LuxLeaks: the way forward

The LuxLeaks story hit the headlines in the international press over the last week and shed a negative light on the Grand Duchy. The practices of tax rulings have been condemned by many as unethical, especially in times of on-going economic crisis. Difficult not to agree. But before reflecting on how to address aggressive tax planning, let’s first get the facts right.

The practice of tax rulings is well established in many EU Member States. According to the OECD, 22 EU Member States apply tax rulings. The process of tax rulings is governed by a specific set of EU and OECD rules. That means that tax rulings are legal if a specific set of rules is applied.

Prior to LuxLeaks, the Commission had already initiated investigations on 4 cases of tax rulings (2 cases in Luxembourg, 1 in Ireland, 1 in the Netherlands). I am sure the Commission will do the right job in assessing whether the specific set of rules has been applied in the case of Luxembourg and all other Member States concerned. In this context, it is important that equal treatment is given to all Member States.

There is no doubt that the set of rules governing tax rulings needs to be reviewed. It is objectionable that international companies pay little or no tax when at the same time citizens and SMEs face an increased tax burden.

The Parliament should continue to reflect and act on aggressive tax planning and tax avoidance… as should the Commission and the Council. To change tax policies, unanimity from the Council is required. It is the Council that holds the real power. Today’s announcements by the Commission go in the right direction. In addition, we need quicker progress on the parent-subsidiary directive. The parent-subsidiary directive is one step in the right direction.

I wish the debate to be fair, pragmatic and solution-oriented. The bashing of only certain Member States – often small Member States – does not seem to be appropriate nor effective.