Leaked Documents Expose Global Companies’ Secret Tax Deals in Luxembourg

http://www.icij.org/project/luxembourg-leaks/leaked-documents-expose-global-companies-secret-tax-deals-luxembourg

by flexie • 12 years ago

55 72 12 years ago

flexie• 12 years ago

This is the original article from the International Consortium of Investigative Journalism, which uncovered the secret tax deals.

JetSpiegel2• 12 years ago

This is common knowledge for ages, good to see it properly proven.

However, it seems there's something else at play here when you realize Juncker has just started his term as European Comission president, and the TTIP deals going on. It seems fishy that this only appears now and with such fanfare.

nomailing• 12 years ago

You are mixing up two persons: Jean-Claude Juncker is starting his term as the European Comission president. Jean-Claude Trichet was president of the ECB.

JetSpiegel2• 12 years ago

Yes of course, that's what I meant. I edited the original post.

vixen99• 12 years ago

Common knowledge that Jean-Claude Juncker has just begun his term as European Commission President.

return05• 12 years ago

Well, now is the best time then. It's good to see on what ground the modern european leaders are built.

Dont forget that germany officially punished Cyprus for doing similar things.

And lets not forget he is not an elected President

gutnor• 12 years ago

European Union is a union in a UN sense rather than USA sense. There is no European value or identity to defend, so neither Cyprus nor Luxembourg is doing anything wrong really, just playing their card and do the best for their citizen first and foremost.

Cyprus found itself in a hole with no good geopolitical bargaining chips so they got screwed. All the argumentation that followed was to make the pill easier to swallow for other EU citizen. Like "Look we are screwing them up and it is scary but they are bad guys, so don't worry, that won't happen here."

Nobody is unhappy with Luxembourg right now, so nothing will happen. At best politician in other countries will moan and complain about the various companies involved and maybe build up public outrage to justify extra local taxation.

simonebrunozzi• 12 years ago

Help! On another, similar article, they have used one of my pictures, with me and my wife in it - http://www.euractiv.com/sections/competition/luxembourg-tax-...

The only reason I think is because it was taken in front of the Amazon office in Luxembourg.

Any suggestion on how to ask for removal, and possibly compensation for damage?

oskarth• 12 years ago

Tweet them: https://twitter.com/euractiv and https://twitter.com/DominiqueOstyn

EDIT: Interesting that people are downvoting a simple "talk to them, here's how" comment. Before going all litigious and looking up the specifics of fair use for various licenses, what exactly is wrong with asking them nicely?

vidarh7• 12 years ago

Before going all litigious and looking up the specifics of fair use for various licenses, what exactly is wrong with asking them nicely?

I agree. Most likely they've just done a quick search and don't particularly care what photo they used.

jgrahamc3• 12 years ago

The image you are talking about appears to be: http://www.flickr.com/photos/25012939@N03/4196459317 on that image it says: "Some rights reserved" and when you click through you are taken to https://creativecommons.org/licenses/by-sa/2.0/

So, it appears you have the photograph available on the Attribution-ShareAlike 2.0 Generic Creative Commons license. The original story using your picture is attributing it to you. So it appears to me that they've done nothing wrong.

If you want to ask them not to use it then there's a contact page: http://www.euractiv.com/contact

brazzy3• 12 years ago

Actually, wouldn't the story have to be licensed under the same license to satisfy the terms? Is it?

vidarh7• 12 years ago

It's not necessarily that simple.

The European Convention on Human Rights, Article 8 grants a right to privacy.

It is not clear whether or not the right under copyright law to copy an image is always sufficient to give you a right to publish the image. That depends on jurisdiction.

In the UK, for example, it does not, as a result of the way ECHR has been implemented in local law through the Human Rights Act 1998, though courts have to weigh Article 8 against Article 10 (freedom of expression) so it's not clear cut.

EDIT: The EU Data Protection Directive, and it's member state implementations (so in the UK the Data Protection Act, for example) also comes into play.

Consider e.g. that Google Street View was met with threats of lawsuits in many European countries until the blurred out faces - while Google had the right to take the pictures, and have the copyright to the images, privacy laws and human right laws in many European countries did not give them automatic right to publish those images.

brazzy3• 12 years ago

What license did you choose for your photographs on Flickr? If you chose a Creative Commons Attribution license without further restrictions, you don't really have any grounds to complain, though of course you can still ask nicely to have it removed.

If they are actually violating the license terms, the best idea is still to first ask nicely. If they don't comply, you can sue.

"compensation for damage" you can pretty much forget about unless you can prove actual damages.

spacefight• 12 years ago

Well, it looks someone has covered the CC by-sa license already so it sure looks fine to use, they're missing citation of the license though.

dghf• 12 years ago

Also missing "a copyright notice, ... a disclaimer notice, and a link to the material."

psykovsky• 12 years ago

Streisand effect, do you know about it?

Torgo• 12 years ago

Creative Commons license covers copyright, but doesn't cover model release. You may have something actionable there.

Cthulhu_• 12 years ago

I for one hope the countries in question will patch the tax holes, but not as much as to make the companies evade to other countries. The national economies would be vastly improved, at the expense of shareholder dividend.

mike_hearn8• 12 years ago

Well, this problem is fundamental to trying to tax entities that don't have any specific location. Taxing people is quite simple because you can't split a person up - just count the days they reside in a particular tax jurisdiction and once it goes over a certain number of days per year, you say "you are resident here, benefiting from our services, so pay us tax" and as long as that number of days per year is reasonable, it all sort of works. And it feels fair(ish) because people can vote, so they get to control what their tax money is spent on, modulo lots of handwaving about how we all use insufficiently good voting systems.

A company though, can be split up and spread around, and many modern companies operate almost everywhere and yet nowhere in particular. That's very true of internet companies that don't need any local presence to operate in a country. Additionally they are seen as ideal tax targets by politicians because they can't vote, and are often perceived as "foreign" even if the reality is rather more complex, and people perceive tax on corporations to be free as the price increases that it (theoretically) results in can't be distinguished from general price rises due to inflation.

So we end up in a messy situation that suits nobody. Big companies exploit their trans-national nature to try and get taxed in places that don't really need the money like Luxembourg. Big countries try and exploit their size to extract as much money as possible from the evil foreign capitalists, regardless of where they may actually be based. Companies get taxed without representation and we just sort of ignore this because we feel they can already buy too much influence with politicians anyway, even without them actually getting to vote on anything.

And in the end, governments still don't have enough money.

Economists who study this problem sometimes conclude that the best rate to set corporation tax at is zero; they argue that "dead weight costs" of corporation taxes are very high compared to most taxes and besides, ultimately the costs get passed on to consumers. Of course this ignores the fact that business is global but taxation and voting is still very local. What might make theoretical sense in a textbook rarely seems sensible to the man on the street.

tomp6• 12 years ago

Companies get taxed without representation

Equating companies with actual people seems to be a uniquely american view (also, complaining about "double taxation" of corporate profits). Personally, I don't think those who pay the tax are those who "deserve" to vote or be represented by politicians/laws. In my view, companies (and their investors) have the privilege of being able to profit by providing services to citizens, and they should pay (be taxed) for this privilege.

prawn• 12 years ago

Anyone got any ideas on how governments could effectively clamp down on this?

In Australia, IKEA paid 1%* tax over the last 12 years, even as sales surged 500%:

http://www.theguardian.com/world/2014/nov/06/luxembourg-tax-...

(The Guardian article has since removed the 1% reference, though it was in there when I first read the article.)

lumberjack• 12 years ago

I would understand how small countries would have a hard time dealing with big corps but could not a big country just tell them to close shop and go elsewhere if it deems them to be evading taxes? Probably some kind of FTA forbids his but in principle it should work, shouldn't it? After all countries are supposed to be sovereign entities.

xgbi• 12 years ago

Problem is, in regard of European laws, you can't tell them to fuck off if they are not doing anything unlawful. And here it is the case, they exploit a hole in the law which allows to create subsidiaries in Luxembourg through which the French/German/whatever company is paying the products it sells.

higherpurpose2• 12 years ago

I'm not saying I condone it (I especially don't like the part of routing all of your profits made in other countries through a single country with lower taxes, and don't think it's fair) - but maybe there's an argument to be made about low income tax for corporations, if that actually leads to much higher sales (on which consumers pay VAT, so tax money still goes to the government)?

ams6110• 12 years ago

Lower tax rates, and simpler tax rules, often lead to higher revenues. Make it easy to comply with the rules, set reasonable rates, and companies may find it easier to deal with than setting up shell offices in another country and employing teams of accountants and lawyers and bankers to shuffle the money around.

pfortuny• 12 years ago

The quesution is.... and what about small businesses? Why should they be treated differently than corps?

lsaferite2• 12 years ago

Or, no income tax at all and just a sales/use tax across the board.

return05• 12 years ago

First you need to communicate this to the public and show that the problem is only going to get worse, as globalization allows more and more elaborate schemes like this. This will justify lowering corporate taxes, or establishing official authorities that will negotiate special tax deals with companies. In short, what luxembourg is doing, all big countries will be doing soon as well.

Shivetya• 12 years ago

Tax the sale of the item to the end buyer and do away with all corporate taxes? That would be easiest method but psychologically it may cause angst amount the populace when they realize just how much tax they pay on everyday purchases.

going back to other stories, if and when space tourism takes off, whats to stop someone from relocating to orbit and avoiding excessive and at times abusive taxation?

lsaferite2• 12 years ago

I personally like the idea of dropping income taxes and switching to just sales/use tax. Compliance is simplified, tax codes are simplified, and tax avoidance is reduced. There are many practical aspect that would need to be resolved, like how do you apply this to imports and such, but those are solvable problems.

jdimov• 12 years ago

There is only one correct solution - abolish all taxation based on profits.

return05• 12 years ago

Love this. Would love to see similar stuff from Switzerland, Singapore, Channel islands, UAE etc.

firstaccount2• 12 years ago

link to the docs? Probably an interesting read.

firstaccount2• 12 years ago

https://s3.amazonaws.com/iw-files/apps/2014/12/luxleaks/sear...

justcommenting• 12 years ago

To the extent these types of activities are legal, I still hope we'll see the media and customers increasingly--and visibly--questioning corporate/managerial patriotism in situations like this.

smoyer• 12 years ago

Does anyone else read these articles and feel a tinge of jealousy? I'm hoping that someday one of my businesses will generate the kind of money that would make tax-hiding worthwhile.

As an aside, it's kind of nice to see the government's over-complicated tax code used against them.

jayvanguard• 12 years ago

I can totally see some CFO getting fired over this. For being NOT on the list.

Leaked Documents Expose Global Companies’ Secret Tax Deals in Luxembourg

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