Sharp rise in secret ‘sweetheart tax deals’ with multinational corporations

Secret ‘sweetheart deals’ in the EU have soared, according to a new Eurodad report. Incredibly, after the LuxLeaks scandal the amount of deals kept increasing dramatically, from 547 in 2013 to 972 in 2014, finally reaching 1444 by the end of 2015. According to the report’s analysis of new European Commission data, that is an increase of 160 per cent in just two years. The findings are published in ‘Survival of the Richest: Europe’s role in supporting an unjust global tax system 2016’, the fourth annual report examining the tax and transparency policies of the European institutions, 17 Member States and Norway.

As sweetheart deals are secret to the public, the content of these agreements is unknown. However, the LuxLeaks scandal and several ongoing state aid cases have shown that these deals can create the basis for large scale corporate tax dodging in both developed and developing countries. Belgium and – incredibly – Luxembourg have made the greatest number of new sweetheart deals with multinational corporations.Photo: Eurodad

Important findings

Survival of the Richest

The report authors, a coalition of civil society organisations across Europe, have made a comparative analysis of 18 European countries. They also found that:

• Support for transparency around the true owners of businesses is growing and, among the 18 European countries covered by the report, the group of countries in favour of transparency is now – for the first time – larger than the group against.
• There is also growing support for transparency around what multinational corporations are actually paying in taxes in the countries where they operate. However, the governments that are against this measure still outnumber supporters.
• European governments keep signing controversial tax treaties, which undermine taxation in developing countries. In total, the countries covered in the report has 752 such treaties. On average, these treaties lower tax rates in developing countries by 3.8 percentage points.
• More than half of the governments investigated remain opposed to the idea of giving developing countries a seat at the table when global tax standards are negotiated. Not one single government is actively speaking out in favour of this proposal.

More secret deals

Eurodad’s spokesperson Tove Maria Ryding: “It’s very surprising and deeply worrying to see that the amount of secret sweetheart deals is skyrocketing in Europe – as if the LuxLeaks scandal never happened. We know from examples like the Apple case and LuxLeaks that these secret deals can be used for large scale tax avoidance by multinational corporations. And as we can see with the LuxLeaks trial, anyone who tells the public what’s in these deals can get threatened with lawsuits and jail time. The fact that multinational corporations now have more than one thousand sweetheart deals in Europe is deeply concerning, to say the least.”

“We’re glad to see that more and more European governments start supporting transparency around who actually owns the companies operating in our societies. But we’ve also found a number of European governments that still reject the idea. This battle has not yet been won”.

SOMO wrote the chapter about the Netherlands together with Tax Justice Network Nederland (opens in new window)