The president of the European Commission, Jean-Claude Juncker, “spent years in his previous role as Luxembourg’s prime minister secretly blocking EU efforts to tackle tax avoidance by multinational corporations”, The Guardian newspaper has reported, citing as its source leaked documents.
According to The Guardian, years’ worth of confidential German diplomatic cables revealed “a candid account of Luxembourg’s obstructive manoeuvres inside one of Brussels’ most secretive committees”, the so-called Code of Conduct group on business taxation.
The Code of Conduct Group was set up almost 19 years ago to oversee the inter-action between member states with respect to tax policy, and to prevent tax arbitrage being used to obtain harmful competitive advantages over other member states.
The Guardian said the leaked cables – which had been shared with it, and the International Consortium of Investigative Journalists by the German radio group NDR – showed how a “small handful of countries” had made use of their seats on the Code of Conduct Group committee “to frustrate concerted EU action and protect their own tax regimes”.
“Efforts by a majority of member states to curb aggressive tax planning and to rein in predatory tax policies were regularly delayed, diluted or derailed by the actions of a few of the EU’s smallest members, frequently led by Luxembourg,” The Guardian report added.
The leaked papers were described by the Guardian as being “highly embarrassing” for Juncker, pictured above, who served as Luxembourg’s prime minister from 1995 until the end of 2013.
During that period he also acted as finance and treasury minister, taking a close interest in tax policy.
“Despite having a population of just 560,000, Luxembourg was able to resist widely supported EU tax reforms, its dissenting voice often backed only by that of the Netherlands,” the notes. It goes on to cite a lists of proposals that it says had been “popular” among the other members of the Code of Conduct committee but which Luxembourg had opposed, including a plan for the that would have seen the tax authorities in each member state “subject their dealings with multinational businesses to peer review”.
The Guardian report doesn’t contain a response from Juncker to the allegations, although the paper notes that the politician had vowed in 2014 to “lead a campaign against tax avoidance and evasion”, as he began his five-year term as president of the European Commission. It does, though, say a spokesperson for Luxembourg’s finance ministry “refused to comment on the positions previous governments had taken in private EU discussions”.
“We have no knowledge of the communications you claim to have, and whether they are genuine, and therefore cannot comment on them,” the Luxembourg finance ministry spokesperson added.
“In recent years Luxembourg has been at the forefront of the global trend towards greater transparency in tax matters and the fight against harmful tax competition.”
The Guardian then said it had spoken to another former member of the code of conduct committee, who did not want to be named but who “corroborated claims in the leaked cables that Luxembourg was regularly among those looking to frustrate EU efforts to tackle tax avoidance”.
To read The Guardian’s report in full on the newspaper’s website, click here.
As reported, the European Commission said in November that it had launched a consultation on possible regulatory measures that might be introduced in order to disincentivise the use of aggressive tax planning schemes by EU financial advisers and wealth managers.
The “Disincentives for advisers and intermediaries for potentially aggressive tax planning schemes” consultation was described in a statement on the European Commission’s website as “aim[ing] to gather views on whether there is a need for EU action aimed at introducing more effective disincentives for intermediaries or tax payers engaged in operations that facilitate tax evasion and tax avoidance, and in case there is, how it should be designed”.