Tuesday, November 11, 2014

 

The Luxembourg Scandal

The Luxembourg scandal – where many large companies have quietly set up subsidiary offices, paying very low taxes and, with creative interior billing, manage to pay almost no taxes at all in other countries where they operate – has received a major disclosure  recently. The Guardian runs an extensive exposé titled: 'Luxembourg tax files: how the tiny state rubber-stamped tax avoidance on an industrial scale' and Business Insider lists the companies involved here. El Confidencial covers the story for the Spanish readers, saying that over 300 multinationals are involved in the report from the International Consortium of Investigative Journalists which runs to 28,000 pages. All of these companies use one of the 'Big Four' accountants, and just one revealed, PricewaterhouseCoopers, is said to have arranged tax savings of around 700,000 million euros between 2004 and 2010. A quote from the ICIJ exposé: 'Companies have channelled hundreds of billions of dollars through Luxembourg and saved billions of dollars in taxes. Some firms have enjoyed effective tax rates of less than 1 percent on the profits they’ve shuffled into Luxembourg'. The new President of the European Commission, Jean-Claude Juncker, was the Prime Minister of Luxembourg when many of these fiscal advantages were approved by the Government, says El Diario, and, as Infolibre notes, Spain's own Minister of Finance Luis de Guindos was director of the financial division of PwC between 2008 and 2010. We are left with just three more links in this paragraph, the first from Twitter reminds us of the plan to create wealth, jobs and employment reforms from the 'Consejo Empresarial para la Conpetitividad' (mentioned in Business over Tapas last week) with the comment 'In other words, the big companies that on Monday asked us to fight against the Black Economy in Spain are the same people who pay 1% in Luxembourg'. The second, Britain's Private Eye returns to the story noting that '...the practice explains why the ratio of foreign investment to GDP in Luxembourg is the highest in the world at 4,700 percent (compared to the UK, itself fairly high, at around 50 percent)'. And lastly, there's an article about the Spanish presence in Luxembourg from El Diario here.

Comments:
I LOOK FORWARD TO READING A FULL ACCOUNT OF ALL THIS IN TOMORROWS EWN!
 
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