Europe is ‘obliged to take care of taxpayer money’ says MEP
The “OpenLux” probe highlighted a number of serious weaknesses in Luxembourg and the bloc’s anti-money laundering policies. An analysis of around three million documents from Luxembourg’s online business register found that 80 percent of its private investment firms did not disclose who profits from them. The Transparency International campaign group claimed a “significant number of Luxembourg-based funds appear to have failed to identify their owners as required by law”.
It was claimed that companies shift profits via Luxembourg and then onto tax havens in order to circumnavigate tax rules.
German MEP Sven Giegold, finance spokesman for the EU Parliament’s green bloc, accused the EU state was acting as a “go-between” for the bloc and tax havens.
He called on Brussels to introduce even stricter laws to prevent the practice of shifting money around the bloc.
“Luxembourg’s head in the sand policy does nothing to end the damage caused by tax evasion and tax avoidance,” Mr Giegold said.
“Luxembourg acts as a go-between for European countries and tax havens around the world. Societies will continue to lose out on billions of euros in tax revenue so long as other countries act as tax havens without hindrance and tax transparency rules are not implemented across the EU.
We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.
“Luxembourg should draw consequences and change its tax system.
“These revelations expose the potential of public transparency registers, which the European Parliament has pushed through.
“The weakness of the transparency register lies in its piecemeal implementation. While Luxembourg’s register is better than the transparency registers of many other EU states, this is not enough. We need the possibility to search the register for the beneficial owners of companies, and police and public prosecutors must be given electronic access to the register.
“We shouldn’t need a large group of investigative journalists to uncover such a scandal. We call on the Commission to take action against incomplete transparency registers across the EU with infringement procedures.”
David Szakonyi, co-founder of the Anti-Corruption Data Collective, said: “Beneficial ownership registries are a powerful tool for fighting corruption and money laundering.
“But they only work as intended when the data contained is complete and accurate. Not only should all natural persons publicly disclose their ownership stakes in companies, funds, and trusts, but verification mechanisms need to be put in place to ensure the integrity of this reporting.”
And Maíra Martini, Research and Policy Expert at Transparency International, added: “The person who benefits from an investment fund is the person whose assets are under that fund’s management. It does not make sense for the definition of a beneficial owner to only include certain shareholders or the person making investment decisions.
“The EU and Luxembourg authorities need to close this loophole, which allows politically exposed persons to hide their assets and potentially launder illicit funds.”
The EU has introduced a series of tax transparency laws but many member states are yet to fully implement them.
MUST READ: BBC Question Time blasted for ‘disappearing down a rabbit hole’
Germany has been blocking country-by-country transparent tax filing for years.
The European Commission estimates the losses for the state coffers of the other member states at up to €70 billion each year.
In most cases, tax avoidance is perfectly legal because states undercut each other as they compete for investment.
In a statement, Luxembourg said: “The Government takes note of the publication of a series of articles in the international press concerning alleged shortcomings in the Grand Duchy’s anti-money laundering arrangements and refutes the various allegations. The authors also make a number of unsubstantiated assertions about the Luxembourg economy and the financial centre.
Deluded Rejoiners crushed as doomed EU plot ‘off agenda’ for TEN years [INSIGHT]
‘Weakened’ Von der Leyen warned to brace for vaccine chaos reckoning [ANALYSIS]
Attorney General BACKS Boris plan to rip up EU rules [REVEALED]
Rishi Sunak urged to stamp down on tax ‘loopholes’ by Mullins
“Luxembourg is fully in line and compliant with all EU and international regulations and transparency standards, and applies, without exception, the full arsenal of EU and international measures to exchange information in tax matters and combat tax abuse and tax avoidance. Neither the EU nor the OECD have identified any harmful tax regime or practices in Luxembourg.
“Luxembourg provides no favourable tax regime for multinational firms, nor digital companies, which have to abide by the same rules and legislation as any other company in Luxembourg.”
Mr Giegold added: “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. 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.
“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. 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. The country of European founding father Robert Schuman should rethink its tax system, especially in the face of empty public coffers everywhere in Europe after the Corona crisis.
“It is true that Luxembourg’s transparency register is better than Germany’s, but this is due to the major shortcomings of the German register. I expect the Luxembourg government to end tax practices that deprive other EU countries of tax revenues. The German government must also act to protect our common good from tax tricks. It is high time that Germany implements the EU’s second Anti Tax Avoidance Directive. Since the end of 2019, the CDU/CSU has been blocking the draft bill of the Federal Ministry of Finance, which is modelled after the corresponding law in France. France has set tight limits on interest rates for loans within a group of companies, preventing the large-scale outflow of profits. Tax tricks via real estate investments are doubly damaging to the common good, as they drive up rents and drive down tax contributions.”
Source: Read Full Article