Insight: The Luxembourg tax break that helps firms profit from loss

“Life in Luxembourg is simply different,” says its government website. It’s known for its generous tax policies, but what’s less familiar is a Luxembourg rule that lets companies cut their income taxes using costs that they haven’t actually borne – a break offered by almost no other state. The profits that escape tax have often not been earned in Luxembourg, but in countries like Britain, the United States and Germany. New York-listed telecoms group Vimpelcom, U.S. internet group AOL Inc., building equipment maker Caterpillar and UK mobile telecoms group Vodafone are just four of those to have made use of the system, accounts for their Luxembourg subsidiaries show.


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