Luxembourg hosts around 55,000 offshore companies, acts as a tax evasion hub

Luxembourg, along with other countries such as the Netherlands, the UK, and Switzerland, plays a significant role in the global landscape of tax avoidance. These nations are often criticized for their part in what is termed the ‘chain of tax avoidance,’ collectively responsible for approximately 33% of global losses due to corporate tax avoidance, according to the Tax Justice Network’s annual State of Tax Justice report. In Luxembourg, the tax system has been a subject of intense scrutiny. Despite the country’s assertions that it is fully compliant with EU and international regulations, investigations such as the OpenLux investigation have revealed that Luxembourg hosts around 55,000 offshore companies, many of which are controlled by non-Luxembourgers, including billionaires, multinationals, and high-ranking politicians. These companies, often described as “phantom” entities due to their lack of physical presence and employees, manage assets worth at least €6 trillion. The Luxembourg Leaks, another significant expose, revealed that global companies like Pepsi, IKEA, FedEx, and many others have secured secret tax deals in Luxembourg, allowing them to significantly reduce their global tax bills. These companies have used complex accounting and legal structures to shift profits to Luxembourg, where they enjoy effective tax rates of less than 1% [...]

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