Juncker Releases 18-Year-Old Page Cautioning on Tax Rulings

  • EU Commission chief denies lying about issue at EU Parliament
  • Page was withheld from tax-evasion report released in 1997

European Commission President Jean-Claude Juncker, who was Luxembourg’s prime minister for almost two decades before taking up his current post, released an unpublished page of a document cautioning his government 18 years ago about the possible risks of special tax accords with international companies.

Tax rulings “don’t exist in our fiscal legislation” and “as things stand, these ‘informal rulings’ are applied only to multinational companies that have inter-group activities,” according to the page, released Wednesday. The text recommended “that the competent minister follows more closely such accords” because when the “political power is clearly on top of these practices, it can intervene when the informal rules would be no longer in accordance with the government’s policy.”

The page was withheld from the public version of a 238-page report on tax evasion in Luxembourg that Jeannot Krecke, then a member of the nation’s parliament and later his country’s economy minister, prepared for Juncker in April 1997.

Juncker, in a letter to a member of the European Parliament dated Tuesday, said he never asked for the missing page to be concealed.

“It was the initiative” of Krecke “to remove this page from the official report to the commissioning government” and Krecke “explained to me clearly that I neither ordered him to do so, nor demanded this from him,” Juncker said in the Sept. 29 letter to Fabio de Masi, a German member of the European Parliament from the European Left group, who released the letter and the report’s controversial page on Wednesday.

Tax Rulings

Juncker sent the page and the letter explaining himself after being accused of lying two weeks ago when he appeared before a special committee of the EU Parliament looking into tax rulings. Juncker said he wasn’t aware of such a page at the time in 1997.

Krecke disputed this when contacted by Bloomberg on Thursday. “Juncker was one of three people who have been in possession of the page” on tax rulings since 1997, Krecke said by telephone. The other two were Krecke himself and Lucien Lux, a member of parliament then, he said.

EU lawmakers created the special committee amid public outrage over corporate tax dodging that reached fever pitch after the so-called LuxLeaks shed light last year on Luxembourg’s tax arrangements with scores of global companies. The documents leaked by a consortium of investigative journalists showed some firms effectively lowered their tax burden to less than 1 percent of profit by making deals with authorities in the tiny EU nation. Juncker became European Commission president last November after almost 19 years as the leader of Luxembourg, when many deals now under scrutiny were arranged.

In the letter dated Sept. 29, Juncker apologized if he gave the impression that he lied.

“I know that gaps of memory are often a welcome deviation. However, I reject the accusation that I told the European Parliament a lie on purpose,” Juncker said in the letter, written in German. “I can objectively and retroactively follow that you may have had doubts about my presentation given the lapse of time. I have to apologize that this led to a wrong impression being formed,” he said.

The Brussels-based commission is probing whether some low-tax deals are illegal state subsidies and has announced steps toward legislation on greater fiscal transparency. Three months ago, EU Antitrust Commissioner Margrethe Vestager said she would be seeking to conclude shortly probes into possible illegal aid through tax arrangements for Apple Inc. in Ireland, Starbucks Corp. in the Netherlands and Amazon.com Inc. and a Fiat SpA unit in Luxembourg. Vestager’s team missed a self-imposed deadline to complete the cases by the middle of the year.

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