Luxembourg Braces for New Wave of Tax-Deal Revelations
Luxembourg’s government is on alert for a new wave of tax revelations that Prime Minister Xavier Bettel expects to hit the country in the coming days.
The country’s Finance Minister Pierre Gramegna received a new batch of questions from a group of investigative reporters that indicate more documents revealing alleged sweetheart tax deals with multinational companies will be published next week, Bettel told journalists in Luxembourg today.
“It’s clear that we can count on a new round of revelations,” Bettel said. “We are of course continuing to look at this internally and preparing our response.”
More than 340 companies have transferred profits to Luxembourg using complicated tax arrangements, according to leaked documents published in a report by the International Consortium of Investigative Journalists on Nov. 5. The report, which reviewed almost 28,000 pages of confidential tax deals and identifies companies such as PepsiCo Inc., Ikea Group and FedEx Corp. (FDX), said some corporations effectively lowered their tax bill to less than 1 percent of profit during Jean-Claude Juncker’s tenure as the nation’s prime minister.
The Luxembourg government was taken by “complete surprise” by the revelations, Gramegna said last month, rejecting criticism that he knew what was coming based on the extent of the first questionnaire with 11 questions sent to him by the group of journalists in mid-October.
‘Smaller Number’
Bettel, who took over from Juncker as Luxembourg prime minister last year, said today this time “a smaller number of tax rulings” should be revealed and that he has no certainty yet what exactly will be published next week.
The questions addressed to Gramegna this time “were about things like what has happened until now, what’s being done now by the government, what happened in the administration at the time,” Bettel said.
Juncker, who was Luxembourg’s prime minister for almost 19 years and took over as European Commission president on Nov. 1, said last month that he had no involvement in the deals during his time as finance minister or prime minister.
In 2005, when Juncker held the prime minister and finance minister posts simultaneously, he told the Luxembourg Parliament that his government planned to make the country the main address for e-technology, citing names such as Amazon.com Inc. as already being flagships “for the policy that is being driven by the finance minister and by others.”
‘Promising Contacts’
“Promising contacts” with Amazon.com and “other international players” happened partly because of “a favorable tax environment that we have created here in Luxembourg,” Juncker said then.
Luxembourg, with a population of just under 550,000, is among countries being probed by the Brussels-based commission for tax deals that may have violated the 28-nation bloc’s state-aid rules. Firms named so far include Amazon and Fiat Finance & Trade in Luxembourg, Starbucks Corp. in the Netherlands and Apple Inc. (AAPL) in Ireland.
New EU Competition Commissioner Margrethe Vestager, a former economy minister of Denmark, has said that while “tax rulings as such” are a common practice, they may be illegal if authorities “accept that a tax base of a specific company is calculated in a favorable way.”
