EU: EC President hits back at tax probe conflict of interest

The European Commission’s new president is on the defensive as allegations mount that he has a conflict of interest in the watchdog’s investigation into member states’ tax breaks to foreign companies.

Jean Claude Juncker, which began his position as European Commission President on November 1, says there is no conflict of interest in the case and has denied allegations that he encouraged so-called “sweetheart” deals with foreign companies when he was Prime Minister of Luxembourg. Luxembourg is one of the nations under investigation by the Commission as authorities examine whether those tax breaks constituted illegal state aid.

Just days after he took office, a slew of documents obtained by investigative journalists allegedly found major corporations like Pepsi and Ikea had inked deals with Luxembourg to save billions of dollars in taxes.

Juncker did not comment on the documents at the time. Luxembourg’s current Prime Minister, Xavier Buttel, stressed that all tax agreements were legal; now, Juncker is reiterating those claims.

The Commission’s competition arm is investigating Luxembourg, Irelad and Malta for their tax relationships with foreign companies. Critics say this constitutes illegal state aid and gives those firms an unfair financial advantage over their competitors. Companies have similarly come under fire for recent inversion mergers, in which the firms merge with another company for the intent of relocating their tax bracket abroad to benefit from lower tariffs.

Full content: BBC

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