The Luxembourg government on Monday rejected allegations made by international media outlets that the country remains a massive tax haven despite EU legislation to clamp down on the practice.
A year-long investigation carried out by sixteen outlets including France's Le Monde, Belgium's Le Soir, Germany's Suddeutsche Zeitung claimed that some 90 per cent of 140,000 active companies registered in Luxembourg are owned by non-residents and that a third are holding companies. This status allows them to have a preferential tax regime.
The Grand Duchy said in a statement on Monday that it "rejects the claims made in these articles as well as the entirely unjustified portrayal of the country and its economy."
"Luxemburg continuously assesses and updates its supervisory architecture and arsenal of measures to combat money laundering and terrorist financing," it also said.
It added that the nation is "fully in line and compliant with all EU and international regulations and transparency standards and transparency standards, and applies, without exception, the full arsenal of EU and international measures to exchange information in tax matters and combat tax abuse and tax avoidance."
The investigation, dubbed OpenLux, analysed some four billion documents made available following a 2018 EU directive which required the creation of public registers of the real owners of companies in all member states.
According to the outlets, in the 2018-2019 fiscal year, some €6,500 billion of assets were invested in Luxembourg in these offshore companies — more than 100 times the 2019 Gross Domestic Product of the small landlocked country.
"These ghost companies without offices or employees were created by billionaires, multinationals, sportsmen, artists, high-ranking politicians and even royal families," Le Monde wrote. "On a territory of 2,586 km2, Tiger Woods and the Hermes family rub shoulders with Shakira and the Crown Prince of Saudi Arabia. Hundreds of multinationals (LVMH, Kering, KFC, Amazon, etc.) have opened financial subsidiaries there," it went on.
The outlets also flagged that about one-third of the companies' accounts could not be recovered, most often because they had not been published, and that only half of the companies' beneficiaries could be identified.