Luxembourg added 172 new tax deals in year after LuxLeaks

As a second trial against a reporter and two whistleblowers nears, a new report claims the number of “sweetheart” tax deals has grown.

Luxembourg Leaks

Luxembourg reportedly made more than 170 new secret tax agreements or “sweetheart deals” with multinational companies in the 12 months after the Lux Leaks scandal, according to a new study published on Wednesday.

The new report by Eurodad, a coalition of advocacy groups in Europe, comes just days ahead of a second trial of two whistleblowers and a journalist in Luxembourg over the leak of tax documents.

Eurodad’s study of European Commission tax data found that across the European Union the number of secret “sweetheart deals” – agreements that often allow multinational corporations to dramatically reduce tax bills – grew from 547 in 2013, to 972 in 2014, and 1444 by the end of 2015.

Belgium and Luxembourg were singled out by the report, which found that the number of “sweetheart deals” increased in these two countries by 248 percent and 50 percent respectively from 2014 to 2015, despite the international scrutiny of these hidden tax agreements generated by ICIJ’s Luxembourg Leaks investigation.

According to the study, Luxembourg signed 172 new advance pricing agreements with multinational corporations in 2015.

The report comes just days before a second trial of investigative journalist Edouard Perrin and whistleblowers Antoine Deltour and Raphael Halet over the leak and publication of secret tax documents. These documents, which were used as part of the LuxLeaks investigation, revealed that Luxembourg had signed hundreds of tax agreements with multinational corporations that allowed some of them to pay effective tax rates of less than 1 percent on profits shuffled into Luxembourg.

Prosecutors are appealing the verdicts of the first trial, in which Perrin was acquitted while Deltour and Halet were convicted, handed suspended prison sentences and ordered to pay fines. The case is due to come before a Luxembourg court on Monday.

ICIJ deputy director Marina Walker Guevara used her keynote speech at the Open Government Partnership summit in Paris on Wednesday to urge Luxembourg to defend press freedom rather than prosecute reporters and their sources.

“ICIJ considers this trial an affront to journalism and freedom of expression,” she told the summit, which included Luxembourg Prime Minister Xavier Bettel in the audience.

“Luxembourg is joining the [Open Government Partnership] today. It would be fully appropriate if protection of whistleblowers and journalists will be part of their commitment.”

Press freedom advocates are expected to watch the appeal case closely, while supporters of the trio have planned to rally outside the Luxembourg courthouse as the trial begins next week.

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