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Carthy calls for action to stamp out shell companies

11 April, 2018 - by Matt Carthy MEP

Sinn Féin MEP Matt Carthy has called for decisive action against shell companies, in response to media reports that a Dutch state company, Netherlands Railways, has avoided hundreds of millions of euros in tax by setting up a shell company in the Irish state.

Carthy said:

“This is a clear case of tax avoidance by a company owned by the Dutch state. Sinn Féin is not in favour of changing the Irish state’s corporate tax rate – but the fact that the company is being taxed at 12.5% is not the key issue here.

"The reason this is a clear case of tax avoidance is because we are basically dealing with a shell company that has registered in the Irish state to take advantage of this lower rate.

"There is no true economic activity taking place in the Irish state. This is not a case of foreign investment, creating jobs. The trains are running in the Netherlands – the (parent) company is supposed to be providing a public service to the Dutch people. A company that has accrued a billion euros in profit by locating itself here, and employs just eight people, is a shell company.

“This is by no means the most scandalous case of tax avoidance involving the Irish state or Irish subsidiaries. It doesn’t involve secret tax rulings, inversions, transfer pricing tricks or other key tax avoidance techniques that have been actively facilitated by successive Irish governments.

“It is shocking because we are talking about a public European company avoiding paying both taxes and dividends to its own national budget.

"State-owned companies, and government processes such as public procurement, should always be held to the highest standards, and this company has clearly failed to meet those standards.

“The key challenge globally when it comes to combating tax avoidance, is ensuring that profits are taxed where economic activity takes place. This is the principle underpinning the OECD BEPS process and many of the EU-wide initiatives on combating tax avoidance.

“This case is first and foremost a poor reflection on the company, and on successive Dutch governments. But it is also yet another poor reflection on the Irish state. There have been countless cases reported of individuals, sports stars, celebrities and companies using shell companies in the Irish state to avoid taxes.

“One of the key ways this is facilitated is through Ireland’s network of tax treaties, with both EU and non-EU states – most dramatically through our treaties with several developing countries.

“Our government, and others internationally, need to take action against shell companies and ensure that profits are being taxed in the jurisdiction where the economic activity is taking place. 

“The Irish government also needs to urgently revise its network of tax treaties to remove the tax avoidance opportunities they facilitate, ranging from the Double Irish to the easy creation of shell companies.” 

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