German Finance Minister Wolfgang Schaeuble sharply criticised leading German companies for reducing taxes by creating subsidiaries in Luxembourg, where tax rates are lower, according to Focus news magazine. "The list of those that have institutions in Luxembourg with the aim of saving taxes is a Who's Who of the German economy," Schaeuble was quoted as saying in an interview published on Saturday.
He added that other European countries were also offering tax avoidance schemes. "This is a form of competition that is not right," he said, adding that the participating companies were causing an enormous damage to German society. The minister did not name a particular firm. "If certain groups do not participate in financing the public budgets in an adequate manner, something is going wrong," said Schaeuble, who is a close ally of Chancellor Angela Merkel.
For the European Union to adopt common taxation rules such as minimum rates, the 28 member countries must reach unanimous agreement, and so there has been only slow progress in negotiations, he added. The minister sent proposals to the European commissioner for economic affairs last week, urging him to act quickly to improve the exchange of information on tax deals with companies, a move linked to allegations against Luxembourg.
European Commission President Jean-Claude Juncker, a former Luxembourg prime minister, has taken responsibility for the country's tax practices. He has advocated enhancing the automatic exchange of information to fight tax avoidance. The European Commission is investigating several tax deals offered by Luxembourg to large multinational corporations to see whether they break EU laws on state aid. Ireland and the Netherlands are also under investigation. Juncker has said the investigation will be conducted by Competition Commissioner Margrethe Vestager and that he will not discuss the case with her to avoid being seen as trying to influence the outcome.
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