Skype used Luxembourgish and Irish subsidiaries to avoid paying corporation tax for five years, according to a Guardian report.
The newspaper, which analyzed confidential documents that had been obtained by the International Consortium of Investigative Journalists, reported late Tuesday that Skype was one of the many companies that had used Luxembourg’s extremely light-touch tax regime to get out of paying significant amounts of tax.
Legally speaking, the issue here isn’t so much the actions of the companies themselves – there’s no suggestion that they broke the law as such — but the establishment of sweetheart deals by relatively small European nations that meant more tax revenues for themselves, but the demolition of tax revenues in other European countries.
The European Commission is finally cracking down on such behavior by claiming such deals amount to illegal state aid, and is also now trying to sew up the loopholes. Awkwardly, however…
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