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EU parliament approves LuxLeaks tax probe

EU lawmakers approved a probe Thursday into suspect tax breaks that critics said had been watered down, as the Luxleaks scandal continues to dog current European Commission President Jean-Claude Juncker.

The new commission of inquiry will last six months and examine whether any of the 28 European Union member states offer sweetheart tax deals to attract top companies, giving them an unfair advantage over their EU neighbours.

Disney, Microsoft and Heinz are among dozens of companies linked to the “LuxLeaks” scandal unearthed by investigative journalists late last year.

The revelations put Juncker in an uncomfortable spotlight, since many of the contested deals were made during his 19 years as Luxembourg’s prime minister.

The Greens group collected some 190 votes to oblige the European Parliament to launch an full-blown investigation with real powers into the normally secret tax affairs of member states and big companies.

However, Parliament President Martin Schulz decided on his own authority to ignore the Greens’ proposal, and instead approve a probe with weaker powers, said joint party head Philippe Lambers.

“This was in breach of European Union law,” Lamberts said.

However senior lawmaker Philippe Juvin of the centre-right European People’s Party, said that the Greens’ proposal lacked political support, and pandered to popular opinion by trying to single out Juncker.

The new commission “will have as its mission to bring to light all fiscal practices in all member states and not just those in Luxembourg,” Juvin said in a statement.

The European Commission, the EU’s executive arm, is already carrying out probes into several specific tax deals, including arrangements linking Luxembourg and online retailer Amazon, and Starbucks with the Netherlands.

Tax avoidance, whereby a company or individual minimises their tax burden is legal. But tax evasion, where they try to hide their wealth and so avoid tax completely, is illegal.

Both practices, however, have raised a storm at a time when ordinary taxpayers have had to tighten their belts to help governments balance the books.