Someone with a better knowledge of ta law might want to have a look at this report.
Using a couple of Luxembourg companies to do internal financing basically. And that most certainly reduces current tax bills.
This is fun:
Many large private equity investments are also the subject of Luxembourg ATAs. Well known buyout firms such as Blackstone and Carlyle appear in the leaked documents, and Luxembourg investment vehicles are commonplace in such investment firms.
A 2008 joint venture between private equity group Apax Partners and Guardian Media Group, which owns the Guardian, also used a Luxembourg structure after it invested in magazine and events group Emap, now called Top Right.
A spokesman for GMG said: “We partnered with a private equity company which regularly used such structures. A Luxembourg entity was used because Apax already had that structure in place. The fact that the parent company is a Luxembourg company does not give rise to any UK corporation tax savings for GMG.”
And correct me if I’m wrong here. But what all of this does is delay tax bills, not actually reduce them. So the financing company racks up the interest on the loans it’s made to other subsidiaries, Luxembourg doesn’t tax that interest much. Great. But to get it out of the corporate structure it’s still necessary to repatriate it to wherever the domicile of the top company is. At which point it’s taxable at that domicile’s normal corporation tax rate. Or at least that was true until Osborne (for the UK) started to change matters.
That’s correct, isn’t it?