European Commission President Jean Claude Juncker on November 12 said advance tax rulings issued by Luxembourg to multinationals while he was the country’s prime minister were legal even though the rulings helped multinationals avoid tax due other European nations.
Juncker was responding the uproar over the release of leaked taxpayer private rulings and tax returns, which were published on the Internet on November 5 by the International Consortium of Investigative Journalists. The documents reveal that Luxembourg has helped scores of multinationals avoid tax by sanctioning complex deals in tax rulings. The European Commission had already been investigating Luxembourg tax rulings issued to Fiat and Amazon, looking into potential violations of EU state aid rules.
Speaking to reporters in Brussels, Juncker acknowledged that there has been tax avoidance in Luxembourg, but maintained that the tax rulings are in line with Luxembourg practice and are therefore legal. These same rules apply to all companies without discrimination, Juncker said.
Juncker also insisted that there is no conflict of interest if he continues to serve his post as Commission president while the Commission investigates tax practices that occurred in Luxembourg under his watch. He said would not interfere with EU Competition Commissioner Margrethe Vestager’s investigations into the Luxembourg tax rulings.
Juncker blamed multinational tax avoidance on the lack of tax harmonization in Europe and said that, under his leadership, the Commission will introduce automatic exchange of advance tax rulings, so that any tax administrations that issues an advance private ruling would be required to inform other EU member states of the ruling.
The Commission will also work with the G-20 to enlarge the scope of information exchange to countries outside the EU, he said.
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