Leaked cables from German diplomats have been released by the code of conduct group on business taxation and show how a group of smaller EU states, led by Juncker’s native Luxembourg, routinely made efforts to obstruct plans to curb lenient tax regimes which favour big global companies.
The documents were shared with The Guardian and the International Consortium of Investigative Journalists (ICIJ) by the German radio group NDR.
The lobbying group, set up almost 19 years ago, has been working to prevent member states from being played off against one another by increasingly powerful multinational businesses, eager to shift profits across borders and avoid tax.
Efforts by the majority of the 28 EU states to curb aggressive tax planning and to rein in predatory tax policies were regularly delayed, diluted or derailed by Luxembourg and its allies.
These included blocking investigations into cross-border tax avoidance, improved information sharing and a peer review by member states into each others’ dealing with multinational businesses.
‘LuxLeaks’ scandal
The revelations are the latest blow to Juncker, who served as Luxembourg’s prime minister between 1995 and 2013. During that period he also acted as finance and treasury minister, taking a close interest in tax policy.
In 2014, shortly after he became commission president, Juncker came under fire after leaked documents known as the LuxLeaks exposed how 340 international companies – including Apple, Ikea and Pepsi – struck “secret deals” with Luxembourg, enabling them to save billions in their global tax bills.
While not illegal, Juncker was forced to concede that his country’s overly generous tax system was “not always in line with fiscal fairness” and may have breached “ethical and moral standards”.
EU tax avoidance crackdown
He has since publicly backed Brussels’ competition commissioner Margrethe Vestager as she pursues investigations into Luxembourg deals with Amazon and McDonald’s, which are examining whether the agreements were so generous they amount to illegal state aid.
In November, the EU announced plans to force financial advisers to report “aggressive” tax planning schemes which help clients avoid paying tax.
