European Interest

EU investigates VW over Luxembourg tax affairs

Flickr/Keita Kuroki/CC BY 2.0

The European Commission’s competition watchdog is reportedly checking whether German carmaker Volkswagen AG, mired in a separate scandal over diesel emissions, may have benefited from an unfair tax deal from the Grand Duchy.

According to one person, who spoke to Bloomberg on condition of anonymity because the process is not public, the preliminary query is part of a wider crackdown on sweetheart tax deals that’s snared some of the world’s biggest companies.

According to Bloomberg, it’s possible the regulator could find no wrongdoing and close the dossier. But if this is not the case, Wolfsburg, Germany-based carmaker could potentially face an order to pay millions of euros in back taxes.

Last year, German magazine Der Spiegel reported that VW’s tax structures in Luxembourg since 2012, involving a holding company and a financing company, helped it avoid paying higher taxes back home.

VW in 2014 also decided to transfer almost two dozen subsidiaries from a Netherlands-based holding company to Volkswagen Finance Luxemburg SA, the magazine said.

As reported by Bloomberg, Luxembourg was singled out in 2014 on its tax practices after reporters published thousands of pages from secret arrangements between the tiny nation and companies including Walt Disney Co., Microsoft Corp.’s Skype and PepsiCo Inc. The so-called LuxLeaks publications have been used by the European Commission in its deliberations.


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