There is a clear incentive for corporates to be located in jurisdictions which have a favourable tax treatment. In the case of Luxembourg, profits which move into the Duchy can potentially be taxed at rates substantially lower than other EU countries and in some cases as low as 1%. The move is for the EU to close down internal tax havens which have the effect of relieving EU countries of tax receipts. The EU investigation is also extending to Ireland and Malta. Could we see some EU anti avoidance directive shortly?
The European Commission is to press Luxembourg over new allegations it offered tax breaks for more than 300 global companies, an EU spokesman says. But Commission chief and ex-Luxembourg PM Jean-Claude Juncker will not handle the probe, Margaritis Schinas said. Pepsi and Ikea are among those accused of making deals with Luxembourg to save billions in tax in other countries.