The ongoing outrage over special tax arrangements for big multinational corporations rightly centers currently on Luxembourg and on the brand-new European Commission President Jean-Claude Juncker, under whose premiership all of those advantageous arrangements were agreed there. The accompanying open secret, however, is how Luxembourg is not alone in its guilt in this regard. Ireland was actually pressured to take (limited) measures to rein in its own concessions to tax-avoiding corporations even before the issue blew up recently with the Luxembourg leaks, and EU Commission scrutiny is also being increased on some similar Netherlands measures, particularly what that country may have done to attract Starbucks.

Add to that infamous list Belgium, as well. However, a new report from La Libre Belgique describes one rather unique – indeed, some would say typically Belgian – approach taken there.

As you can see, the affair involves AB InBev, now the world’s largest brewing company, headquartered in Leuven, just to the East of Brussels. They have plenty of clout to force through their own sweetheart deal with any country that would want to host them, you would think. Indeed in 2011 the Belgian fiscal authorities permitted them to set up a “nameplate company” to which, in the usual fashion, they could use various accounting tricks to steer responsibility for more than €50 million of profits actually earned elsewhere and so be very lightly taxed on them, in most cases not at all.

This organization was set up in Brussels rather than in Leuven, perhaps to provide a sheen of “arms-length” propriety. Imagine its surprise when, last year, it found itself under investigation for its fishy tax arrangements by the Belgian tax inspectorate, the Inspection spéciale des impôts (ISI)!

Clearly, the left hand of Belgium’s tax authorities often does not know what the right hand is doing! This article does not reveal the final resolution of this investigation; it might still be ongoing, although in any event it’s likely that those authorities will go for consistency and call off the inspectors – rather than seize the opportunity presented by this bureaucratic cock-up, that is, to claim back what are surely millions of sorely needed tax-receipts from a scandalous arrangement that some official was browbeaten into approving in the past.

Really, given the mounting public outrage over these sweetheart tax deals you would think the relevant Belgian officials would think again about whether they might just want to shut this one down. It would be very good publicity; AB InBev (originally a truly Belgian company, anyway) is firmly embedded in the country so that it would be costly to move. At least these officials have effectively raised the cost of such arrangements to tax-avoiding multinationals, in the form of the uncertainty that henceforth must be part of their calculus as to whether to deal with the Belgian state.

Here’s the latest EU scandal – yes, with the new Commission not even a week old! – and it might be a biggie. It broke this morning:

Oooh, «accords secrets» – secret accords! They’re linked with that “343,” that’s the number of multinational companies to which the Luxembourg granted sweetheart tax deals to come and operate there. This has just emerged from a leak from the offices of Pricewaterhouse Coopers there, which itself earned handsomely in taking up the role of negotiating with the Luxembourg government on those companies’ behalf for these tax-breaks. According to the report cited in this piece in the Tribune de Genève,

While in Luxembourg the tax rate for companies is officially 29%, which is decent [honnête] in international terms, that often passes below 1% after negotiations with the tax authorities.

The important thing to remember here is that multinationals routinely distort their official accounts, through tricks that go under the general name of transfer pricing, to show as much income as they can as coming from a place like Luxembourg where it is subject to the least taxation. Of course, the income has really been overwhelmingly earned elsewhere, in other countries – and those countries thereby effectively have had legitimate tax revenues stolen from them, in often mind-boggling quantities.

The company names sampled in this brief piece are what you would expect: Apple, Amazon, Heinz, Pepsi, Ikea, Deutsche Bank, and also a handful of Swiss companies (as this Swiss newspaper notes): UBS, Credit Suisse, Lombard Odier private bankers (remind you at all of “odious”?), and others. Indeed, with respect to the American companies on this list, their management has to cheat governments out of taxes using techniques like these, in order to increase earnings – otherwise they can be sued by shareholders for breach of fiduciary duty! Behold the face of late twentieth-century/twenty-first century Capitalism!

What really makes this development juicy is of course the identity of the brand-new President of the European Commission, Jean-Claude Juncker, who was Prime Minister of Luxembourg from 1995 to 2013 when presumably all or at least most of these sweetheart tax-deals were negotiated. Now, it’s true that it was pressure from the outgoing Commission that recently Ireland to close its notorious “double Irish” tax loophole (well, at least over the next four years) that enables multinationals to evade enormous amounts in taxes owed elsewhere. The legal justification wielded was that such generous tax terms in effect amounted to “state aid,” which is forbidden to EU member-states.

That same rationale can obviously be brought to bear now on these Luxembourgish arrangements. But will it? As @TeacherDude puts it:

Juncker is going to have to change his spots, and quick. This development is precisely the last thing the EU needs after last May’s elections that saw so many new MEPs elected from extremist parties, reflecting a souring on the EU on the part of the European electorate. Already Marine Le Pen, whose Front National is prominent among those extremist parties, is calling on Juncker to resign from his very new Commission President position .

You can now add the Netherlands to the Cayman Islands and Switzerland in the Mitt Romney tax-avoidance Hall of Fame:

#Romney ontwijkt belasting door sluipweg via Nederland http://t.co/S1w4WKy2

November 5, 2012 6:03 am via bitlyReplyRetweetFavorite

@volkskrant

De Volkskrant

“[S]luipweg via nederland” – you can translate that as “Dutch dodge,” through which Bain Capital managed to avoid €80 million in taxation on dividends in 2004 by channeling an investment in the Irish pharmaceutical company Warner Chilcott through a Dutch holding company that held the shares. He also avoided that way a substantial sum in Irish wealth tax.

Note that this is in the period after 1999 when Romney claimed to have cut connections with Bain. This tax-trick was uncovered through cooperative research undertaken by Gawker and a Dutch independent financial investigation website called Follow the Money, using public SEC filings, once-confidential documents made public by Bain, and data from the Dutch Chamber of Commerce. Note that it was apparently perfectly legal.