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Rotterdam drops Corporation Tax appeal

Rotterdam port authority (HbR) will abstain from appealing against the European Court of Justice’s verdict rejecting objections from the Dutch seaports to the imposition of Corporation Tax from 1 January 2017, and said the taxes won’t be hidden in new rates, writes Harry de Wilt.

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A 70m radar tower under construction at MVII, looking north-west (photo: Port of Rotterdam)
A 70m radar tower under construction at MVII, looking north-west (photo: Port of Rotterdam)

The Dutch ports had appealed that the start date should be 1 January 2018, claiming one full year of “playing field distortion”, because Belgian and French ports have been subject to Corporation Tax from that date.

 

“This appeal was rejected by the Court on 31 May, and we’ll leave it at that,” HbR’s CFO Paul Smits told press at the H1 2018 results presentation.

 

Parallel to this, a fiscal balance sheet zero measurement assessment has been concluded with the Dutch tax authorities, leading to a “one off” €1.3B positive result after tax and, significantly a temporarily lower Corporation Tax levy than the nominal 25% over EBITDA, to just €30M for 2018. The normal pre-tax result of €126M was almost equal to that of H1 2017.

 

“Although we will pursue a competitive increase in harbour dues, we won’t recover Corporation Tax here,” stressed Smits. “This will come from cost cuts and sharper finance management.”

 

Commenting on recent events, HbR’s CEO Allard Castelein reported how the massive oil spill from the Odfjell tanker BOW JUBAIL on 23rd June has led to a mitigation bill to the tune of €80M. This estimate includes costs incurred by the port authority and other parties involved in the recovery of 190t of the 217t of bunker fuel spilled, plus the cleaning of 110 affected sea ships, dozens of inland barges and many kilometres of quaysides and port shoreline.

 

The ship had just fully bunkered when she hit a jetty, rupturing a fuel tank. As the force of the low tide could not be entirely contained by floating spill skirts, shores had to be cleaned tens of kilometres further downriver, near the central harbour entrance. Also hundreds of white swans were successfully rescued and cleaned.

 

Happy with the initial outcome of the Juncker/Trump meeting on 25 July, Castelein nonetheless expressed grave worries about how various trade disputes will pan out. Already, Rotterdam has felt the bite of the US-China conflict as this led to increased Chinese steel imports into Europe over various ports, accordingly reducing Rotterdam iron ore and coking coal imports.

 

The 10.5% decrease in dry bulk volume H1 2018 volume, adding to a 4.3% lower liquid bulk volume could not be offset by the 5.9% rise in containerised tonnage to 73.67 Mt and by 6.2% in unit terms to 7.08M TEU. In the past 10.5 years, the container share in Rotterdam’s total handling figure (in tonnes) has risen from 25% to almost 32%.

 

Overall, traffic in H1 2018 was down 2.2% to 232.8 Mt year-on-year. Castelein anticipates the 2018 whole year result will vary between 98% and 100% of the 2017 result of 461.1 Mt. He also expects the first contracts for tenancies at the Offshore Service Center at Maasvlakte II will be concluded later this year. The site is to accommodate offshore oil, gas and wind construction and decommissioning companies.

 

Brexit also features prominently on Castelein’s list of major trade disruptors. The United Kingdom generates 40 Mt per year, 8.5% of the port’s total. “Whilst preparing for the worst, Rotterdam must be the continental port best geared for post-Brexit UK cargo,” he said. “To this end, the manpower at the various inspection services needs to be increased drastically. Later this year we’ll have an assessment made to establish how Brexit-proof we are.”

 

Next to drastic cuts in CO2 emission cuts being planned for the 60 plus major industrial complexes in the greater Rotterdam port area, HbR is eager to push ahead with whatever it can do to lower the 25 Mt carbon footprint from cargo transport to and from the port. Its five-track plan roadmap includes: sustainable shore-based power supply for ships, low-emission fuels, greener cargo handling equipment, introducing emission caps and increased efficiency through digital tools.

 

Teamed up with the Dutch port so far are the San Pedro Bay ports, Barcelona, Antwerp and Hamburg. “They are as driven as us and share our view that we are stronger together,” Castelein said.

 

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