 |
| Picture: Streppel/Wikipedia |
Based on a review of 28,000 pages of leaked documents the International Consortium of Investigative Journalists and a team of more than 80 journalists from 26 countries say, international companies such as IKEA, FedEx, Pepsi and Procter & Gamble have channeled hundreds of billions of dollars through Luxembourg and slashed billions from their global tax bills. The leaked documents come from Pricewaterhouse Coopers in Luxembourg and include hundreds of private tax rulings – so-called “comfort letters” – that Luxembourg provides to corporations seeking favorable tax treatment. The leak comes after months of Luxembourg refusing to supply information about its tax rulings to the EU, which is intended to support investigations into whether Luxembourg’s tax deals with Amazon and Fiat Finance were in violation of EU law.
November 6, 2014 | Global Policy Forum
Luxembourg Leaks: Secret Tax Deals of Multinationals Exposed
Based on a review of 28,000 pages of leaked documents the International Consortium of Investigative Journalists (ICIJ) and a team of more than 80 journalists from 26 countries say, international companies such as IKEA, FedEx, Pepsi and Procter & Gamble had channeled hundreds of billions of dollars through Luxembourg and slashed billions from their global tax bills.
The leaked documents come from Pricewaterhouse Coopers (PwC) in Luxembourg and include hundreds of private tax rulings – so-called “comfort letters” – that the Luxembourg Ministry of Finance provides to corporations seeking favorable tax treatment. These tax deals were allegedly negotiated by PwC on behalf of hundreds of its corporate clients. To qualify the companies for tax relief, the reports indicate, PwC tax advisers have helped come up with financial strategies that feature complex webs of internal loans among sister companies and other moves designed to shift profits from one part of a corporation to another to reduce or eliminate taxable income. Indeed, in some instances the leaked records indicate that companies have enjoyed effective tax rates of less than one per cent on the profits they’ve shuffled into Luxembourg.
The European Union and Luxembourg have been fighting for months over Luxembourg’s reluctance to turn over information about its tax rulings to the EU, which is investigating whether the country’s tax deals with Amazon and Fiat Finance violate European law. Luxembourg officials have supplied some information to the EU but have refused, EU officials say, to provide a larger set of documents relating to its tax rulings.
Today ICIJ and its media partners are releasing a large cache of Luxembourg tax rulings – 548 comfort letters issued from 2002 to 2010 – and reporting on their contents in stories that will be published or broadcast in dozens of countries. It’s unclear whether any of these documents are among those still being sought by EU investigators, but they are the kinds of documents that go to the heart of the EU’s investigation into Luxembourg’s tax rulings.
The tax arrangements signed off by Luxembourg have been declared by the country’s government to be legal within Luxembourg as well in full accordance with European and international law. Companies in the leaked files and PwC itself have also spoken out in defense of their tax practices. Nonetheless, the aggressive tax reduction strategies underlying these tax rulings may be subject to legal challenge outside the country if tax officials in other nations view them as improper.
See the ISIJ’s Luxembourg Leaks report here.
Read coverage on the Luxembourg leaks in the following countries:
England (English): The Guardian
Germany (German): Süddeutsche Zeitung
France (French): Le Monde
Sweden (Swedish): SVT Nyheter
Luxembourg (French): Le Quotidien
Belgium (Dutch): Mondiaal Nieuws
Ireland (English): The Irish Times
Finland (Finnish): YLE
Spain (Spanish): El Confidencial
Switzerland (French): Le Matin
South Korea (Korean): Newstapa
Italy (Italian): l’Espresso
Brazil (Portuguese): Folha de S. Paulo
