Thursday

26th Apr 2018

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.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

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.

Macron and Merkel pledge euro reform

France and Germany have pledged to forge a joint position on euro reform by June, despite German reluctance on deeper monetary union.

Stakeholders' Highlights

  1. Sustainable Energy Week 2018"Lead the Clean Energy Transition"- Register and Join Us in Brussels from 5 to 7 May
  2. EU Green Week 2018Green Cities for a Greener Future. Join the Debate in Brussels from 22 to 24 May
  3. Nordic Council of Ministers12 Recommendations for Nordic Leadership on Climate and Environment
  4. Macedonian Human Rights MovementOxford Professor Calls for an End to the Anti-Macedonian Name Negotiations
  5. ACCAPeople Who Speak-Up Should Feel Safe to Do So
  6. Mission of China to the EUProgress on China-EU Cooperation
  7. Nordic Council of MinistersWorld's Energy Ministers to Meet in Oresund in May to Discuss Green Energy
  8. ILGA EuropeParabéns! Portugal Votes to Respect the Rights of Trans and Intersex People
  9. Mission of China to the EUJobs, Energy, Steel: Government Work Report Sets China's Targets
  10. Martens CentreJoin Us at NET@WORK2018 Featuring Debates on Migration, Foreign Policy, Populism & Disinformation
  11. European Jewish CongressKantor Center Annual Report on Antisemitism Worldwide - The Year the Mask Came Off
  12. UNICEFCalls for the Protection of Children in the Gaza Strip

Latest News

  1. EU tells platforms to sort fake news by October or face new law
  2. Civil society chief: social media can't replace engagement
  3. The reality behind the €7 'Brexit bombshell visa'
  4. Commission wants bigger post-Brexit budget
  5. Whistleblowers could be enforcers of rule of law in Europe
  6. EU shelves Macron idea for 'European Darpa'
  7. Don't play EU 'games' with military HQs
  8. EU had a plan for Jordan - now it's time to make it work