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Companies sign secret tax deals with Luxembourg

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  • Companies sign secret tax deals with Luxembourg

    Food company Glanbia invested more than €1bn in Luxembourg-based subsidiaries that employ no staff and exist simply to reduce its tax bill.

    Leaked documents obtained by the International Consortium of Investigative Journalists show Glanbia and other Irish companies were among hundreds of firms to negotiate agreements with tax authorities in Luxembourg.

    These documents leaked from accounting firm PwC and obtained by the ICIJ run to 28,000 pages and detail what are known as advanced tax agreements.

    Those secret deals with authorities in Luxembourg allowed companies to set up what were effectively brass plate operations in the country in order to avoid tax.

    In Glanbia's case, it put more than €1bn into a company with no staff. That money was then loaned to Glanbia in Ireland.

    The interest paid on the loan was used to reduce Glanbia's tax bill in Ireland while attracting no tax liability in Luxembourg.

    In a statement this morning, Glanbia confirmed that it has group companies in Luxembourg, which are clearly identifiable as Glanbia companies and are part of "inter-group financing arrangements underpinning our international operations".

    It said the group is fully tax compliant in all of the jurisdictions in which it operates and the majority of its 2013 corporate tax payments were made to the Exchequer.

    Construction firm Sisk was among the other companies to have set up similar subsidiaries alongside multinationals such as Ikea, Pepsi and Amazon.

    Details of the documents are published in The Irish Times having been shared by the Washington DC-based ICIJ.

    There is no suggestion that there is anything illegal in the practice.

    The leaked documents include hundreds of private tax rulings - known as comfort letters - that Luxembourg provides to corporations seeking favourable tax treatment.

    Luxembourg officials denied any "sweetheart deals" in its tax system.

    "The Luxembourg system of taxation is competitive - there is nothing unfair or unethical about it," ICIJ quoted Nicolas Mackel, chief executive of Luxembourg for Finance, as saying in an interview.

    EU state aid regulators are investigating Amazon's tax deals with Luxembourg, saying the arrangements could have underestimated the US online retailer's profits and given it an unfair advantage.
    Companies sign secret tax deals with Luxembourg - RTÉ News

  • #2
    Coming from Ireland it sounds more like they're trying to deflect the identical charges levied at the Irish government...

    Interestingly, the same scoop is interpreted differently by the other journalists involved in the international investigative group that got the data:
    • the British Guardian focus on Jean-Claude Juncker in what is so obviously "not" a pure political thing regarding British opposition to him
    • German (leftist) Süddeutsche targets primarily PriceWaterhouseCoopers, who finagled those deals, and puts an opinion piece next to it on why companies like that are a danger to society at large
    • Brazilian Folha da Sao Paulo concentrates on the involvement of domestic banks and on tax-evasion-through-foreign-assets apparently being rampant in Brazil
    • Canadian CBC concentrates on the involvement of the Canadian Federal Pension board and Crown Corporation, and on how Luxembourg was used as a hub in a shell company game through which Canadian pensions were invested via several hundred European companies while evading taxes.
    • Danish reporting focuses on the evilness of capitalist megacompanies
    Last edited by kato; 06 Nov 14,, 16:38.

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    • #3
      Originally posted by kato View Post
      Coming from Ireland it sounds more like they're trying to deflect the identical charges levied at the Irish government...
      You will have to take my word when I say that I saw this one coming. I don't believe that it is the case, it wouldn't be a very effective measure anyway.


      Originally posted by kato View Post
      Interestingly, the same scoop is interpreted differently by the other journalists involved in the international investigative group that got the data:
      • the British Guardian focus on Jean-Claude Juncker in what is so obviously "not" a pure political thing regarding British opposition to him
      • German (leftist) Süddeutsche targets primarily PriceWaterhouseCoopers, who finagled those deals, and puts an opinion piece next to it on why companies like that are a danger to society at large
      • Brazilian Folha da Sao Paulo concentrates on the involvement of domestic banks and on tax-evasion-through-foreign-assets apparently being rampant in Brazil
      • Canadian CBC concentrates on the involvement of the Canadian Federal Pension board and Crown Corporation, and on how Luxembourg was used as a hub in a shell company game through which Canadian pensions were invested via several hundred European companies while evading taxes.
      • Danish reporting focuses on the evilness of capitalist megacompanies
      Nice list. Although we might want to hold back evilness for somewhat more special circumstances.

      And the Irish article I posted mentions a company, Glanbia, that lowered its tax bill in Ireland as a result. There is no mystery to the nature of the reporting, but I welcome it too a point. Attention needs to be brought to this issue as often as possible to maintain pressure on those who form policy to tackle the issue. Constant pressure and constant tackling.

      Comment


      • #4
        This has been going on for decades, at least in the US (i.e.: US companies moving their headquarters overseas, or "inversion"); I can't remember the exact figure, but NPR did a piece on this a few weeks ago, and the amount of taxes the US Gov't takes in from corporations every year has fallen dramatically since 2000 due to corporate flight overseas (and, in some cases, north of the border). The latest large corporation to do this was Burger King, which merged with Canadian company Tim Hortons, and has set-up shop in Canada, thereby reducing it's corporate taxes:

        Treasury Announces New Steps To Reduce Corporate Tax Dodges : The Two-Way : NPR
        "There is never enough time to do or say all the things that we would wish. The thing is to try to do as much as you can in the time that you have. Remember Scrooge, time is short, and suddenly, you're not there any more." -Ghost of Christmas Present, Scrooge

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