Leandra Lederman (Indiana-Maurer; Google Scholar) presents The Rise And Fall (?) Of Luxembourg As A Tax Rulings Haven at Duke at present as a part of its Tax Coverage Seminar hosted by Lawrence Zelenak:

In November 2014, the Worldwide Consortium of Investigative Journalists (ICIJ) broke the “LuxLeaks” scandal, revealing tons of of billions of {dollars} of secret offers given by the tiny nation of Luxembourg to giant multinational enterprises similar to Amazon, Apple, and Verizon. These sweetheart offers, within the type of Luxembourg tax rulings, allowed many name-brand firms to dodge large quantities of tax that may in any other case be because of the U.S. or different international locations. The worldwide LuxLeaks scandal was headline information as a result of it revealed that giant multinationals had basically purchased tax breaks with out the data of the international locations that may have collected the taxes dodged.

The tax rulings that Luxembourg used to grant these tax breaks had been prolonged and complicated. It’s stunning {that a} small tax administration was in a position to produce hundreds of those rulings in a number of years. This Article is the primary to discover the historical past of the place Luxembourg’s casual tax-rulings course of got here from and the weather that allowed it to be so prolific. 

After discussing key gamers within the importation and progress of the rulings course of, the Article argues that three components had been crucial to permitting these secret tax offers to draw so many main multinational firms: (1) amenability of the tax administration, (2) belief in that administration by tax advisers, and (3) secrecy.

The Luxembourg instance exhibits {that a} nation can have excessive statutory tax charges and nonetheless operate as a tax haven. Secrecy is essential, nonetheless. As soon as tax-rulings secrecy ended, Luxembourg’s rulings quantity plummeted, because the Article demonstrates. Furthermore, on the similar time, a secret new course of allegedly arose, as revealed within the lesser-known 2021  “LuxLetters” scandal. This Article exhibits that LuxLetters illustrates the identical three components, suggesting that so long as a tax administration is amenable and advisers belief that administration, collectively they are able to discover methods to considerably scale back their taxes on the expense of different international locations. Transparency is due to this fact crucial for international locations to have the ability to successfully impose taxes on multinational enterprises.

https://taxprof.typepad.com/taxprof_blog/2023/03/lederman-presents-the-rise-and-fall-of-luxembourg-as-a-tax-rulings-haven-today-at-duke.html