Tuesday

16th Jul 2019

Secret tax deals in Luxembourg in dramatic rise

  • Secret tax deals have increased by 160 percent in the EU since the November 2014 LuxLeaks scandal broke (Photo: Sven Graeme)

Secret tax deals between Luxembourg and multinationals have increased dramatically since the LuxLeaks scandal broke late 2014, according to a new report.

Eurodad, a Brussels-based NGO, found that so-called sweetheart deals, elaborate schemes used to slash corporate global tax bills, increased by 50 percent in Luxembourg during the year following the scandal.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

The report, released on Wednesday (7 December), analysed data from 17 EU states and Norway.

Tove Maria Ryding, one of the author's behind the 124-page report, said in a statement it's "as if the LuxLeaks scandal never happened."

The November 2014 scandal revealed that Luxembourg had signed off secret deals with some 340 corporations from 2002 until 2010.

Billions of taxes had been diverted away from national coffers and back into corporate pockets. Some firms managed to get away with effective tax rates of less than 1 percent on profits.

The Grand Duchy, once presided over by EU commission president Jean-Claude Juncker, also remains one of the most secretive countries in the world.

Another investigation in April linked some 10,000 offshore accounts to Luxembourg, following a massive leak of documents from the Mossack Fonseca law firm in Panama.

The LuxLeaks scandal broke when Juncker took the top post at the EU Commission. Juncker has consistently denied any wrongdoing despite having governed the small landlocked nation for two decades.

“What comes under the term LuxLeaks, really what they are talking about is a kind of common practice in many member states. In fact, that is why I’d rather say EUleaks than Luxleaks," he told MEPs in September last year.

Juncker's description appears prescient given that the recent spike in such deals is not exclusive to Luxembourg. Belgium's tax deals increased by 248 percent in only one year.

The report notes that the number of sweetheart deals in the EU went from 547 in 2013, to 972 in 2014, and reached 1,444 by the end of 2015 or increase of 160 percent in just two years.

"The fact that multinational corporations now have more than 1,000 sweetheart deals in Europe is deeply concerning, to say the least," noted Ryding.

One study by the EU parliament in 2015 said such deals cost the EU up to €70 billion in lost tax revenue every year.

The EU commission has since launched probes into big tax dodgers.

Earlier this year they ruled Apple had received €13 billion in illegal corporate tax benefits from Ireland. The order triggered an immediate backlash from Apple and the governments in Ireland and the United States.

It's also looking into Luxembourg linked firms like Amazon, Engie [formally GDF Suez], and McDonald's.

It had also launched anti-tax avoidance laws earlier this year but the rules were later weakened by member states.

Tax transparency advocates are instead pushing to make companies financial information public. The idea has gained some traction with more countries now backing plans, when compared to last year, of creating public registers that reveal the true owners of businesses.

EU states set to oppose tax transparency bid

A compromise text by the Slovak EU presidency is proposing to water down the commission's plans to allow public access to the names of those who own offshore accounts.

Luxembourg not a tax haven, claims PM

The prime minister of Luxembourg, Xavier Bettel, maintains that his country had broken no rules and committed no crime when issuing rulings that slashed global tax bills for the big firms.

News in Brief

  1. Ansip's ex-cabinet chief to head EU cybersecurity agency
  2. Malta starts trial of journalist murder suspects
  3. Full text of von der Leyen candidacy speech to MEPs
  4. Von der Leyen open to further Brexit delay
  5. Von der Leyen promises carbon border tax
  6. Brexit: both UK PM candidates say Irish backstop is 'dead'
  7. Mogherini: Iran's nuclear enrichment 'reversible'
  8. Report: Selmayr to leave 'next week'

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  2. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  3. Nordic Council of MinistersNo evidence that social media are harmful to young people
  4. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  5. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  6. Nordic Council of MinistersEducation gets refugees into work
  7. Counter BalanceSign the petition to help reform the EU’s Bank
  8. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  9. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  10. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  11. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  12. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North

Latest News

  1. European Commission has first ever woman president
  2. Son: Malta trial for murdered journalist 'not enough'
  3. Von der Leyen's final appeal to secure top EU post
  4. EU talks tough on Turkey, but arms sales go on
  5. The Abortion Exodus - more Poles and Croats going abroad
  6. Poland's ex-PM loses EU parliament chair again
  7. Von der Leyen reaches out to left and liberal MEPs
  8. Farmers among new MEPs deciding on EU farming money

Join EUobserver

Support quality EU news

Join us