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Reporter's diary

Day in a Fiscal Paradise: Chasing Letterbox Leads in Luxembourg

ICIJ's German partners take a day trip to Luxembourg, looking for answers. But all they find are mailboxes and more questions.


Welcome to the land of hidden billions, where anyone looking for more than a mailbox gets an absurd theater

The intercom in this Luxembourg City office park crackles a bit as a spokesman for the German energy giant Eon takes a breath. He’s in a really bad mood after being asked just a few questions about the company’s billion-dollar transactions that shifted profits out of Germany. He says he can’t say anything on the topic, and refuses to allow anyone inside the office.

“Forget it,” he says, “there’s no way you’re coming up.”

“No way.”

Then—just silence. Until he asks, “What do you want?”

When your nose has been stuck in tax documents for weeks, a couple questions come to mind.

The secret documents which make up the Luxembourg Leaks hint at the fact that there might not be much behind these corporations’ offices in Luxembourg other than a mailbox. 

Yet, according to the Luxembourg Leaks, there are a number of multinational corporations, like Deutsche Bank, Ikea, and German health giant Fresenius, storing nontaxed German profits here, hidden behind “letterbox companies” that give no clue what business, if any, is conducted by their Luxembourg operations.

We flew to Luxembourg at the crack of dawn one October morning, with a long list of addresses. From the airport it’s a quick 15-minute drive downtown. We had a list of 37 major banks to visit in the Grand Duchy, which is also home to offices for some of the world’s biggest brand names instead, like Apple offshoot iTunes, Amazon, and Kellogg’s. 

First up was energy giant Eon (which has facilities in Europe, Russia and North America and generated more than €122 billion in sales in 2013). The address – Boulevard Prince Henri 17 – was just beyond the old town, and was purportedly the office of DutchDelta Finance Sàrl, a wholly owned Eon subsidiary where billions of dollars were sent, according to the Luxembourg Leaks documents. Some $2.6 billion in loans and $14 billion in dividends. It even recorded some $24 billion in debt at one point. All that for a company which, according to its balance sheets, has zero employees. 

An Eon spokesperson denied that DutchDelta had no employees, but could not explain the zero on the company’s balance sheet.

Most spokespeople declined to provide any details and thanked us for our understanding. But we didn’t have any more understanding than before.

The address of the Eon subsidiary led to a narrow, glamourless six-story building. There was a sign that read ‘DutchDelta Finance Sàrl, fourth floor,’ and a mailbox with homemade stickers bearing the names of eight companies on the fourth and fifth floors. Welcome to the land of the letterbox company.

We rang the buzzer, but once we established that we were journalists, the conversation turned to a charade: 

What do you do here for Eon?

“I have nothing to say about that.”

What is Dutchdelta’s function?

“I have nothing to say about that.”

Who can say something about it?

“No one who’s here now.”

We asked whether we could come up and wait for someone who could answer some questions. The answer: call the German office. 

The German office gave the standard response we had come to expect during this investigation: “Eon fulfills all tax obligations in and out of the country.”

It was a common pattern. Most spokespeople we contacted declined to provide any details and thanked us for our understanding. But we didn’t have any more understanding than before. All we understood was that, from the evidence in the documents, companies like Eon, Ikea, Amazon and more seemed to have moved money from real operations in other countries to letterbox companies here in Luxembourg. And some companies appeared to not even have paid a full 1 percent in taxes on the profits.

Left standing, hopeless, in front of the intercom, we struck up a conversation with a neighbor who sold stamps on the ground level of the building. What did she know about the companies in that building? All we got was a shake of the head.

“You know,” she says, “the company names on those letterboxes change constantly, but the people who work here are always the same.”

It was typical of the sort of financial theater common in Luxembourg. The corporations act as though their letterbox companies are real, functioning operations. The Luxembourg tax authorities act as though we should believe them. And the European Union names the long-standing patron of this letterbox system and former Luxembourg finance and prime minister as its Commission President: Jean-Claude Juncker. It was during his time as the country’s Prime Minister that Luxembourg became what it is today: the second largest financial center for the world. 

And a giant mailbox rental.

We drove next to Avenue de la Gare 41 where the address for Luxembourg office of the German health care giant Fresenius was listed. On the building there was no sign or doorbell for the publicly-traded, billion-dollar German company, apart from a slot on the letterbox, which it shared with five other companies. It was here that Fresenius registered Fresenius Finance I, which would lend hundreds of millions of euros to other parts of the company. The interest paid on the loans was tax-deductible in Germany and subject to only very, very low taxes in Luxembourg.

But a billion dollar-company without a doorbell? We checked the address again on the online Luxembourg company register, and found the company was gone. Fresenius Finance I was liquidated on October 6, 2014—in the middle of our reporting. 

Fresenius had a similar financial shuffle going on through a total of eight such subsidiaries: FMC Finance VIII had some €750 million (US$930 million) loaned out to Fresenius in 2013—which gathered some healthy interest. It’s a classic model of profit shifting. A Fresenius spokesman told us the company gained no tax advantage. 

Either way, that particular subsidiary had been dissolved. So we ventured further. First on foot, to get a better view of the accumulation of mailboxes and company signs. Again and again we came across buildings with 50, 100, sometimes 200 company names on the door. Take, for example, Avenue J.F. Kennedy 46A, where 1300 companies are listed. At Avenue Charles de Gaulle 2, some 1,450 companies are listed.

A cluster of companies on the 'Cloche d'Or' area of Luxembourg
A cluster of companies on the ‘Cloche d’Or’ area of Luxembourg

You don’t have to be a mathematician to know that these companies don’t actually have offices here. And legally they don’t have to—that’s often why they’re here in Luxembourg to begin with. A company only has to show a little bit of money, a bank account, an address and a telephone number, and, according to tax law, show that “key decisions” are made in Luxembourg.

The biggest collection of companies to be found here is at Rue Guillaume Kroll 5. Here more than 1,600 companies are listed, including some connected to Deutsche Bank that play major roles in the bank’s real estate division. We went to the address and searched for a letterbox, bell or any sign of an individual company, but it was in vain. In reality, only one company was stationed there: a corporate services company by the name of Alter Domus. Its services were also offered in Cyprus, Malta, Ireland, Jersey, Guernsey, Mauritius, Hong Kong and Singapore – some of the world’s leading tax havens. 

We explained to the receptionist at Alter Domus building that we were looking to talk to someone from the Deutsche Bank subsidiaries listed at that address. She stared back blankly.

“Press pass?” she asked.

She wrote down our names and told us unfortunately no one was around to answer questions. We could send an email, or come back another time when the Alter Domus spokesperson was there. 

Later a spokesperson from Deutsch Bank explained that the bank didn’t own any letterbox companies, rather it had “places of business” with “business premises and staff.” But the company could offer “no public access.”

At another Deutsche Bank subsidiary’s “place of business” we found a concierge who had never heard of the companies registered there or even of Deutsche Bank. 

We swung by Ikea and were referred to a spokesperson in Belgium. We received more non-responses at the registered addresses for a German pension fund for doctors, and at an address where a Canadian pension fund funneled hundreds of millions of dollars. 

As evening fell in Luxembourg City’s commercial zone, we could see construction sites light up. Cranes hovered over a spot where another office would go up – perhaps to make space for more multinationals to open Luxembourg subsidiaries.

We finished the night in front of the brand new, ultra-modern offices of the audit firm at the center of the Luxembourg Leaks story: PricewaterhouseCoopers (PwC). Despite the shiny new building, the firm gave the same old response as every other company tried through the day: a statement issued by the company declared that PwC has always followed the law in the advice it gave to clients.

Republished with kind permission from Translated and edited for English by Candice Novak. 


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