LuxLeaks: EFG of the Latsis family, Wind Hellas were using Luxembourg to save millions in tax

The EFG Group, an international private banking group headquartered in Zurich and linked to the Latsis family along with Weather Investments – which operates Wind Hellas – are among scores of companies around the world that secured deals with Luxembourg to reduce their tax bills, according to a review of leaked documents of an EU probe by the  ICIJ and a group of some 80 journalists from 26 countries.

Spiros Latsis is the chairman of EFG International of which the EFG group owns a 55% stake. The Latsis family's holds a major chunk of Hellenic Petroleum, one of Greece's major oil refining companies. He has a net worth of $2.3 bln and placed 506th in the Forbes list of billionaires. Eurobank was part of the EFG Group when the deals were signed.

All in all, nine companies associated with Greece -five of which have been named –  reportedly struck deals with the tiny landlocked Duchy.  

The deals, which are legal in Luxembourg, have been a cause of friction with the EU.

The EU and Luxembourg – a nation with a population of less than 550,000 – have been at loggerheads for months over Luxembourg’s refusal to hand over information about its tax rulings.

According to the ICIJ, the documents reviewed include hundreds of private tax rulings, called ‘comfort letters, “that Luxembourg provides to corporations seeking favourable tax treatment”.

Key findings

Here are the key findings of the investigation as reported by ICIJ: 

• Pepsi, IKEA, AIG, Coach, Deutsche Bank, Abbott Laboratories and nearly 340 other companies have secured secret deals from Luxembourg that allowed many of them to slash their global tax bills.
• PricewaterhouseCoopers has helped multinational companies obtain at least 548 tax rulings in Luxembourg from 2002 to 2010. These legal secret deals feature complex financial structures designed to create drastic tax reductions. The rulings provide written assurance that companies’ tax-saving plans will be viewed favorably by Luxembourg authorities.
• Companies have channeled hundreds of billions of dollars through Luxembourg and saved billions of dollars in taxes. Some firms have enjoyed effective tax rates of less than 1 percent on the profits they’ve shuffled into Luxembourg.
• Many of the tax deals exploited international tax mismatches that allowed companies to avoid taxes both in Luxembourg and elsewhere through the use of so-called hybrid loans.  

Jean Claude Juncker and the world's second biggest tax haven

The EU probe into Luxembourg’s tax laws comes at a time when the nation’s former Prime Minister Jean-Claude Juncker took over as European Commission President.

Although Juncker has vowed, as Commission President,  to crack down on tax evasion, he has insisted that Luxembourg’s tax laws are in ‘full accordance” with European law.

Juncker was in charge as finance minister and then prime minister, when many of Luxembourg’s tax breaks were formulated.

In a report published just before the 2014 EU elections, ThePressProject International had slammed Mr Juncker’s record who was the Prime Minister for 18 consecutive years of the the world's second biggest tax haven.

As economist Thomas Picketty has pointed out in an interview with EurActiv, speaking about Juncker, “I find it shocking that one of the groups [the European People's Party – a grouping of mostly conservative parties] chose a representative from Luxembourg, which has become a tax haven. 30 or 40 years ago, the wealth of these countries relied greatly on industrialisation. Today it is built on a financial sector, part of which corresponds to providing tax exemptions to companies from other European countries. This completely goes against economic and social cooperation.”