Tax avoidance in Luxemburg and the Recovery and Resilience Facility

Subject: Tax avoidance in Luxemburg and the Recovery and Resilience Facility

On 4 May, the Guardian revealed that Amazon had paid no corporate income tax in Europe. This despite announcing record global profits of USD 8.1bn for Q1 in 2021 and European sales of EUR 44bn. Amazon avoided paying taxes due to an arrangement in Luxembourg and is not alone in benefiting from Luxembourg’s tax system. The Tax Justice Network has calculated that by enabling corporate tax abuse, Luxembourg is inflicting a tax loss on other countries of over USD 9bn a year.

On 30 April Luxembourg submitted its recovery and resilience plan, requesting EUR 93 million in grants. Commissioner Gentiloni has repeatedly outlined, including during a hearing with Parliament’s Subcommittee on Tax Matters (FISC) on 24 September and in plenary on 10 May, that aggressive tax planning should be addressed in the plans of countries that have received country-specific recommendations on this topic, including Luxembourg.

1. Can the Commission confirm that it remains committed to only approving the national plans of countries issued with country-specific recommendations on aggressive tax planning if those recommendations have been adequately addressed?

2. Does it still take the view that Luxembourg facilitates aggressive tax planning?

3. Does it believe it is fair that Luxembourg can request EU funding while denying other EU Member States of much-needed corporate income tax?

Answer given by Mr Gentiloni on behalf of the European Commission

(25 June 2021)

The fight against tax abuse is of utmost importance for the Commission, which monitors the Member States’ progress in addressing the country-specific recommendations on the fight against aggressive tax planning made to them in the framework of the European Semester.

Early 2021, Luxembourg passed a law to deny deductibility for taxpayers making interest and royalty payments to jurisdictions on the EU list of non-cooperative jurisdictions for tax purposes. The government has announced that an impact assessment of this measure will be carried out in 2022, in view of enlarging its scope of application.

The regulation establishing the Recovery and Resilience Facility (1) provides that Member States shall set out, in their national recovery and resilience plans, how the plan contributes to effectively address all or a significant subset of challenges identified in the relevant country-specific recommendations. This is one of the criteria the Commission will take into account as it assesses Luxembourg’s plan.

⋅1∙ Regulation (EU) 2021/241. | | ( | | )