Category Archives: Luxembourg

(EurActiv) MEPs grill Juncker over LuxLeaks: ‘You turned from Saul to Paul’

(EurActiv)

PANA Committee meeting – Public Hearing, with Jean-Claude Juncker, president of the European Commission. [European Parliament]

European Commission chief Jean-Claude Juncker admitted on Tuesday (30 May) that he overlooked certain effects of Luxembourg’s tax policy during his tenure as prime minister of the tiny member state.

Juncker was thrust into the world spotlight in late 2014 when his native EU duchy was singled out in the LuxLeaks scandal as a tax haven for dozens of multinationals, including Ikea and Pepsi.

Juncker made his comments while addressing a European Parliament hearing on the Panama Papers, in which he also argued EU member states could still use tax policy to compete for investment.

“I am in favour of tax competition but it has to be fair and it was not always fair,” Juncker told MEPs in Brussels.

“(As prime minister) I was with a few others neglecting that dimension … on fair competition,” he added, referring to the practice of EU neighbours using low taxes to outgun each other for foreign investment.

The EU has made cracking down on very low taxes a high priority since LuxLeaks unveiled the two decades of tax deals made when Juncker was premier.

“I was a minister at the time, I wasn’t responsible for these business issues,” Juncker said, defending heated questions from MEPs on his role in Luxembourg’s cushy and secret tax arrangements.

“I never discussed fiscal measures with a company. It’s a clear principle in Luxembourg, but not everywhere in the European Union,” he said.

From Saul to Paul

German Green MEP Sven Giegold told Juncker his name was “associated with a country getting rich through tax avoidance”. His previous positions contrast sharply with his current work as head of the European Commission, spearheading the fight against money laundering, tax avoidance and evasion. Juncker repeatedly stressed that in recent months, the Commission has produced twelve new initiatives in the field of taxation.

Juncker says there are countries with a lot more intermediaries than . Our report from Jan says contrary:http://bit.ly/2qC1SQX 

But this failed to satisfy Giegold. “You have turned from Saul to Paul on the road to Damascus,” he said, referring to the conversion of Saul into Paul the apostle, in the New Testament.  “People want a clear idea of what you did in the past,” said Gielgold.

German CDU lawmaker Thomas Mann (EPP) suggested that the current requirement that changes in tax policy needed unanimity from all member states is an “obstacle to tax reform”.

Juncker responded that he was in favour of a treaty change to shift from majority to qualified (two-thirds) majority voting in tax matters.  Later, he added that he might even consider the never-before used “Rule 116” (which sets out a procedure for amending distortions in the internal market) to change the process for tax reforms.

Juncker considers making reforms under co-decision,putting Council & EP at same decision level. It would be unprecedented and welcomed!

LuxLeaks helped spark a major global push against the generous deals handed to multinationals, which grew even stronger with new revelations such as the Panama Papers and Football Leaks.

The revelations ended up prompting the EU to take urgent steps to stop global firms avoiding tax in Europe, including inquiries into firms such as Apple, McDonald’s and Amazon.

In addition to the historic decision against Apple, the European Commission has already decided against Fiat in Luxembourg, and Starbucks in the Netherlands, ordering them to repay up to €30 million.

“Juncker is a rather catastrophic symbol for the European Union,” said French Green MEP Eva Joly, a strong advocate for fair taxation.

“He represents hypocrisy. He represents the fact that the EU is completely oriented towards helping multinationals,” she added.

(EUobserver) Luxembourg seeks to host EU banking authority

(EUobserver) Luxembourg said on Thursday that it wants to host the European Banking Authority, which is currently in London. “This claim is rooted in a decision taken by European leaders in 1965 in which they said they were willing to locate in Luxembourg EU bodies concerned with finance,” Luxembourg’s prime minister Xavier Bettel said in a letter addressed to both European Council president Donald Tusk and European Commission president Jean-Claude Juncker.

(EXP) CGD escapa à CMVM com emissão de €500 milhões no Luxemburgo

(EXP)A Caixa Geral de Depósitos tem algo a esconder da CMVM? Ou dos investidores? O banco estatal vai emitir 500 milhões de euros em dívida perpétua a partir do Luxemburgo. Assim escapa aos exigentes e rigorosos critérios de informação impostos pela Comissão do Mercado de Valores Mobiliários. Na CGD há outra explicação.

Toda a gente sabe no mercado: quem quer fazer uma emissão de dívida sem ter de dar muita informação aos investidores encontra no Luxemburgo uma opção menos exigente. O BES sabia-o. O BPN também. Agora, a estatal Caixa Geral de Depósitos (CGD) vai emitir dívida perpétua e escolheu precisamente o Luxemburgo para o fazer.

A emissão de 500 milhões de euros, essencial para cumprir o projecto de capitalização em curso, escapa assim aos critérios mais apertados de informação rigorosa exigidos pela Comissão do Mercado de Valores Mobiliários (CMVM).

O regulador português não recebeu qualquer informação ou apresentação sobre esta emissão da CGD.

Contactado, o banco escusou-se a comentar oficialmente o tema. A CGD tem experiência com a aprovação de emissões no Luxemburgo, através do seu programa EMTN (Euro Medium Ter Notes), que utiliza regularmente em emissões, através da CGD SA com sede em Portugal e duas outras sociedades com sede nas ilhas Caimão.

O Expresso pediu à CGD mais informação sobre a emissão e o prospeto da mesma. Fonte oficial da CGD indicou que não existe um prospeto. Fontes financeiras estranham esta opção, sobretudo por uma questão de transparência e dada a sensibilidade do momento que a CGD está a viver.

“Não é a CGD que deve ser censurada”, diz um fonte jurídica. Emissões na Holanda, Luxemburgo e Inglaterra acontecem, por serem mais rápidas na sua execução, aponta. Em Portugal levam mais tempo. Esta operação faz parte de um mega plano de recapitalização da CGD, num total de 5.000 milhões de euros, que foi acertado com o governo e aprovado pelo BCE e pela Comissão Europeia. O anúncio da injeção de capital no banco foi feito em agosto pelo ministro das Finanças, após um acordo com Bruxelas. O plano inclui a emissão de 1.000 milhões de euros em dívida subordinada. Os 500 milhões agora colocados são a primeira fatia.

O plano passa ainda pela injeção de até 2.700 milhões de euros em “dinheiro fresco” em simultâneo com a emissão da primeira tranche de 500 milhões de euros de dívida subordinada. E passa também pela conversão de 960 milhões de euros de obrigações subscritas pelo estado em 2012.

JUROS DE 10%?

Segundo a informação enviada aos investidores pelos bancos que lideram a operação, a que o Expresso teve acesso, os títulos têm um ‘trigger’ de 5,125% de ‘common equity tier 1’. Se for atingido, os investidores sofrem perdas, pela conversão dos títulos de dívida em capital.

Os juros a pagar pela colocação não são conhecidos ainda mas espera-se que rondem os 10% tal como em outras emissões na Europa.

O UniCredit vendeu dívida perpétua em dezembro pagando 9,25%. O Banco do Chipre colocou em janeiro €250 milhões com um cupão de 9,25%.

A CGD mandatou o Barclays, o Caixa – Banco de Investimento, o Citi, o Deutsche Bank e o J.P.Morgan para levar a cabo uma série de reuniões com investidores para promover a emissão. Este ‘roadshow’ arranca a 20 de março em Londres e vai contar com a presença do presidente executivo, Paulo Macedo, e do administrador financeiro, José Brito.

(EUobserver) LuxLeaks whistleblowers sentenced again

(EUobserver) LuxLeaks whistleblowers were convicted again by Luxembourg’s court of appeal on Wednesday (15 March) but with reduced sentences compared to the first verdict.

Antoine Deltour, a former PricewaterhouseCoopers (PwC) employee who leaked documents showing how the company helped multinational companies to evade tax in the Grand Duchy of Luxembourg, was given a 6-month suspended sentence and fined €1,500.

  • Deltour (r) got a 6-month suspended sentence. (Photo: European Parliament)

Raphael Halet, another PwC employee who had helped Deltour, was fined €1,000. 

After the first trial last year, Deltour received a 12-month suspended sentence and a fine of €1,500. Halet was fined €1,000 and given a nine-month suspended sentence.

Edouard Perrin, a journalist who had revealed the tax evasion scheme in a programme on French TV in 2012, was acquitted for the second time.

Both Deltour and Halet were convicted of theft of tax rulings and computer fraud. Both were cleared of the charge of trade secret violation.

Halet was convicted of violating professional confidentiality, while Deltour was cleared of the charge thanks to his whistleblower status.

The court had recognised Deltour and Halet’s whistleblower status but had noted that it did not protect them under national or European law.

“This disappointing judgment constitutes an additional argument for going ahead with recent European initiatives towards whistleblowers’ protection,” Antoine Deltour said in a statement published by the defendants’ support committee after the verdict.

The group, Support Antoine, said that the court’s decision presented “a disturbing contradiction”.

“It recognizes the whistleblower’s role and the public interest of the revelations but anyhow concludes on a condemnation,” it said in the statement.

“Once again, private financial interests seem to take priority over the collective interest and the rights for information.”

Activists have used the LuxLeaks case to showcase the need for more transparency and anti-tax evasion measures. Whistleblower protection has been a main focus.

LuxLeaks revelations

PwC first filed a complaint after the first revelations in 2012. But further revelations by a network of newspapers in the so-called LuxLeaks project in 2014 showed the extent of the tax evasion schemes uncovered by Deltour and Halet.

The LuxLeaks revelations showed how tax rulings allowed more than 300 companies to pay almost no taxes in Luxembourg, using it as a tax haven to avoid paying billions of taxes in other countries where these companies also operate.

The revelations came just after Jean-Claude Juncker, the longstanding prime minister of the Grand Duchy who reigned during the time the tax rulings were developed, became president of the European Commission.

The extent of the revelations, after several years of financial and economic crisis, pushed the EU executive led by Juncker as well as member states to propose and adopt tighter rules on tax evasion and tax fraud.

Molly Scott Cato, a British Green MEP, said on Wednesday that without Deltour and Halet’s revelations, “the significant tax reforms that are now being agreed by the EU institutions would not have happened”.

She said that “the LuxLeaks scandal highlights the need for tax rulings to be made public and for companies to be obliged to publicly disclose where they do business. It also draws attention to the urgency of making progress with EU-wide whistleblower protection legislation.”

While “corporate tax dodging is costing billions of euros every year,” whistleblowers like Deltour and Halet “deserve praise, not punishment”, said Tove Maria Ryding from the European Network on Debt and Development (Eurodad).

“It is scandalous that those who did an invaluable service to society, risking their careers, have again been found guilty while the rich and powerful rob hundreds of billions of euros from citizens,” said radical-left MEP Fabio De Masi, who is vice-chair of the European Parliament’s inquiry committee for Panama Papers, another raft of revelations on tax evasion practices.

The LuxLeaks revelations also triggered a special committee in the parliament, to shed light on tax rulings in Europe.

Its chair, French center-right MEP Alain Lamassoure told MEPs on Tuesday that “fair competition and tax justice” were making progress but three conditions were needed to address citizens’ demands for more transparency.

He said that corporate tax systems in Europe have to be harmonised, through the so-called common consolidated corporate tax base (CCCTB) scheme that is still under discussion.

He also said that whistleblowers should be granted Europe-wide protection.

The third condition, he added, is that EU finance ministers politically back the Code of Conduct Group, a body set up in the EU council to work on preventing harmful tax competition.

(BelfastTelegraph) Lloyd’s of London favours Luxembourg in European hub shortlist

(BelfastTelegraphLuxembourg is the front runner in the search by Lloyd's of London for a post-Brexit European subsidiary

Luxembourg is the front runner in the search by Lloyd’s of London for a post-Brexit European subsidiary

Lloyd’s of London has narrowed down its hunt for a post-Brexit European subsidiary, with Luxembourg emerging as the front runner following a crunch board meeting.

The move could see more than 100 jobs at the insurance market shifted from London to the continent.

Sources close to Lloyd’s told the Press Association that Luxembourg has emerged as the favourite in a shortlist of five European hubs – including Malta, Dublin, Frankfurt and Paris – to house a portion of its business.

It would give Lloyd’s of London access to the single market even if the Government follows through with plans for a hard Brexit.

The news comes just a week after a meeting of the insurance market’s franchise board which is looking after progress of post-Brexit contingency plans.

A spokesman for Lloyd’s of London said: “We are continuing to work through the options of establishing a subsidiary in the European Union and will provide an update to the market later this quarter on how that is progressing.”

Lloyd’s generates around 11% of its revenue in continental Europe and chairman John Nelson and chief executive Inga Beale have previously warned that losing single market access would be detrimental.

The insurance market has been ramping up contingency planning in the hopes of unveiling a location for a potential EU subsidiary to its members by the end of the first quarter.

Lloyd’s has not confirmed the exact number of staff that may be moved if the plan is approved, though a European centre is not expected to rival the size of its other hubs in cities like Singapore and Dubai.

The insurance market is set to outline the potential costs of a relocation when it suggests a new site to its members at the end of the first quarter, which could be in the tens of millions, covering higher operating costs, regulatory requirements, and capitalisation.

EU regulators may force Lloyd’s to capitalise a subsidiary separately, which means a portion of its cash will be put into untouchable reserves that will underpin the business.

Experts have speculated that rival financial centres like Luxembourg, Dublin, Frankfurt and Paris could end up siphoning off some of the City’s business as they court financial services firms ahead of Brexit.

Officials from the Paris region were wooing banks and fund managers in London earlier this week at the Shard to talk about the benefits of moving to France.

It followed in the footsteps of German authorities who met with financial executives in Frankfurt at the end of January to set out guidelines for setting up shop in the country after Brexit.

(EurActiv) Luxembourg ‘made 172 secret tax deals’ with companies in year after LuxLeaks

(EurActiv)

Luxembourg struck 172 secret tax deals in the year after the LuxLeaks scandal first exposed the prevalence of agreements made between the government and multinational corporations, new research published today (7 December) has revealed.

The number of such deals between companies and governments across Europe has increased by almost 50% since the November 2014 investigation rocked the European Commission. Its president, Jean-Claude Juncker, was prime minister when many of the more than 300 tax rulings were made.

The two whistle-blowers and one of the journalists who exposed the scope of the practice and the profit-shifting of some multinationals are on trial in Luxembourg.

Belgium and Luxembourg made the largest amount of new “sweetheart deals” since the scandal, according to a report by the European Network on Debt and Development (Eurodad).

The NGO, a coalition of civil society organisations campaigning for greater tax transparency, analysed European Commission data for 18 countries.

LuxLeaks drove forward international and EU measures to force multinational companies to pay their fair share of tax, and not shift payments on profits made to jurisdictions with more favourable tax treatments.

Despite the controversy, Luxembourg made another 172 such deals in 2015, taking its total to 547 by the end of that year, according to the report.

In the EU as a whole, the number of deals kept increasing dramatically from 547 in 2013 to 972 in 2014, finally reaching 1,444 by the end of 2015. This is an increase of 160% in just two years, according to the report.
Not every tax ruling counted in the report will be problematic. But it is impossible to judge the agreements because they are made in secret.Luxembourg claims ‘leading role’ on tax transparency

Luxembourg’s finance ministry told EurActiv.com, “We cannot confirm these allegations. On the contrary, I would like to underline that Luxembourg has played a leading role in enhancing transparency on tax rulings in Europe.”

When Luxembourg last held the rotating presidency of the EU, in the second half of 2015, it brokered agreement in the Council of Ministers on the automatic exchange of information on tax rulings between member state authorities.

Scheduled to begin in the second quarter of next year, it will allow EU governments to see each other’s tax deals with companies. Sources confirmed Luxembourg had helped push through an unprecedented agreement.

Defending his alleged part in the industrial scale, but legal, tax avoidance, a testy Juncker in September 2015 angrily told MEPs, “Call it EU leaks, not LuxLeaks!”

Tove Maria Ryding, tax justice coordinator of Eurodad and one of the report authors, said there were now more than 1,000 tax deals with multinationals in Europe.

She said, “It’s very surprising and deeply worrying to see that the amount of secret sweetheart deals is skyrocketing in Europe – as if the LuxLeaks scandal never happened.

“It’s even more surprising that one of the countries where we are seeing a dramatic increase is Luxembourg.”

As well a bill for country-by-country reporting of company profits and taxes, based on OECD international guidelines, the Commission also launched a number of state aid investigations.

State aid?

These probes scrutinised whether the sweetheart deals had given companies an unfair competitive advantage, in breach of EU rules.

In August, the Commission hit Apple with a with a €13 billion clawback of unpaid taxes in Ireland.

The Apple decision, which is set to be appealed, follows two similar but smaller EU state aid investigations into tax rulings for Fiat in Luxembourg and Starbucks in the Netherlands.The Commission accused Ireland in 2014 of dodging international tax rules by letting Apple shelter profits worth tens of billions of dollars from tax collectors in return for maintaining jobs.

“We know from examples like the Apple case and LuxLeaks that these secret deals can be used for large scale tax avoidance by multinational corporations,” said Eurodad’s Ryding.

“As we can see with the LuxLeaks trial, anyone who tells the public what’s in these deals can get threatened with lawsuits and jail time.”

(Politico) Luxembourg foreign minister: Hungary should leave EU

(Politico) Country treats refugees almost like ‘wild animals,’ Asselborn said.

Jean Asselborn, Luxembourg’s foreign affairs minister, said Hungary should be kicked out of the EU over its stance on the refugee crisis, Die Welt reported.

“We cannot accept the founding principles of the EU being violated,” Asselborn told the newspaper in an interview published Tuesday, just days before the informal EU summit in Bratislava on September 16.

“[Those] who build fences against refugees like Hungary does, or who violate press freedom and judicial independence, should be excluded temporarily or forever from the EU,” Asselborn said, adding that was “the only way to preserve the cohesion and values of the EU.”

Asselborn added that a treaty change would “be helpful” in order to allow EU membership to be suspended without the required unanimity. If it had to apply today, Hungary would not stand a chance of joining the EU, he said.

Hungarian Prime Minister Viktor Orbán’s government had made serious mistakes and treated refugees almost like “wild animals,” Asselborn said, pointing to a fencethe country has built to prevent asylum seekers crossing its borders.