In 2022 send 1,500 million Madrid to the Netherlands to invest abroad
Dutch tax authorities have had a magnifying glass over Ferrovial since it established all of its international business in Amsterdam, moving it from the UK in December 2018. Applying for absorption of Spanish Ferrovial SA to become parent company, subsidiary Ferrovial International SE passed from mere explanations to litigation. With the Dutch Treasury as a result of the restructuring of the group abroad.
The Tax Administration questioned the existence of the Ferrovial Group for horizontal fiscal consolidation in 2019 and early 2020. From its point of view, the merger of Ferrovial SA with Ferrovial Internacional SLU, in March 2019, determined the disappearance of the Consolidated Group with extinction of the second. This meant that all Dutch railway companies had to pay taxes in the individual system, whose impact the company estimated at 2.3 million and decided to fight back: it filed an administrative appeal to defend freedom of association and the principle of non-discrimination, as well as neutrality in EU reorganizations.
Surprisingly, the Dutch administration did not accept such arguments from Ferrovial, which formed a new tax consolidation group, submitted the individual returns to its Dutch subsidiaries for 2019 and moved from administrative appeal to administrative litigation. The process is still ongoing. For the company, this is a “minor problem”, but the trajectory of the assets from Madrid to Oxford, and then to Holland, was not convincing in Holland, the country chosen to locate Ferrovial because it has “AAA credit rating, a favorable environment for companies and investors, a reliable legal system and a strong corporate governance structure,” the company told investors on Feb. 28. The Spanish government found out the same day.
The company managed by Rafael del Pino has provisions of €184 million to deal with legal proceedings related to taxation in Spain, with procedures established in terms of IRC and VAT (€332 million under discussion). But so far, it has not deemed it necessary to reserve any item to deal with a possible penalty in the country where it intends to have its headquarters. It is stated in several documents that “the possibility of capital outflows is remote”.
Ferrovial International SE is the tax unit having its head office in and within Amsterdam which for tax purposes are Ferrovial Netherlands, Ferrovial Services Netherlands, Ferrovial Services International SE, Ferrovial Airports International SE, Ferrovial Transco International BV, Cintra Infrastructure SE, Cintra Global SE , Ferrovial Construction International SE, 407 Toronto Highway B.V. , etc. Thus, it collects in Holland all international business in motorways and airports, and a large part of affiliated construction companies.
Ferrovial’s reorganization began in 2013 with the reconsolidation of assets in the US, and took a decisive step in 2014 with the spin-off of the international subsidiaries in each area of the business in favor of
Ferrovial Internacional SLU, which is headquartered at Ferrovial SA. Thus, a headquarters was established with four lines of activity outside Spain (construction, airports, services and highways), but still headquartered here.
These companies traveled to the UK in 2015, where they were tax-exempt on collecting profits. Brexit saw the English public limited company transform into the European limited company Ferrovial International SE, based in the Netherlands.
Long before the turbulence caused by its transfer, Ferrovial already used what would be its Dutch headquarters as its true base of operations. In 2022 alone, Madrid’s contributions are set at around 1,500 million (865 million in 2021) to increase the financial capacity of subsidiaries and meet capital needs. Most of this injection went to the projects of the Cintra highway subsidiary in the United States (946 million) and the acquisition of the stake in the Indian concessionaire IRB (370 million). But part of the blood transfusion from Spain (132 million) also helped in the purchase of 60% of the Turkish Dalaman airport.
Ferrovial’s move out of Spain caused the equity capital (investments in group companies) of the Dutch subsidiary to jump from 6,000 million at the beginning of 2021 to 8,000 million at the end of 2022. With 90% of the group’s value abroad, the Dutch subsidiary was already the heart of Ferrovial’s business for some time.