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28th Feb 2024

EU commission will use LuxLeaks for new cases

  • Vestager says anti-trust cases alone won't end unfair tax practices (Photo: European Commission)

"We consider the Luxembourg Leaks as market information. We will examine it and evaluate whether or not this will lead us to opening new cases," EU anti-trust commissioner Margrethe Vestager told press in Brussels on Thursday (20 November).

She said she does "admire the journalistic work" of a consortium of international media who sifted through a trove of documents linked to the private consultancy PriceWaterhouseCoopers.

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Their research revealed that Luxembourg authorities allowed at least 340 international firms to pay as little as 0.25 percent tax on their profits.

The Luxembourg government says the documents were "stolen" from PwC and should not be admissible in a legal probe.

But Vestager disagrees.

"Yes, to say that it's 'market information' means we can use it and we consider it legitimate to do so," she said.

Her services are still waiting for official information on "tax rulings" from Luxembourg - in reference to the legal advice given by tax authorities to companies engaged in "aggressive tax planning" about how they can divert profits and pay as little tax as possible.

"We don't want every single tax ruling, but we do want to look at a list to see if there are certain patterns in the use of these tax rulings," she said.

Vestager also said it is a "high priority" to finalise four existing probes into such tax rulings - two in Luxembourg, one in Ireland and one in the Netherlands - which could have amounted to market-distorting state aid.

The verdict could come by spring next year, she said, adding that these cases were important to gather experience for the new investigations that might emerge from Luxembourg Leaks.

But she admitted that even if all her probes end in solid anti-trust decisions, this will not stop big companies from paying less tax than smaller firms or regular citizens.

For this to happen, a harmonised minimum tax level is required across the EU - the so-called Common Consolidated Corporate Tax Base (CCCTB) initiative - a scheme given a new lease of life by LuxLeaks.

Vestager remembered working on CCCTB during her time as Danish economy minister chairing the EU finance ministers' meetings under the Danish presidency in 2012.

"It was very difficult back then, but I hope that the work by journalists and tax policy makers will make it happen for the benefit of citizens and companies not engaged in aggressive tax planning," she said on Thursday.

For his part, Jean-Claude Juncker, a former Luxembourg PM who is now Vestager's boss in Brussels, has also promised a new bill on automatic exchange of information on tax rulings between EU member states.

With Juncker implicated in the Luxembourg tax-dodging affair, Vestager said his endorsement of the new initiative was made "with member states watching his back."

But Luxembourg itself remains reluctant to endorse this new push for tax harmonisation.

On Wednesday, its prime minister, Xavier Bettel, said he favours greater transparency but opposes creating a single tax regime.

"To say that everyone within the European Union must move toward a single tax policy with the same tax rate, that I'm against," he said.

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