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16th Feb 2019

LuxLeaks: Grand Duchy puts limits on transparency

  • Luxembourg is pressing charges against reporters and others for disclosing how the state helps big firms avoid paying taxes (Photo: Brett Jordan)

MEPs looking into state sanctioned corporate tax avoidance praised Luxembourg’s finance minister on Monday, despite his refusal to say how many tax rulings the Grand Duchy has issued.

The micro-state gained notoriety last year following media disclosure of some 500 government-backed rulings, also known as comfort letters, which exonerated big companies from paying billions in taxes at the height of the EU’s economic crisis.

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The polemic spurred the European Parliament to set up a special committee in February with a six-month mandate to probe it and similar schemes in Europe.

On its second leg of a six-member state tour, a small delegation of MEPs from the committee met Luxembourg’s finance minister Pierre Gramegna on Monday (18 May).

French centre-right MEP Alain Lamassoure, who heads the special committee, told reporters at a press conference after the two-hour meeting that “there is an obvious change of mindset” in Luxembourg.

Lamassoure said it had demonstrated a “desire to support transparency” and noted that the “real scandal” is that there are 28 different tax laws in Europe.

But when asked by a reporter to reveal how many tax rulings the Duchy had issued over the past 10 years, Luxembourg’s finance minister Pierre Gramegna stonewalled.

“The figure that you are asking for is confidential, so I cannot give it,” he said.

Instead, Gramegna said Luxembourg had handed over all its tax rulings from 2010 to 2012 to EU competition commissioner Margrethe Vestager, in part, because all member states had been asked to do the same.

The LuxLeaks scandal covered the period 2002 to 2010 and showed how 340 multinationals avoided paying billions thanks to secret deals with the Grand Duchy.

Gramegna said Luxembourg has since initiated tax reforms that he hoped would help create a new European and global transparency culture.

Last November, the government vowed to abolished bank secrecy. In January, it agreed to introduce an automatic exchange of information with other countries despite years of resistance to the idea.

“Luxembourg is not part of the problem, it is part of the solution,” said Gramegna.

Meanwhile, a judge in late April filed criminal charges against the lead journalist, French reporter Edouard Perrin, who first revealed the extent of the state-sanctioned secret tax schemes in 2012.

Perrin and other reporters from the International Consortium of Investigative Journalists were invited to discuss their work at the special committee in Brussels earlier this month.

"Legal charges are brought against people who reveal certain practices, not against those who are involved in these dealings,” Perrin told MEPs in the committee.

The International Consortium of Joualists’ director Gerard Ryle said Perrin’s reporting on Luxembourg’s secretive tax practices helped trigger "official European inquiries and opening significant, widespread debate about the fairness of tax policies".

The charges brought against Perrin and others were not mentioned at Monday's press conference.

Article updated at 21:35 on 18 May. Article had incorrectly stated the government filed charges against Perrin.

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