Former premier under fire over Luxembourg tax deals
Print Edition
LUXEMBOURG and its former premier Jean-Claude Juncker — now head of the European Commission — came under fire yesterday after leaked documents showed the nation gave hundreds of global firms huge tax avoidance deals.
Household names such as Pepsi, IKEA and Deutsche Bank were among companies named by the US-based International Consortium of Investigative Journalists following a six-month investigation into 28,000 leaked documents.
The tax revelations risked weakening Juncker’s position just days after he took office as head of the EU’s executive arm following 19 years as Luxembourg prime minister, the period during which many of the deals were made.
Juncker’s spokesman said the veteran politician was “serene” about the revelations, though he pulled out of a public speaking engagement with former commission chief Jacques Delors yesterday.
Under an hourlong barrage of questions from reporters, the spokesman stressed that EU regulators were already investigating whether Luxembourg’s deals with US Internet giant Amazon and the financial arm of Italian carmaker Fiat amounted to illegal state aid.
Spokesman Margaritis Schinas said that if the EU found it was in breach of the rules, “Luxembourg will have to take corrective actions.” He added that the EU could widen the probe to companies mentioned in the ICIJ investigation.
The so-called “Luxleaks” documents showed that billions of dollars were funneled through the tiny European duchy of Luxembourg thanks to complex financial structures that allowed companies to slash their tax liabilities, depriving hard-up governments around the world of revenue.
Juncker presided over the tax affairs of Luxembourg for more than two decades, transforming the country from a sleepy European backwater to a prized destination where hundreds of the world’s biggest companies channel their affairs.
The leaks threaten to undermine his vow to be a more politically involved head of the European Commission, the EU’s financial enforcer, especially as he is already embroiled in bitter rows with Britain and Italy over their budgets.
On Wednesday, asked about the tax policies he once led, Juncker said he “had his ideas” about the matter but would keep them to himself and do nothing to affect the EU’s investigation.
Luxembourg’s current prime minister, Xavier Bettel, insisted the tax deals were legal.
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