After the OpenLux survey (see EUROPE 12653/1), it is now the turn of the LuxLetters to reveal how Luxembourg circumvents the European tax rules on administrative cooperation in the tax field (DAC3).
Information published on Thursday 1 July by a group of newspapers including Le Monde, Süddeutsche Zeitung, El Mundo, Woxx, IrpiMedia and the NGOs Tax Justice Network and The Signals Network highlights the “newsletter” trick used by tax advisers working for large firms in Luxembourg.
This trick takes the form of a letter by which a tax adviser informs the Luxembourg administration of the advantageous tax treatment that one of his clients intends to receive and for which the silence of the authorities would be equivalent to approval. This unofficial validation would thus make it possible to secure the tax agreement reached without having to go through the signing of more official agreements and, above all, to escape the rules of the DAC3 Directive which governs the exchange of tax information between European tax administrations.
In a statement published on Thursday, the Luxembourg government refutes these allegations. “The assertions made in these articles are erroneous and unjustified: there is no informal or oral confirmation in Luxembourg from the tax administration about a taxpayer’s tax situation based on letters written either by the taxpayers themselves or by their tax advisors”, it writes.
According to the government, such correspondence with the tax administration would be purely unilateral and cannot in any way be considered binding on the tax administration or even be interpreted as a confirmation of a given tax situation.
In Luxembourg, tax rulings are strictly regulated, the government assures. Moreover, the country fully complies with all European and international regulations on taxation and transparency, it stresses.
European Parliament calls for investigation
The S&D and Greens/EFA groups in the European Parliament have called on the European Commission to investigate the revelations.
“In the light of such serious allegations, we call on the Commission to investigate if these letters are in breach of European rules establishing the cooperation between tax administrations. If that is indeed the case, not only EU law was broken, but also the mutual trust EU countries place in each other”, said Jonás Fernández (S&D, Spain).
The S&D group will also request a hearing on the LuxLetters scandal in the European Parliament’s Subcommittee on Tax Matters (FISC). “We want to know if the Luxemburgish authorities informed other EU countries about these letters, which effectively enabled multinationals to escape paying their fair share of taxes where they made their profits”, said Aurore Lalucq (S&D, France).
European Parliament rapporteur on the evaluation of the application of the directive on administrative cooperation in the field of taxation (DAC) and its subsequent amendments (see EUROPE 12681/20), Sven Giegold (Greens/EFA, Germany) intends to raise the subject of LuxLetters in plenary next week, in a discussion on his report. (Original version in French by Marion Fontana)