Antoine Deltour, the Luxembourg source behind the LuxLeaks scandal is currently facing charges for disclosing confidential agreements and could be sentenced to five years in jail. He exposed the way Pepsi, IKEA, FedEx and 340 other international companies secured secret deals from Luxembourg, allowing many of them to slash their global tax bills while maintaining little presence in the tiny European duchy.
.@Europarl_EN this week: PNR, #taxrulings, animal diseases, development http://t.co/3CCUBhg4TC pic.twitter.com/OuGqtxctCy
— European Parliament (@Europarl_EN) June 1, 2015
The companies are alleged to have channeled hundreds of billions of dollars through Luxembourg and saved billions of dollars in taxes, according to a review of nearly 28,000 pages of confidential documents conducted by the International Consortium of Investigative Journalists (ICIJ) and a team of more than 80 journalists from 26 countries.
Big companies can book big tax savings by creating complicated accounting and legal structures that move profits to low-tax Luxembourg from higher-tax countries where they're headquartered or do lots of business. In some instances, the leaked records indicate, companies have enjoyed effective tax rates of less than 1 percent on the profits they've shuffled into Luxembourg.
@ICIJorg @RyleGerard @Newseum Technically correct doesn't necessarily imply legally correct #LuxLeaks pic.twitter.com/EhKWMr2DMl
— The Belgian Tax Man (@BelgianTaxMan) May 26, 2015
Red Faced Commission President
The fact that lawmakers in the European Parliament are interviewing Deltour will come as a huge embarrassment to the former prime minister of Luxembourg during the time when many of those tax deals were made, Jean-Claude Juncker, as he is now President of the European Commission and under pressure to harmonize EU taxations systems.
It's a topsy-turvy situation indeed: Antoine #Deltour, Edouard #Perrin & others are sued, while tax dodgers go free. https://t.co/se6SeObdCx
— Koen Roovers (@k_roovers) May 11, 2015
Juncker, has vowed to crack down on tax dodging in his new post, but he has also said he believes his own country's tax regime is in "full accordance" with European law. Under his prime ministership, tax advisers from the major accountancy firms, such as PwC, Deloitte and Ernst & Young, could present proposals for corporate structures and transactions designed to create tax savings and then get written assurance that their plan will be viewed favorably by the duchy's Ministry of Finance.
"It's like taking your tax plan to the government and getting it blessed ahead of time," Richard D. Pomp, a tax law professor at the University of Connecticut School Of Law told ICIJ. "And most are blessed. Luxembourg has a very user-friendly tax department."
The parliament's special committee, which is examining tax breaks for multinationals, will also take evidence from former EU tax commissioner Mario Monti, former Prime Minister of Italy.
