Probe Stumbles

Juncker Out of the Woods

Juncker latest source afp
E.U. Commission President Jean-Claude Juncker.
  • Why it matters

    Why it matters

    The E.U. parliamentary committee set up to investigate Luxembourg’s questionable tax incentives seems to have hit some legal snags, which could lead to Jean-Claude Juncker escaping further scrutiny.

  • Facts

    Facts

    • Mr. Juncker was prime minister of Luxembourg from 1995 to 2013 before becoming president of the E.U. commission in 2014.
    • The revelation of low tax rates intended to lure international firms to Luxembourg was dubbed Luxleaks.
    • About 190 of the 751 members of the E.U. Parliament had demanded an investigative committee be set up.
  • Audio

    Audio

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Jean-Claude Juncker, the E.U. Commission’s president, can breathe a little easier.

The former prime minister of Luxembourg may not have to face an embarrassing public inquiry by the European parliament into accusations that Luxembourg tried to attract multinational companies by offering illegal, super-low tax rates during his time as prime minister.

The censure motion proposed in the European Parliament in December put responsibility for Luxembourg’s tax policies on Mr. Juncker, its long-time prime minister and one of Europe’s craftiest politicans. A committee was supposed to begin an investigation into the legality of the Grand Duchy’s tax schemes.

But that parliamentary investigative committee may be thwarted before it begins its work following a statement from the legal services arm of the European Union’s parliament, which questioned the panel’s legality.

“If we want to change something in the unfair tax practices in Europe, the European parliament must stay at the top of clearing it up.”

Markus Ferber, MEP, Christian Socialist Union member

The legal services’ adviser noted that investigative committees in European parliament can only be set up when a reasonable suspicion of a breach of E.U. law exists. That is not the case with Luxembourg’s tax deals, the adviser said.

“Sufficient indications” were missing in the paperwork setting up the committee, according to the adviser’s statement. Parliamentary house lawyers failed to provide a detailed explanation of the suspicions against Luxembourg, and against its former prime minister.

Mr. Juncker and other Luxembourg officials have defended the country’s tax policies, saying they were legal under E.U. law.

Parliamentary floor leaders, led by Martin Schulz, the president of the parliament, will make a final decision on Thursday. It does, however, seem somewhat unlikely that they have failed to observe legal protocols.

Mr. Schulz and the heads of the two largest factions, Manfred Weber (EVP/European People’s Party) and Gianni Pittella (S&D/Socialists&Democrats), were not so enthusiastic about the idea in the first place. Now they are maintaing silence. “We are waiting for a suggestion from Mr. Schulz,” a source in Mr. Weber’s circle said.

Those in favor of an investigative committee have reacted angrily to the latest development – about 190 of the 751 European parliamentary members had requested it be set up.

One of them is the German center-right CSU (Christian Socialist Union, Christian Democratic Union party sister in Bavaria) representative Markus Ferber. He does not want to accept that the committee may now fail due to formalities.

“If we want to clear up the procedures and really change something in the unfair tax practices in Europe, the European parliament must stay at the top of clearing it up,” he said.

The Green party representative Sven Giegold shares that view: “An investigative committee is the most powerful instrument of the European parliament and therefore the appropriate answer to Luxleaks and the consequences.”

 

Ruth Berschens is the Handeslblatt correspondent in Brussels. To contact her: berschens@handelsblatt.com

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