According to media reports, in an appearance before journalists in Brussels, Jean-Claude Juncker – who was appointed as head of the Commission at the beginning of the month – said there was no conflict of interest between his new post and his 20-year political position in Luxembourg, a jurisdiction with one of the most lenient tax regimes in Europe.
Junker was finance minister of the Grand Duchy prior to serving as Prime Minister from 1995 to 2013, when most of the tax efficient rulings in the country were crafted.
“Secret deals”
Meanwhile, 28,000 pages of leaked documents – reviewed by the International Consortium of Investigative Journalists (ICIJ) – have exposed 340 international companies which were engaged in what the ICIJ refer to as “secret deals” with Luxembourg, enabling them to save billions in their global tax bills.
The documents from PriceWaterhouseCoopers indicate that some companies enjoyed tax rates of 1% by channelling some of their profits into Luxembourg.
This comes at a time when European countries, including Luxembourg, Malta and Ireland, find themselves under investigation as part of an EU crackdown on tax avoidance.
“Sweetheart deals”
In an interview with ICIJ, chief executive of quasi-governmental agency Luxembourg for Finance Nicolas Mackel, said: “No way are these sweetheart deals. The Luxembourg system of taxation is competitive – there is nothing unfair or unethical about it.
He added: “If companies manage to reduce their tax bills to a very low rate, that’s a problem not of one tax system but of the interaction of many tax systems.”
At the end of October, more than 50 countries – including Luxembourg – signed a global exchange agreement which endorses the automatic exchange of tax information between jurisdictions.
