We invest in the future
As a profitable market leader, DB offers its customers first-class mobility and logistics solutions. Profitable growth and our consistent focus on customers and quality are the key strategic areas that will allow us to maintain this position.
DB UK Tax Strategy for the year ended 31 December 2018
Publication date: December 2018
The publication of this tax strategy statement is regarded as satisfying the statutory obligation under Para 16(2), Schedule 19 of the Finance Act 2016, for the DB group of companies within the UK listed below.
Deutsche Bahn AG (‘DB’), is based in Berlin and was founded in 1994. It is one of the world’s leading mobility and logistics companies, operating in more than 130 countries. The group employs more than 300,000 employees and across Europe more than 12 million passenger journeys are made every day in buses and trains operated by DB’s passenger transport division. Around 300 million tons of freight is carried via rail and around 99 million shipments carried via land transport annually in the group’s European transport and logistics division alone. Around 1.1 million tons of air freight and more than 1.9 million TEU of ocean freight are carried by DB’s worldwide networks.
DB recognises that taxes allow governments to fund essential public expenditure, and the taxes which DB’s activities generate are a key part of how DB contributes to society.
This strategy sets out DB’s approach to UK tax. In particular it summarises how DB manages risk in relation to tax; its dealings with tax authorities, and its governing principles relating to tax planning and relationships with professional advisors. This strategy sets out the principles of DB in relation to UK tax and the responsibilities for implementing these throughout the business.
Scope of our Tax Strategy
This strategy applies to the DB companies in the UK listed below. It applies to the compliance, payment and reporting of all taxes borne and collected by those companies, the principal ones being corporate income, indirect and employment taxes. This strategy applies until it is superseded and adheres to the overarching principles in place across the DB Group.
As a responsible business DB is committed to:
- Being a responsible tax payer, being straightforward and transparent in relation to all tax matters;
- Paying tax in accordance with all relevant laws and regulations in the territories where it operates;
- Managing its tax affairs in such a way as to deliver the right amount of tax, in the right place and at the right time; and
- Operating with integrity, honesty and fairness.
These principles are reflected in DB’s relationships with tax authorities, including HMRC. In addition to operating with integrity, DB seeks to be proactive with tax authorities to ensure the efficient resolution of any issues arising, wherever possible and appropriate.
Governance, Assurance and Tax Risk Management
The CFO (or equivalent) of each DB business unit operating in the UK is responsible for the management of the tax affairs of their business unit, supported by internal DB Tax specialists.
The scale and complexity of DB’s business and the volume of transactions impacting tax means that tax risks inevitably arise.
DB seeks to reduce the level of tax risk arising from its operations as far as is reasonably practicable by ensuring that reasonable care and control is applied in relation to all processes which could materially affect its compliance with its tax obligations. Systems, processes and controls are in place to ensure that DB has robust and appropriate tax accounting arrangements as part of DB’s Senior Accounting Officer procedures.
DB only tolerates tax risk where the position adopted in a tax return is likely to be accepted by the local tax authorities.
There are, from time to time, situations where it is appropriate for DB to engage the services of suitably qualified professional tax advisors. This typically happens when there is uncertainty as to how the relevant tax law should be applied. Any such professional advisors are expected to respect the underlying principles of this Tax Strategy.
Any tax risks identified are evaluated and managed by the internal DB Tax specialists, working with local senior management teams.
Approach to tax planning
DB uses available tax incentives, reliefs and exemptions in line with tax legislation, provided that this is aligned with DB’s commercial objectives. DB does not undertake tax structuring which has no commercial purpose and which leads to legally unintended tax advantages or where tax structuring might harm DB’s corporate or social responsibilities, reputation and brand. DB’s intention is to ensure that its transactions and the tax implications arising from them reflect the commercial reality of each situation.
Relationships with tax authorities
An important part of DB’s tax strategy is the maintenance and development of strong, transparent and constructive working relationships with local tax authorities (including HMRC). This is effected through various means including:
- Regular meetings and communications in respect of developments in DB’s business activities, tax risks and interpretation of law in relation to all relevant taxes;
- Making fair, accurate and timely disclosures in tax returns and correspondence;
- Seeking to resolve issues on a timely basis; and
- Generally ensuring that all interactions with tax authorities are conducted in an open, collaborative and professional manner.
This tax strategy was approved for publication during December 2017 Members of the DB UK Group covered by this tax strategy:
AXIOM RAIL (STOKE) LTD
AXIOM RAIL COMPONENTS LTD
BOREAL & AUSTRAL RAILFREIGHT LTD DB (UK) INVESTMENTS LTD
DB CARGO (UK) HOLDINGS LTD
DB CARGO (UK) LTD
DB CARGO INFORMATION SERVICES LTD DB CARGO INTERNATIONAL LTD
DB CARGO SERVICES LTD
DB SYSTEL UK LTD
EAST & WEST RAILWAY LTD ENGINEERING SUPPORT GROUP LTD LOADHAUL LTD
LOCOMOTIVE 6667 LTD
MAINLINE FREIGHT LTD
MARCROFT HOLDINGS LTD
NEW LOCOMOTIVE FINANCE LTD
RAIL EXPRESS SYSTEMS LTD
RAIL TERMINAL SERVICES LTD
RAILWAY APPROVALS LTD
RAILWAY INVESTMENTS LTD
REDHEAD EUROPE LTD
REDHEAD FREIGHT LTD
REDHEAD HOLDINGS LTD
RES DECEMBER LTD
STINNES (UK) LTD
TRANSFESA UK LTD
We are convinced that a company’s success means more than just economic performance. That’s why we want to strike a balance between economic, social and environmental pillars.
Deutsche Bahn aims to be a profitable market leader by 2020. And DB Cargo, as the Transportation and Logistics Division of the Deutsche Bahn Group, will play a key role.
Two strategic areas will ensure the Group reaches this goal: growth and profitability as well as a consistent customer and quality orientation.
Growth and profitability
The company’s growth and profitability are fundamental for long-term success, and the two must go hand in hand. With its healthy financial foundation and good economic performance, DB Cargo is in a position to invest in new jobs, its employees’ expertise and new business, which in turn enable it to continue to grow. These investments are necessary to be able to assert and further expand our market position as the leading transportation and logistics company.
DB Cargo already has leading market positions in all market segments – European rail freight and land transport, air and ocean freight, and contract logistics. Before it can build on these positions, it must improve profitability by modernizing the IT landscape and expanding new high-margin products. DB Cargo will increasingly shift the focus of its growth activities to newly industrialized and developing countries to take even greater advantage of fast-growing markets.
Customer and quality orientation
At DB Cargo we are pressing ahead with expanding our core business while focusing on continually improving the quality of processes and products. At the same time, we are striving to expand our integrated products and services and strengthen our international transportation network. Innovative industry solutions and key account management geared toward those solutions are long-term tools that will help us keep our customers satisfied. Our ability to find smart ways to combine different modes of transportation and their strengths in terms of speed, capacity and environmental aspects gives us a clear competitive advantage.
DB Cargo, with its closely meshed network, is already Europe’s leading rail freight transport company. We are able to offer our customers all-in-one products and services at a uniformly high level of quality. This has allowed us to continually increase our market share in Europe in recent years and to grow from a national network provider to a European rail freight transport company. DB Cargo Logistics stands for our global logistics activities – and we are already one of the world’s leading companies in this area as well. Our extensive, internationally oriented range of products and services in global air and ocean freight and contract logistics and our dense European land transport network make it possible for us to offer our customers all transportation and logistics solutions from a single source.