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Less than 6 percent in taxes thanks to Luxembourg

Not only Switzerland is in the tax competition internationally, with strong observation. Luxembourg was some 5 years ago in the focus. Research by the International network of investigative journalists (ICIJ) had placed in the Lux-Leaks open, as large companies such as Amazon or Ikea in Luxembourg, had a very advantageous tax deals.

Much has changed since then, apparently. According to a new, not-yet-released study by the Tax Justice Network Luxembourg is still one of the Top Ten among the sites for companies that want to avoid taxes. "Luxembourg is one of the most aggressive group-tax havens of the world," said Markus Meinzer of the Tax Justice Network.

Popular location

research by the "süddeutsche Zeitung" with the broadcasters NDR and WDR show that Luxembourg continues to be used also in Switzerland, prominent personalities and companies as a location for tax optimization.

For example, dairy king, Theo Müller, who lives in Switzerland. In 2011, Müller is based in Luxembourg, the Theo Müller S. e. C. p. to include as a Holding company of the company Empire, today more than 100 companies. His group of companies has been taxed in 2017 with an effective rate of just 5.78 per cent, in the previous year, there were at 5.64 per cent. The annual accounts were able to view the Reporter of SZ, NDR and WDR in accordance with the Luxembourg company register.

EUR 5.9 billion – responded specifically to the questions, but informed, to meet their tax obligations in full.

"This stock options can lead to a deduction of the eligible expenditure in accordance with Luxembourg tax law."Denis-Emmanuel Philippe, a tax expert

The tax benefits that are prominent to make use of in the Grand-Duchy of, although, in principle, legal. However, such a tax optimizations are the subject of criticism in the home countries, such as Germany, where the tax is down load by means of profit shifting. But anyway, the least confirm to go because of the dreaded taxes to Luxembourg.

Thus, the JAB Holding Company not to operate for tax reasons in Luxembourg. The company was founded in 2011 by the German family Reimann, who occurs although never in Public in appearance, but billions in sales with well-known brands such as Sagrotan, Calgon, Clearasil, Jacobs coffee or Senseo. Directly or indirectly, the Luxembourg holding company has stakes in over 250 companies around the world.

Through this structure by using Luxembourg can be several tax loopholes. An example: company managers and a panel of advisors to be provided with share options in views, for which the Holding company has placed a 200 million Euro in the year 2018, and almost 600 million euros the year before. To grant to "company managers, stock-options, can be in Luxembourg for tax purposes interesting," says Denis-Emmanuel Philippe. The Belgian lawyer and a tax expert has looked at for the SZ, NDR and WDR are some commercial structures: "These stock options can lead to a deduction of the eligible expenditure in accordance with Luxembourg tax law." In plain text: Even if the options should only be years later, redeemed, belittle them immediately, the company's earnings and the tax burden.

in Addition, can be directed to dividends from the subsidiaries of the Luxembourg Holding tax-free to two Austrian companies for the Reimann's. By sharing the profits of the parent company reported losses, which reduce the tax burden in Luxembourg. Because there are such tax exemptions are not possible, had to pay for the JAB in 2017, according to the balance sheet to around 338 million euros profit of only 1.1 million in taxes – not a half of one percent.

"No tax benefit"

But, as I said, don't be JAB for tax reasons in Luxembourg. In addition, the treatment of stock options surrender as liabilities, with no tax advantages. Also of the companies of the group in the respective countries, the appropriate taxes would be paid.

Also in the Switzerland-based entrepreneur Klaus-Michael Kuehne is represented in the Grand-Duchy of. Of the handful of companies in Luxembourg, some hardly employees, measured by that, but they seem to be disproportionately important. In particular, the company name Kuehne + Nagel Investments S. à.r.l.: You took distributions of profits of other group units, in which it is directly involved, and paid last year about 60 million euros in dividends. According to the registration statements, the company specifies as a purpose to grant loans within the group.

up to one and a half years, this special purpose entity was tampering with amounts of more than EUR 800 million, which it distributed to group subsidiaries, often in high-tax countries. According to the final report for the year 2016 has been awarded to Germany's-daughters of Kuehne + Nagel with approximately 500 million euros. For the most part were paid the loans within a year – for such a high loan sums, an unusually short period of time. The money awarded by the Luxembourg Holding company was due mainly to a different subsidiary from the zero-tax haven Bermuda. By this Trick taxes were save, because the German subsidiaries interest paid to the Holding company in Luxembourg. This reduced the taxable profits in Germany. In Luxembourg must be paid on the interest only bit. By the end of 2017, the model was discontinued. Markus Meinzer, a Board member of the Tax Justice Network, this is a maneuver to "aggressive tax avoidance".

The group, however, operational reasons for the location Luxembourg – such as the favorable geographical location. The internal company loans from the Luxembourg had been assigned to the Reorganisation and financing of Acquisitions; in the case of Holdings in Luxembourg, it was also not about tax avoidance companies, because the subsidiaries have already paid tax on the profit.

(editing Tamedia)

Created: 16.05.2019, 22:58 PM

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