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25th Feb 2024

Luxembourg not a tax haven, claims PM

Luxembourg continues to refute any notion that it is a tax haven, despite widespread evidence of dubious schemes that it cuts global tax bills for big firms.

"We were never a tax haven," Luxembourg's prime minister, Xavier Bettel, told EUobserver on Tuesday (27 June).

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Bettel's comments follow a grilling of Luxembourg's former prime minister and current European Commission president, Jean-Claude Juncker. Juncker in late May told the European Parliament that he was unable to explain why the Grand Duchy "didn't want to remove tax secrecy."

But Bettel, who was fielding a wide range of questions from reporters at an event hosted by the European Investment Bank in Luxembourg, defended the country's tax policies by saying it was one of the first places to push transparency and the exchange of tax rulings with other member states.

"It is important for me that we have common rules and Luxembourg was one of the first one for transparency," he said.

Luxembourg was rocked by scandal following media revelations in late 2014 that exposed how nearly 340 companies secured secret deals that shaved billions of euros from taxes, which were due to be paid elsewhere.

The revelations ushered in a raft of new EU and national legislation to increase tax transparency and weed out abuse.

The scandal also triggered a probe by the European Parliament, which slammed Luxembourg for allowing corporations to dodge "tax that could have been used to build schools, hospitals or pay down national debt."

A report by the Brussels-based NGO, Eurodad, had also revealed last December that Luxembourg had in fact increased the number of so-called tax rulings in the wake of the 2014 media revelations by some 50 percent.

The issue saw former PricewaterhouseCoopers (PwC) employee Antoine Deltour face prison time for leaking the secret rules to the media, posing larger questions on whistleblower protection laws.

But Bettel maintained that his country was fully compliant with tax standards and had not committed a crime.

"There are over 20 countries in Europe doing [tax] rulings," he noted, echoing a similar refrain to his predecessor, Juncker.

Luxembourg, under Juncker's decade-long leadership of the country, had also repeatedly blocked the rolling back of aggressive tax planning schemes throughout the EU, according to a cache of German cables leaked earlier this year.

Bettel also opposes any pan-EU taxation system and refuses to impose any sort of tax on financial transactions.

The financial transaction tax, also known as the FTT, aims to raise money for the public good by imposing a 0.1 percent tax on shares and bonds, and 0.01 percent on derivative products.

"I am fully against and I will block that," said Bettel. But he noted that other member states are free to move ahead on the file as part of a two-speed Europe.

He also added that people in Luxembourg should not have to pay more tax only "because other countries were not responsible with public finances."

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