, NS should not be considered as part of the private sector, so in essence, they are effectively stealing from us, the taxpayers, for 13 years. I want money back in lieu of their 13 years of tax savings.

By Alice | September 3, 2012 8:48 AM

NS is not a government service, it's a commercial company with the state as only stock holder. Don't expect the greedy CEO's suddenly act as if they're not allowed to make profit. It USED to be a government service, it's not anymore. If it was still a government service, train tickets wouldn't be so expensive, infrastructure would be okay and the company wouldn't need to pay taxes at all.

By Pee-Tor | September 3, 2012 9:33 AM

This blatant tax avoidance makes my blood boil.
It's a green light to all those who wish to find 'loop holes' in the system- a big boo boo.
It is common knowledge that lower and more simple tax frameworks incentivise entrepreneurialism and value creation through innovation- how can the Dutch, who have these two qualities so deep-rooted, be stripped of the essence of what makes their country so great?
How can the Political class display such cowardice and hypocrisy?!
The belastingdienst are void of any moral authority and I do not respect an institution that bullies hardworking people, whilst they themselves cheat their own system.

By Christopher A G | September 3, 2012 11:35 AM

Surely it's obvious? NS is of course a company and as such has to be run like one. It is using this legitimate tax dodge to keep the consumer prices down. By stating that they are trying to 'compete' what they mean (surely?) is that they need to be run as a lean and mean business in order to ensure they are selected again when their contract runs out? Or?

By SK | September 3, 2012 12:14 PM

Good for them. Better to do that than just pour into into the uitkeuring black hole.

By Simon Says | September 3, 2012 12:26 PM

I wonder: If the tax dodged was used to meet profit targets, and therefore generate a nice bonus for management? hmmmmm......

By Kevin | September 4, 2012 6:31 PM

@SK you state to keep consumer prices down? So that means we the consumers can hope to not see any hike in the rates for train tickets come 2013 because the NS was able to save money? You mean it's a way to award management greater bonusses if anything...

By Michael K | September 4, 2012 11:24 PM

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