EU starts legal actions against Luxembourg over money laundering, tax avoidance
The European Commission launched legal actions on Thursday
against Luxembourg over laws to prevent money laundering and tax avoidance, it
said in a statement.
New EU rules to step up scrutiny of financial assets
controlled by politicians and companies’ owners were approved in May 2018 in an
effort to clamp down on money laundering, but Luxembourg is among EU states
that are not yet fully applying them, the Commission said.
In a separate legal action, also launched on Thursday, the
EU executive arm urged the Grand Duchy to change a law that allows companies to
cut their tax burden beyond what is permitted under EU rules, since it leads to
reduced tax revenues in other EU states.
EU legal actions could lead to fines if member states do not
apply common legislation.
Luxembourg, a country of 600,000 people, hosts as much
foreign direct investment (FDI) as the United States and much more than China,
data cited in a International Monetary Fund report last year shows, estimating
FDI in the Grand Duchy is worth $4 trillion, a 10th of the global figure.
A large part of that money is parked in shell companies set
up by multinationals, with no real business activities in Luxembourg, IMF
researches said, adding that favourable tax treatment is one of the main
reasons for creating these financial vehicles.
The Commission said Luxembourg’s rules allowed firms
“unlimited deductibility of interest” from tax bills, which is not in line with
EU rules. A similar legal action was launched on Thursday against the
government of Portugal.
On money laundering, Luxembourg is accused of not having
adopted new EU rules which became operational this year in the 27-nation bloc.
More than half of the EU member states face similar legal challenges.
Luxembourg’s delay in applying a previous revision of
money-laundering rules approved in 2015 forced the Commission to take a legal
case to the EU top court in 2018, the last stage of the EU infringement
procedure against states that do not respect common legislation.
After that intervention, Luxembourg adopted new legislation
that requires disclosure of the owners of companies and trusts, stronger powers
against money laundering and stricter checks on banks, lawyers and accountants.
Comments
Post a Comment