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Fifty Shades of Tax Dodging • 81<br />
EU solutions<br />
When it comes to taxation, the relationship between<br />
Luxembourg and the EU has been tense over the past year.<br />
As mentioned above, the European Commission initiated<br />
two state aid investigations in 2014 and in March 2015 it<br />
started looking into the Duchy’s tax dealings McDonald’s. 856<br />
Concurrently, and in response to the LuxLeaks scandal,<br />
the European Parliament set up its TAXE committee, which<br />
brought a delegation of MEPs to Luxembourg in March<br />
2015. 857<br />
Luxembourg has been reluctant to collaborate with both<br />
processes. In relation to the state aid investigations, the<br />
government first refused to confirm the identity of the<br />
companies referred to in documents handed over to the<br />
Commission in relation to the state aid investigations.<br />
Then it threatened to drag the Commission to court over<br />
its information request on tax rulings, which was only<br />
abandoned after the request was extended to all Member<br />
States. 859 In relation to the European Parliament’s TAXE<br />
committee, the Luxembourg Parliament in April 2015 voted<br />
down a motion calling on the government to support and<br />
cooperate with the committee, encouraged by a speech from<br />
the Minister of Finance who argued that the motion was<br />
unnecessary and would not provide any added value. 860<br />
In the second half of 2015, Luxembourg took up the rotating<br />
EU Presidency for a six-month period. The government stated<br />
that “fair taxation in the Union is an absolute priority” during<br />
the presidency. 861 However, reflecting a common argument<br />
invoked by the government, it was also made clear that a<br />
global level playing field would be preferred, and that as a<br />
consequence the EU should only pioneer improvements in tax<br />
and transparency if it could “ensure that others follow.” 862<br />
The government has expressed some support for a more<br />
coordinated approach to corporate taxation by demonstrating<br />
some support for the Commission’s plan to revive the socalled<br />
Common Consolidated Corporate Tax Base (CCCTB)<br />
proposal. The Luxembourg Finance Committee has similarly<br />
expressed support for the CCCTB proposal. 863<br />
Global solutions<br />
Despite insisting on the need for a global level playing field<br />
and concerted action, 864 it is noteworthy that the Luxembourg<br />
government did not support the establishment of a global<br />
intergovernmental body on taxation at the Financing for<br />
Development conference in July 2015.<br />
The government focuses on capacity building for tax<br />
administrations in its official development assistance<br />
and was a signatory to the so-called Addis Tax Initiative,<br />
which sought to bring together governments to commit to<br />
increase support for developing countries’ tax systems. 865<br />
Despite this, a Parliamentary resolution to commission an<br />
independent study on the impact of the Luxembourg financial<br />
centre on developing countries was voted down by 56 to 2<br />
votes in April 2015. 866<br />
Conclusion<br />
2015 was a crucial year for Luxembourg. After the LuxLeaks<br />
scandals the weight of the international community’s<br />
condemnation weighed heavily on the Luxembourg<br />
government. As the Luxembourg courts proceed with the<br />
charges against the LuxLeaks whistleblower and one of the<br />
key journalists behind the story, the public feeling of injustice<br />
is only likely to grow.<br />
With the one year anniversary of LuxLeaks approaching,<br />
the question of whether the problems have been solved<br />
becomes ever more pressing. Unfortunately, it seems that<br />
the Luxembourg government chose to promise fundamental<br />
reform, while continuing most of its old ways. Thus, the basic<br />
outline of the Luxembourg tax model – with its letterbox<br />
companies, tax rulings and patent box – remain intact. While<br />
some modest, albeit important, improvements have been<br />
implemented or promised, for example, in relation to its tax<br />
ruling regime, other moves such as the establishment of a<br />
Freeport and the plans to introduce a new type of foundation<br />
seem to be opening up for new tax planning opportunities.<br />
The lack of cooperation with the EU on taxation matters<br />
confirm an impression that Luxembourg still has some<br />
way to go. Perhaps most telling, the rejection of an<br />
intergovernmental body on taxation in June 2015 while<br />
insisting on the need for global concerted action on tax<br />
before the government will reform further stresses the lack<br />
of consistency in the government’s stance on tax.<br />
Some of the steps taken during the last year can have a direct<br />
impact on developing countries. These include the decision<br />
to adopt confidential country by country reporting and a<br />
rapid expansion of rate-reducing tax treaties with developing<br />
countries. In addition, the unwillingness of the Luxembourg<br />
Parliament to investigate the effect of its financial centre<br />
on developing countries while the government pursues a<br />
strategy to increase its financial sector’s market share in<br />
emerging markets again point to inconsistencies. 867