26 Feb 2021
Luxembourg has dismissed accusations of rampant tax avoidance and insisted that the country respects “all the applicable European and international rules and standards in terms of tax transparency , the fight against tax abuses and the fight against money laundering and the financing of terrorism”.
The duchy is reeling from relevations made public in an exercise dubbed as Openlux, a collaboration between Süddeutsche Zeitung, Le Monde, OCCRP and 14 other media partners about tax avoidance practices in Luxembourg.
Journalists made Luxembourg’s register of beneficial owners of companies and investment funds completely searchable for the first time.
The register revealed that more than 250 billionaires run companies in Luxembourg, with assets of around €6,500 billion. In addition, there are an estimated €4,500 billion in investment funds. At least 4,600 beneficial owners of companies Are German, while around 15,000 French businesspeople own Luxembourg companies with total assets of €100 billion, equal to 4% of French GDP.
The data was first relased on Sunday 7 February, with regular updates since.
Luxembourg immediately responded to the accusations. “The government rejects the assertions contained in this series of articles as well as the totally unjustified representation of the country and its economy,” a statement read.
“The Grand Duchy was one of the first European countries to set up a public register of beneficial owners (RBE) and is one of the only countries in the European Union to have opted for an open and transparent register’, accessible free of charge online.”
The articles revealed there are 55,000 offshore companies managing €6,500 billion in a country of around 2,500 sq.km.
In addition, the database of owners of Luxembourg companies reconstituted by Le Monde included several dozen people appearing in cases of corruption, tax fraud and money laundering, as well as individuals linked to organised crime or who have been the subject of sanctions.
Luxembourg’s opposition Pirate Party noted that the RBE was made public thanks to pressure from civil society and against the will of many EU member countries. It urged the government to take the revelations seriously and called on civil society to mobilize to ensure that “these practices of tax avoidance and evasion are finally stopped”.
Sven Clement, of Piraten, said that even if Luxembourg were to ensure that large multinationals make tax optimization completely legally, the country would still be at the origin of billions of euros in lost tax revenue for other countries where these revenues could have been invested for the community.
In the same vein, the Collectif Tax Justice Lëtzebuerg (CTJL) said Luxembourg should renew its international solidarity towards its neighbours and the other countries of the international community by fighting against tax evasion of multinational companies and large fortunes”.
The CTJL said the priority should be strengthening the capabilities of the “Commission de surveillance du secteur financier (CSSF,) the Ministry of Finance, the Luxembourg Business Registers, and the Financial Intelligence Unit.
The German Member of the European Parliament, Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group, said that the reaction of the Luxembourg government could not be more brazen.
“The country is a thriving intra-European tax haven. If Luxembourg denies being a tax haven, this can only be described as fake news. Luxembourg shows no remorse whatsoever, even though its tax policy causes massive financial damage to other EU countries,” he said.
“During the European Semester of the last three years, the EU has explicitly asked Luxembourg to change its tax system because it invites aggressive tax avoidance.”
Giegold said that Luxembourg today acts mainly as a gateway between European countries and tax havens around the world.
“To act as a tax avoidance gateway, one does not need to have a ‘harmful’ tax system in the technical sense,” he said. “The government’s statement is a red herring. It is true that nationals and foreigners are treated equally under the law. But the tax rules make Luxembourg particularly attractive for the management of assets abroad. Luxembourg bears a great responsibility in this respect, to which the government should not react with ostrich policies.”
He noted that, more numerous than the Germans and Italians combined, more numerous than the Luxembourgers themselves, the French figure in pole position in the list of owners of Luxembourg companies reconstituted by Le Monde for the OpenLux survey.
Nearly 15,000 French people , including 37 of the 50 richest families in France, including art collectors, film producers, wealthy heirs, landowners, figures of the “start-up nation, own companies in Luxembourg, holding assets equal to 4% of France’s GDP.
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