Jean-Claude Juncker denies link to Luxembourg tax deals

European Commission president Jean-Claude Juncker has denied involvement in sweetheart deals that allowed hundreds of multinationals to slash their tax bills by locating to Luxembourg, despite being prime minister of the country for almost 20 years, reports the Financial Times.

Facing questions from a committee of EU lawmakers set up to probe the so-called LuxLeaks revelations, Mr Juncker insisted he had never sought to create a tax system that would have a “negative impact’” on other European nations.

He said he had not been involved in decisions of the government agency responsible for negotiating tax arrangements, adding that he had never met tax consultants concerning the issue.

“The Luxembourg tax authorities are very allergic to the idea of political interference,” Mr Juncker told the committee, made up of members of the European Parliament, on Thursday. “I think you have an exaggerated idea of the power of the prime minister in this particular respect.”

The LuxLeaks revelations emerged last November, days after Mr Juncker became commission president. More than 300 companies, from Ikea to Pepsi, were able to lower their tax bills, to as little as one per cent in some cases, by funnelling money through Luxembourg.

Although the issue has dogged Mr Juncker’s first 10 months in office, his apparent success at putting the scandal to rest bears testament to his strong political alliances and the parliament’s own backroom power-sharing deal.

The commission president has the support of the parliament’s two largest groups, the centre-right European People’s Party and the Socialists and Democrats. As such, he was subjected to only a light grilling by the committee on Thursday — even receiving a round of applause following his opening statement.

The toughest questions came from members of the assembly’s Green and radical left groups, and from representatives of the far right.

“It’s the tax authorities that develop the specific rules that are applied,” said Mr Juncker, who was Luxembourg’s prime minister from 1995 to 2013. “I haven’t taken a position on individual tax dossiers because that also isn’t my role.”

He also sought to move the issue forward by stressing his determination to tackle aggressive tax competition between governments in the 28-nation EU.

Pierre Moscovici, EU commissioner for taxation, set out plans this summer that include greater corporate transparency and a renewed push for common standards on how companies should calculate their taxable profits.

Mr Juncker also stressed that the practice of governments agreeing special tax deals with multinationals should not be seen as a phenomenon limited to Luxembourg. The commission’s competition arm is probing arrangements in a number of EU countries, including into Amazon and Fiat in Luxembourg, Apple in Ireland and Starbucks in the Netherlands.

“I’d rather say EULeaks than LuxLeaks,’’ he told the committee.

However, some MEPs were not convinced. “The hearing should have been an opportunity for him to express his remorse for his role in facilitating tax avoidance as Luxembourg’s prime minister,” said Sven Giegold, a German member of the Green group.

“Instead, he farcically attempted to present himself as an infallible advocate of fair tax policy and dismissed any criticism.”