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 know, it can be a tough life when you happen to have a lot of money at your disposal. Just ask Mitt Romney. Or nose around a bit in Geneva:

#Economie – Des fortunes de France vivraient l’enfer à Genève: Un reportage sur les exilés fiscaux français clou… http://t.co/9Fgmrp4d

July 25, 2012 1:17 pm via twitterfeedReplyRetweetFavorite

@news_suisse

News Suisse

A little background: The new French Socialist government of François Hollande (dominating both the executive and the legislature) made it clear both pre- and post-election that it intends to substantially raise taxes on the rich. As a result, many of those rich are upping stakes and leaving, often just across the border to more tax-friendly but still francophone climes in Belgium or Switzerland, where they can escape French taxes if they live there for at least 183 days in the year.

Trouble is, it’s not that simple, at least when it comes to Geneva, where for all their money these tax-exiles have to deal with substantial culture-shock. That @news_suisse tweet links to a piece in Geneva’s own Tribune de Genève by Dino Auciello, about how his own venerable hometown is somehow just so uncomfortable and, well, boring for these wealthy wanderers. It’s not difficult to detect Auciello’s thick irony just below the surface, as in his lede:

Poor French fiscal exiles! Those who flee from ever more oppressive fiscal authorities, now the promised land of Geneva reveals itself to them as a veritable hell.

Things are so humdrum there, he reports, that “aside from golf and adultery, distractions are rare.” (more…)

Maybe we can turn this resuscitated weblog into an international scandal-sheet! You heard it here first!

What did you hear? That the marriage between the president of France, Nicolas Sarkozy, and his wife Cécilia is on the rocks. Interestingly, it’s the foreign press, not the French, that is reporting that all that is lacking in the presidential couple’s break-up is the formal announcement. First of all, it was apparently American journalists (which ones or who they write for, however, are not specified) who picked up on remarks Nicolas Sarkozy made on 30 September to Georgian President Saakashvili – they were attending the France-Georgia match of the rugby world cup tournament – to the effect that he could easily see himself as a bachelor again in the near future. And the Nouvel Observateur reports that the Tribune de Genève maintains that the Sarkozys are essentially already separated. For one thing, the Sarkozy’s had been discussing all summer for the benefit of the press their detailed plans of finally moving into the presidential (Elysée) palace come September – yet September has come and gone, and nothing has happened. Then there was the recent state visit to Bulgaria, also noteworthy for Cécilia’s absence – and under normal circumstances she would have been very glad to go to Bulgaria, where authorities wanted to fête her there in grand style in thanks for the very personal role she played earlier this year in securing the release of five Bulgarian nurses, accused of infecting children in their care with AIDS, from their Libyan jail. (more…)