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“As a small country, we are bridge builders by nature.” Xavier Bettel recently summarized how Luxembourg sees itself when it comes to European policy. Not long ago he was forced to step down as leader of the Liberal Party in Luxembourg’s government after a decade in office, but in his new position as foreign minister he continues to build the country’s image as a passionate defender of European solidarity. – and in doing so, he is positioning himself quite aggressively as a candidate for the presidency of the EU Council.
But Bettel and other senior Luxembourg politicians rarely talk about their country’s traditionally ambivalent role within the EU. In many places, the small Grand Duchy located in the heart of Europe is indeed committed to the advancement of the EU. European integration is part of the country’s raison d’être and is not politically controversial. However, this does not mean that Luxembourg does not pursue its own agenda at EU level.
Taxation is a key policy area where cross-party Europhilia breaks down, and it rarely features in public debate. Behind the scenes, the Luxembourg government carefully and consistently defends its interests, often successfully, thanks to its veto power on EU tax issues. Former Foreign Minister Jean Asselborn once said this in an interview. reporter.lu, “We are not altar boys. “We also have ulterior motives.”
It is therefore not surprising that Luxembourg’s bad image as a tax haven still lingers in the eyes of some partners. But this small country with a huge financial center has changed significantly, although not necessarily out of confidence. Rather, it has had to bow to international pressure (particularly from powerful neighbors Germany and France) to revise some of its “aggressive tax avoidance” practices, as the European Commission still calls them.
But there has never been a radical rethinking of this. The country’s economic dynamism still relies heavily on attracting vast amounts of foreign capital. The investment fund industry is thriving and is currently second only to the United States in terms of the value of investment assets under management.
Fuel and tobacco tourism, supported by tax speculation, adds billions of euros to national coffers. Infamous mailbox companies with very limited economic substance continue to be politically acceptable. Or, to quote Jean Asselborn again: “It’s a small country, so there’s not a lot of room to build. That’s why we have so many mailboxes.”
