Friday

19th Apr 2019

LuxLeaks firm advising EU commission on tax

  • The Grand Duchy was the centre of an investigation by reporters into tax dodging deals (Photo: R/DV/RS)

A firm directly involved in one of Europe’s largest tax scandals is now giving tax advice to the European Commission and member states.

The audit firm, PricewaterhouseCoopers (PwC), sits in a group called the EU Joint Transfer Pricing Forum.

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 forum’s been around for years, but its mandate was recently renewed, and it held its first new-model meeting last week at the Albert Borschette Congress Centre in Brussels.

Transfer pricing is a method used by multinationals to minimise taxes.

The forum contains 18 experts and 28 officials, one from each EU state.

Two of the experts come from civil society: Financial Transparency Coalition and Eurodad, Brussels-based NGOs.

But it’s chaired by Bruno Gibert, a lawyer at the Paris-based corporate law firm CMS Bureau Francis Lefebvre, which specialises in transfer pricing.

Apart from PwC, it includes audit firm Deloitte.

It also includes the head of global transfer pricing at German chemicals giant Bayer, Spanish energy giant Repsol, and car giant Volvo, among others.

Eurodad’s Tove Ryding told EUobserver that “it’s not a legislative organ, but they do define a lot of recommendations which can later translate to soft law and then into hard law”.

Gibert couldn’t be contacted for comment.

But his law firm’s website says the forum’s “initial aim was to develop a strategy to reduce compliance costs and remove tax obstacles hindering cross-border economic activity between EU countries”.

The forum has helped to elaborate transfer price rules, related management fees, and advanced pricing agreements (APAs).

The APAs were instrumental in letting hundreds of big companies based in Luxembourg pay next to no tax around the world thanks to confidential deals masterminded by PwC.

The LuxLeaks scandal erupted last November, when journalists published thousands of leaked PwC of documents showing that the deals, also known as tax rulings and comfort letters, saw multinationals pay less than 1 percent tax on profits.

But PwC remains largely unapologetic.

In May, its head of tax policy, Stef van Weeghel, told MEPs not to make a fuss about isolated cases.

“If we focus on a particular country and on a particular regime or ruling, it could indeed be that there is very little taxation in that country. But if we look at the overall effective tax rates of multinationals … we find that these are quite high”, he said.

Deloitte head of UK tax policy Bill Dodwell warned that high taxes get passed on to consumers.

The European Commission, for its part, is taking LuxLeaks more seriously.

It has political skin in the game because the commission president, Jean-Claude Juncker, was PM in Luxembourg when the tax rulings took place.

In one response, it launched a so-called Tax Transparency Package earlier this year.

Its anti-trust wing is also looking into potential tax abuse in other member states, but one case specifically involves Amazon and transfer pricing in Luxembourg

Koen Roovers, who sits on the forum on behalf of Financial Transparency Coalition, said it’s unclear to what extent it influences EU or OECD policy.

But he noted that its internal deliberations should spend more time on ethical questions.

“There is a widespread belief there that [tax and transfer pricing] is only a technical discussion, whereas I see it as political”, he told this website.

The forum will meet again in late October.

Stakeholders' Highlights

  1. Counter BalanceSign the petition to help reform the EU’s Bank
  2. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  3. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  4. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  5. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  6. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  7. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  8. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  9. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  10. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  11. Nordic Council of MinistersNordic commitment to driving global gender equality
  12. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan

Latest News

  1. Romania drafts EU code on NGO migrant rescues
  2. Bulgaria, Hungary, and Malta shamed on press unfreedom
  3. EU drafts $20bn US sanctions list in aviation dispute
  4. Brunei defends stoning to death of gay men in EU letter
  5. US Democrats side with Ireland on Brexit
  6. Wifi or 5G to connect EU cars? MEPs weigh in
  7. How Brexit may harm the new EU parliament
  8. EU parliament backs whistleblower law

Join EUobserver

Support quality EU news

Join us