Luxembourg is a very small country and Jean-Claude Juncker served it as prime minister for 19 years. During his tenure he also held the post of minister for the treasury for the last 4.5 years.
Despite his most prominent role, he has told investigating MEPS that he had no role in creating Luxembourg’s controversial tax regime.
The corporate tax system, while legal, is believed to have helped multinational companies registered there to save billions in tax. The arrangement let companies shift tax liabilities to Luxembourg where they could be taxed at favourable rates.
A series of leaked documents, dubbed LuxLeaks, illustrated the tax deals struck between Luxembourg and some 340 major international firms.
MEPs are investigating the deals, concerned that the deals denied tax revenue to other member states. The examination is part of a wider inquiry to see if tax policies within EU states broke rules about state aid.
It is the European Commission which is running the investigation and Mr Juncker is now the president of it, having succeeded José Manuel Barroso.
In his denial of any role in the tax scheme, he said he “never, never, never” instructed officials “to set in place any tax system”.
“I never gave instructions to Luxembourg tax authorities,” he told the hearing of MEPs. “I did not set up any system in Luxembourg in order to ensure there was avoidance in order to discriminate against other member states. I have always been against it, this idea. You exaggerate my political talent in that respect.”
“In no way have I been in support of a tax administration in Luxembourg that would be of negative impact to other European countries.”
“Luxembourg is not an exception in this area – the legislative framework was drawn up by the finance ministry and the tax authorities who draw up the specific rules that are applied. I haven’t taken a position on individual tax dossiers because that is not my role. The Luxembourg tax authorities are very allergic to the idea of ministerial interference.”
Mr Juncker was Prime Minister of the country of 500,000 people from 1995 to 2013, as well as finance minister from 1989 to 2009.
Steel production dominated Luxembourg’s industry until the 1960s when it diversified into chemicals and other manufacturing. The financial sector has been promoted over the past several decades and the country gained a reputation as one of the world’s major tax havens.
Since becoming EC president, Mr Juncker has called for changes to tax systems so that taxes are paid where profits are created.
The Wall Street Journal appears to have uncovered a speech made by Mr Juncker in 2003 in which he is reported to have said: “That AOL and Amazon come to Luxembourg, that with and through them we get a new perspective to the future, is the result of a correct tax policy, of a correct infrastructure policy, but also the result of tough negotiations with the top management of the groups. They took place in America, they took place here at home, and I did not lead them alone.”
