Crackdown

Europe’s Tax Hunter Strikes Again

  • Why it matters

    Why it matters

    French energy group Engie may have to pay hundreds of millions of euros in back taxes, but European Union lawmakers are struggling to come up with comprehensive reforms to avoid future tax dodging.

  • Facts

    Facts

    • The case is the latest in the European Commission’s crusade against tax avoidance, as part of which it has been conducting investigations since 2013. Seven lawsuits have been brought so far.
    • The commission has been hampered in its plans to implement comprehensive tax reforms, which require the unanimous approval of all 28 member states.
    • The G20 bloc of leading economic nations agreed in 2015 on new rules against tax evasion strategies known as base erosion and profit shifting, which are currently being transposed into law in 38 countries.
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    Audio

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Luxembourg, Luxembourg City, Neumunster Abbey and St Michaels Church
Luxembourg City, focal point of E.U. investigations into companies' tax evasion. Source: Getty Images

U.S. giants like Apple, Starbucks, McDonald’s and Google have already had their rude awakening to Europe’s competition watchdog. Commissioner Margrethe Vestager, the E.U.’s top bloodhound when it comes to tax evaders, has now set her sights on a French company. And once more, the track leads to Luxembourg.

France’s fifth-largest company, utility Engie, is accused of having dodged at least €300 million in corporate taxes by employing a complex system of subsidiaries and taking advantage of an tax agreement brokered with the government of Luxembourg – a state notorious for its lax tax regulations and staunch banking secrecy.

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