A group of railway giants with operation in Europe have been brought to light about employing Irish hubs to circumvent their domestic tax liability. By transferring significant value of assets to Irish subsidiaries and signing leasing contract, the rail companies managed to lighten their overall tax burden and hoarding huge profits in the lower-tax jurisdiction, namely, Ireland.
The Dutch state-owned company NS, (Nederlandse Spoorwegen), has upset the public recently due to its aggressive tax planning practice. During the past decade, a wholly-owned Irish subsidiary of NS purchased the trains and lease them back to its Dutch parent. As the corporate tax rate in Ireland is only half of that in Netherlands, NS reduced its Dutch tax liability by estimated €270 million through such leasing arrangements, with another €1 billion of profits in stocks in Ireland. Facing domestic political pressure, NS closed the subsidiary and repatriated the profit back to its home country. However, another Irish unit of NS in Dublin, Disa Assets, continues to lease trains owned and decrease the tax burden in Germany.
NS is not the only enterprise playing with leasing arrangements. Eversholt, a British train leasing group possessing nearly one third of rail passenger market in the UK, received €387 million during 2014 to 2015 from three Irish subsidiaries. Brunswick Rail, the largest Russian rail car leasing company, used an Irish unit to finance over €600 million of assets. Another two French transportation company, Touax and Ermewa, also achieved financing €200 millions and €300 millions respectively with their several units.
With the fast growth of China’s economy and the continuous improvement of the comprehensive strength of domestic enterprises, as well as the implementation of the “One Belt, One Road” policy, an increasing amount of Chinese enterprises are beginning to expand their global footprint and establish their presence in Europe.
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