Tax avoidance

Commission closes LuxLetters investigation

Luxembourg’s finance ministry Library photo: Matic Zorman / Maison Moderne

Luxembourg’s finance ministry Library photo: Matic Zorman / Maison Moderne

The European Commission has closed an investigation into the LuxLetters allegations, finance minister Pierre Gramegna (DP) said on Thursday.

A consortium of journalists in July had revealed that multinational companies in Luxembourg use a tax loophole to underpay contributions and circumvent EU transparency rules.

“The claims made are false and entirely unsubstantiated,” the Luxembourg government had said in response.

And it would appear that the European Commission agrees, as Gramegna on Thursday revealed that the EU executive had closed an investigation into the matter. “It reached the conclusion that there is nothing,” he told lawmakers during a plenary session in parliament.

The European Parliament had pushed for the probe and Gramegna declined to speak with members of a European Parliament tax committee about LuxLetters. The finance ministry said it had supplied all necessary information in writing.

The revelations had claimed that companies can send an information letter to tax authorities with details on how much they intend to pay in taxes. If authorities don’t respond to the letter, it acts an agreement.

“There is no such thing in Luxembourg as an informal or oral confirmation by tax authorities of a taxpayer's tax position based on letters written either by taxpayers themselves or their tax advisors,” the government said in its July statement. “Any such correspondence with the tax administration would be purely unilateral, and can in no way be considered as binding on the tax administration or even be interpreted as confirmation of a given tax situation.”