So far, Luxembourg has been implicated in tax avoidance schemes by just a handful of companies and Shakira, the famous singer, according to the Süddeutsche Zeitung, which broke the news.
While the big stories focus on wealthy individuals and companies, rather than countries, it is nevertheless worthwhile to have a look at how, and to what extent, Luxembourg has been mentioned so far.
The Tageblatt wrote on 7 November, based on information from El Confidencial and Süddeutsche Zeitung, that Shakira’s companies involve a company in Luxembourg which manages her musical and intellectual property.
She owns the company Tournesol Limited, which owns the rights to her music, intellectual property and brands. Its capital amounts to €3,020,001, but also has capital reserves of €31,637,050. Tournesol Limited owns the Luxembourg-based company ACE Entertainment, due to the “low taxes”.
Until 2016, Shakira was officially the sole owner of a Maltese company. A third company, based in the Netherlands, is also involved, as the money is being shifted from one company to the other, avoiding millions in tax payments.
Patrick Hansen, CEO of Luxaviation, told 100,7 that the parent company on the Isle of Man was not founded by Luxaviation, but by the owner of an airplane which Luxaviation operated.
To operate this airplane, an Embraer Legacy 600, an outfit called Luxembourg Yep Aviation was created in 2008 by Russian businessman Nikolay Bogatchev, together with Patrick Hansen.
A few years later, to pay off some outstanding bills, Luxaviation bought the shares of Luxlegacy Ventures Limited on the Isle of Man. Last year, that plane was sold. The company had no use anymore, and to save money, it was liquidated on 31 July 2017, the Luxaviation CEO explained to 100,7.
The public radio station noted that a month before that, a law came into effect which stated that the names of the real owners of companies must be published, not just the administrators. Hansen said that the liquidation of that company had nothing to do with that.
Editor’s note: The activity described in the Paradise Papers has not been ruled illegal.