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03/12/2016

Luxembourg appeals verdicts in Luxleaks tax scandal

Euro & Finance

Luxembourg appeals verdicts in Luxleaks tax scandal

Jean-Claude Juncker will deliver the State of the Union speech on Wednesday (14 September).

[European Commission]

Luxembourg has lodged an appeal against the verdicts handed down to three Luxleaks whistleblowers who exposed the small duchy’s huge tax breaks for giant multinationals, the justice department said Tuesday (2 August).

“The state prosecutor lodged a general appeal at the end of last week,” spokesman Henri Eippers told AFP.

Former PricewaterhouseCoopers (PwC) employees Antoine Deltour and Raphael Halet were given suspended 12-month and nine-month jail terms while journalist Edouard Perrin was acquitted of all charges at their trial in June.

The decision to launch a general appeal against all three verdicts could have the most consequences for Perrin, a journalist with France 2 television who based his expose on thousands of documents obtained by the other two defendants.

The Luxleaks scandal, which implicated global firms such as Apple, IKEA and Pepsi, sparked howls of protest in Europe, leading to a crackdown on the generous tax deals the wealthy seemed able to arrange with governments as normal people struggled with tough austerity policies.

The revelations were doubly embarrassing since they showed many of the tax deals were cut during the premiership of Jean-Claude Juncker, now head of the European Commission, the executive of the 28-nation EU.

Deltour and Halet, who have already appealed against their sentences, faced a maximum penalty of ten years on charges which included stealing documents, revealing business secrets and violation of professional secrets.

Luxleaks whistleblowers found guilty, given suspended sentence

Two whistleblowers have been found guilty in the so-called Luxleaks tax scandal, which put Jean-Claude Junker under pressure on his first weeks as president of the European Commission.

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The documents were used for a 2012 report by Perrin on French public television and then exploded onto the world stage two years later with the huge Luxleaks release of all 30,000 pages into the public domain.

Defence lawyers argued that all three should have been acquitted since they acted in the public good with the sentencing raising concerns about the future role of whistleblowers in Europe.

MEPs came in for heavy criticism when they adopted the European Trade Secrets Directive in April, over what many see as the inadequate protection the text offers whistleblowers.

France to strengthen whistleblower protection in economic reform bill

After the EU’s fierce debate whistleblower protection, France has proposed a much tighter set of safeguards in its draft bill for transparency and the modernisation of the economy. EurActiv France reports.

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Commission President Jean-Claude Juncker, who took the office in January 2015, was accused of being the cause or at least the protector of the Luxleaks tax scheme, in his former capacity of Prime Minister of Luxembourg.

He however survived a motion of censure in Parliament thanks to his comfortable majority and made a priority for his presidency to fight tax avoidance which depletes the EU countries of €70 billion annually.

The Commission wants to close loopholes and make sure multinationals should pay their taxes in the country in which they operate.

The so-called Tax Transparency Package will force the EU’s 28 member states to share details of any tax deals agreed to with some of the world’s biggest multinationals, in information sent automatically every three months. The plan aims to end the secrecy that allowed member states to often compete against each other to attract business and investment.

Vestager: We should thank the Luxleaks whistleblowers

EXCLUSIVE / Margrethe Vestager, the EU’s powerful competition commissioner, believes “everyone should thank the whistleblowers and investigative journalists” who uncovered the so-called ‘Luxleaks’ scandal and says she is “personally in favour” of country-by-country reporting on corporate taxation.

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Background

More than 300 companies, including PepsiCo Inc, AIG Inc and Deutsche Bank AG, secured secret deals from Luxembourg to slash their tax bills, the International Consortium of Investigative Journalists (ICIJ) reported on 5 November 2014, quoting leaked documents.

The companies appear to have channelled hundreds of billions of dollars through Luxembourg and saved billions of dollars in taxes, the group of investigative journalists said, based on a review of nearly 28,000 pages of confidential documents.

Commission President Jean-Claude Juncker, who took the office in January 2015, was accused of being the cause or at least the protector of the scheme, in his former capacity of Prime Minister of Luxembourg.

He however survived a motion of censure in Parliament thanks to his comfortable majority and made a priority for his presidency to fight tax avoidance which depletes the EU countries of €70 billion annually.

The Commission wants to close loopholes and make sure multinationals should pay their taxes in the country in which they operate.

The so-called Tax Transparency Package will force the EU's 28 member states to share details of any tax deals agreed to with some of the world's biggest multinationals, in information sent automatically every three months. The plan aims to end the secrecy that allowed member states to often compete against each other to attract business and investment.

Further Reading

Virginie Rozière: 'We need whistleblowers'

The conviction of the three whistleblowers that broke the LuxLeaks scandal should serve as a trigger for the EU to establish a European system of whistleblower protection, Virginie Rozière told EurActiv France.

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