Luxembourg Leaks: Canadian pension fund that invested especially in Belgium involved
Friday, 07 November 2014
A pension fund managing the pensions of thousands of Canadian civil servants managed to avoid paying millions of euros in tax, in Europe, especially in Belgium, by taking advantage of Luxembourg’s tax incentives, revealed public channel CBC, on Thursday, in the middle of the “Luxleaks” scandal. The Investment Board for public service pension plans (PSP Investments) invested millions of euros in European real estate between 2008 and 2013 (in Germany, France, Spain, Norway, the Netherlands, Great Britain and Belgium) without ever complying with the tax systems of these countries. CBC says that the Canadian fundset up a tax evasion scheme through companies registered in Luxembourg. It presented documents from accounting firm PricewaterhouseCoopers as evidence. These documents were obtained by the International Consortium of Investigative Journalists (ICIJ). In particular, the public broadcaster cited the 390 million Canadian dollars invested in 69 Berlin buildings, in 2008. The CBC says that PSP Investments has avoided paying 20 million dollars to the German tax authorities through a series of brass plate companies based in Luxembourg, Gibraltar and Germany.
PSP Investments spokesman Mark Boutet, who could not be reached last Thursday, assured the CBC that “No significant tax advantage resulted from using companies based in Luxembourg”.
According to its website, PSP Investments – which manages 94 billion Canadian dollars (66 billion euros) from the pension funds of federal civil servants, RCMP officers and members of the Canadian Force – achieved a 16.3% return this year. The CBC survey is part of the “Luxleaks scandal” – 28,000 pages of confidential documents conducted by the International Consortium of Investigative Journalists. It focuses on the practice of advance tax agreements, also known as “tax rulings.” This practice is legal and also happens in countries other than Luxembourg. It enables a company to get advance information on how the tax authorities of a country intend to deal with that company’s tax situation and to obtain some legal guarantees. This affects how a multinational company allocates its taxable profits between various subsidiaries based in different countries and allows it to practice tax optimization.