The flood of stories began at 9pm on Wednesday, when leaked PricewaterhouseCoopers documents revealed some of the arrangements that household-name companies have made to avoid tax around the world. Among them was Glanbia, the Irish food multinational, which had subsidiaries in Luxembourg with no staff but assets of €1 billion. And Dyson, the British vacuum-cleaner manufacturer, had £300 million (€385 million) in loan arrangements that reduced its UK tax bill. The 28,000 pages of documents were released by the International Consortium of Investigative Journalists, in Washington DC, which had been working with media companies around the world, including The Irish Times.
In France, Le Monde wrote about Luxembourg's role in Ikea's global tax structures. In Brazil, Folha de Sao Paulo wrote about the way three banks there used Luxembourg to avoid about $90 million in tax between them.
The Australian Financial Review reported that leaked PwC tax files from Luxembourg were to be scrutinised by the Australian tax authorities. In Canada, CBC News reported on the way a federal agency that invests civil servants' pensions had set up a complex scheme involving Luxembourg and aimed at avoiding foreign taxes.
The Irish Times also reported on a Luxembourg tax agreement put in place for eight members of the Sisk family who wanted to invest €14.4 million in their Irish business group, and about a one-man branch office set up in Shannon by the richest family in Belgium, the De Spoelberchs. Assets worth €1.4 billion switched tax residency from Luxembourg to Ireland as a result, to the benefit of the De Spoelberchs, who have shares in the firm that owns the Becks, Budweiser and Stella Artois beer brands.
The Irish Times also carried reports on one-man Irish branch arrangements involving billions of euro and the UK media groups UBM and Northern & Shell.
The pharmaceutical group Shire, the energy group E.ON, and investment funds with interests in TV3 and Daft.ie were also found to have had advanced tax agreements negotiated on their behalf by PwC Luxembourg. All of the structures involved the establishment of associated Irish companies or branches.
The reports collectively drew attention to the way Luxembourg attracts multinational tax planning. The Organisation for Economic Co-operation and Development, in a recent report on “base erosion and profit shifting” (Beps) – essentially, moving profits across borders, to countries where tax is lower than in the country where the profit is made – noted that $1.98 trillion (€1.6 trillion) was invested in Luxembourg companies called special-purpose entities in 2011.
These special-purpose-entity companies tend to have few or no employees, and mostly lend the money they receive on to other group companies outside Luxembourg, creating tax advantages outside the country as they do so, and leaving behind small amounts that Luxembourg can tax.
