Tuesday

6th Dec 2022

Juncker 'regrets' Luxembourg tax deals

  • Trust me, because I'm Juncker ... (Photo: ec.europa.eu)

European Commission chief Jean-Claude Juncker has broken his one-week silence on “Luxembourg Leaks”, with jokes, and with a new proposal on EU tax transparency.

Luxembourg Leaks saw reporters publish 343 “tax rulings” or “comfort letters” from the Luxembourg government to big firms helping them to minimise payments and depriving fellow EU countries of tax revenues.

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There may have been many more.

The revelations pose questions on Juncker’s role in creating the tax avoidance regime in his time as Luxembourg PM.

"If the tax rulings, which were legal, led to a situation of non-taxation, I regret it," he told press in Brussels on Wednesday (12 November).

He admitted he was "politically responsible" for tax policy, but claimed that Luxembourg tax authorities act independently of the government.

He also tried to make light of the affair, in his characteristic manner, with a joke: saying he cannot take responsibility by resigning as Luxembourg prime minister since he is no longer in that post.

Juncker denied having a conflict of interest in being the head of the EU commission at the same time as it is investigating the Luxembourg tax schemes.

"I don't understand the headlines 'Juncker against Juncker'," he said.

He repeated that the competition commissioner in charge of the probes, Denmark’s Margrethe Vestager, is also completely independent.

He promised that he won’t talk about the "Luxembourg problems" with her.

Amid other revelations of 600 Dutch “comfort letters”, Juncker added that his right-hand man, Dutch super-commissioner Frans Timmermans will also avoid talking with Vestager on "the Netherlands' problems”.

Juncker said the issue requires a "European answer" because corporate tax avoidance - which sees big firms pay less than ordinary people - is a "common practice" in 22 member states.

He said that even if corporate tax relief is legal it might not be "ethical”.

He announced that the commission will propose a new law on "automatic exchange” of information on “tax rulings”.

But he noted that all 28 member states will have to give unanimous assent if it is to go ahead.

On his one-week silence, he admitted it might have been a "mistake”. But he said it was not intentional.

"On the day Luxembourg Leaks were published, I was supposed to appear at a debate with [former French commission chief] Jacques Delors, who cancelled because he was sick. I should have gone anyway and answered all these questions then”.

A veteran of the EU political scene, Juncker once admitted that he used to "lie" to journalists at the height of the economic crisis in order not to spook markets.

He also once said he favours "secret, dark debates" on monetary policy because public revelations can create market uncertainty.

Asked on Wednesday why people should believe him on Luxembourg Leaks, Juncker replied: “because I'm saying it."

EUobserved

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The EU commission may "broaden and deepen" its investigations into Luxembourg taxation practices, a commission spokesman has said, while deflecting questions about Jean-Claude Juncker's involvement in the scheme.

Letter

A letter to Jean-Claude Juncker

The ‘LuxLeaks’ scandal is a recent example of the kind of corrosive deals that big companies are able to extract from countries when they think no one will see.

Portugal was poised to scrap 'Golden Visas' - why didn't it?

Over the last 10 years, Portugal has given 1,470 golden visas to people originating from countries whose tax-transparency practices the EU finds problematic. But unlike common practice in other EU states with similar programmes, Portugal has not implemented "due diligence".

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