EU Commission says already acting on Luxembourg tax practices

Reuters , Thursday 6 Nov 2014

Luxembourg Tax Practices
Luxembourg's Finance Minister Pierre Gramegna, left, speaks with EU Commissioner for the Economy Pierre Moscovici during a meeting of the eurogroup finance ministers at the EU Council building in Brussels on Thursday, Nov. 6, 2014. (Photo: AP)

The European Commission said on Thursday it was already investigating Luxembourg's tax treatment of multinationals and could open more probes in European countries after a media report said it had found widespread tax avoidance in the duchy.

The report piled pressure on new European Commission head Jean-Claude Juncker to explain if he knew about the alleged tax deals during his 24 years as Luxembourg's prime minister or finance minister.

"The Commission is acting already," spokesman Margaritis Schinas told the Commission's daily news briefing, which was dominated by questions about the report.

Former EU Competition Commissioner Joaquin Almunia had opened a number of investigations into tax avoidance and his successor in the new Commission, Margrethe Vestager, would continue to act over the next five years to make sure EU state aid legislation was properly enforced, Schinas said.

Investigations the Commission was already conducting into tax schemes in several member states "in no way prejudge the opening of further investigations in the future or the deepening of the existing ones," he added.

The International Consortium of Investigative Journalists said more than 300 international companies had secured secret deals with Luxembourg to slash their global tax bills while maintaining little presence there.

Luxembourg Prime Minister Xavier Bettel said his country was not breaking any rules and it was not the only one to allow tax schemes by large companies.

Tax Concession

The Commission said last month it was investigating a tax arrangement Luxembourg had with online retailer Inc . It said in September a tax concession Luxembourg authorities had granted to a subsidiary of Italian car maker Fiat may constitute illegal state aid.

Schinas said the Commission had requested information from seven member states in state aid cases involving taxation: Belgium, Cyprus, Ireland, Luxembourg, Malta, the Netherlands and Britain. It had opened four in-depth investigations in three member states, Ireland, Luxembourg and Malta, he added.

But Schinas avoided repeated questions about whether Juncker had been aware of the deals, referring such questions to the Luxembourg authorities.

He said Juncker would not take any role in the state aid investigation of Luxembourg, which is led by the competition commissioner, but he said Juncker would not abstain from any decision taken by the entire Commission that involved a Luxembourg tax deal.

"Mr Juncker is the president of the Commission ... He cannot abstain on something that he presides (over)," he said. Juncker pulled out of a Brussels conference he was scheduled to speak at on Thursday.

In September, the Commission accused Ireland of swerving international tax rules by letting Apple Inc shelter profits worth tens of billions of dollars from revenue collectors in return for maintaining jobs.

It is also investigating the tax treatment of U.S. coffee chain Starbucks Corp in the Netherlands. 

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