30th March 2014

Luxembourg investigated for unfair tax competition

In its continued effort to fight unfair tax competition among Member States, the EC has issued a public rebuke to Luxembourg for refusing to cooperate on the investigations. The EC has announced some months ago, that it would investigate some Member States´ tax systems in order to find if the states do not provide covert state aid by allowing informal tax breaks to big enterprises. At first, Luxembourg refused to respond to the EC´s inquires on grounds of fiscal secrecy. The Netherlands and Ireland are also being investigated. Many of leading global entreprises, mainly from the digital industry, have their EU headquarters in one of these countries, since low tax rates and possibilities for informal tax breaks have led to minimal tax duties for them. This has generated considerable resentment mainly in Germany and France. The issue, however, risks to raise concerns about tax competence between the EU institutions and the Member States, which is a highly sensitive area. If Luxembourg fails to comply with the EC´s demands, it can be brought before the Court of Justice of the EU.

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Members of the American Chamber of Commerce in the Czech Republic