The International Consortium of Investigative Journalists (ICIJ) has published its investigation into tax avoidance in Luxembourg. The findings could have far reaching ramifications for one major accounting firm, the EU, and a lot of big businesses.

What did they find?

IKEA, Pepsi, FedEx, Dyson, Burberry, AIG, Deutsche Bank and Ireland’s Glanbia and the Sisk construction business family are just a few of over 300 companies allegedly involved in a mass tax avoidance scheme in Luxembourg.

These findings come from a cache of nearly 28,000 leaked documents that have been obtained by the ICIJ. Over 80 journalists from 26 countries have been working on the story.

The papers include 548 Advanced Tax Agreements, these are agreements reached between Luxembourg’s authorities and individual companies. The legality of Luxembourg’s arrangements with Amazon and Fiat Finance are currently being investigated by the EU.

How does it work?

Video produced by the ICIJ in partnership with the Pulitzer Center

Large companies have been creating complex accounting structures to funnel profits from high-tax regions to low-tax Luxemburg. The leak indicated that some companies paid less than 1 percent on these profits.

Can we trust the Europe on tax?

Today’s news will come as a blow to the new president of the European Commission, Jean-Claude Juncker. He began his five-year term this week. Mr Juncker was the prime minister of Luxembourg between 1995 and 2013. This means that he was leading the country when most of these alleged agreements were reached.

Mr Juncker has always refuted charges that Luxembourg is a tax haven. During a recent speech in Brussels he promised he would “try to put some morality, some ethics, into the European tax landscape”.

As the alleged tax avoidance schemes are being scrutinised across the Union, Mr Juncker's presidency could damage Europe's credibility. Pressure has been mounting on policies like Ireland’s ‘double Irish’ tax backdoor, and ‘patent boxes’ in the UK and the Netherlands.

What have PWC been up to?

The ICIJ’s documents also suggest that PricewaterhouseCooper, (PwC) one of the world’s biggest accounting firms, helped companies implement schemes to drastically reduce their taxable income.

When questioned by ICIJ journalists PwC said that these findings are based on “outdated” figures and “stolen” data. Analyses of public filings indicate that many of the tax deals revealed in the leak are still in place.