Irish companies 'used Luxembourg deals to slash tax bills'

Irish companies including Glanbia have used undisclosed deals with the government in Luxembourg to slash their tax bills in their own country, according to documents released by an international group of newspapers including the Irish Times.

Other companies used the deals to set up offices in Ireland that helped them avoid tax elsewhere.

The documents, released by 40 media groups worldwide, show how more than 300 companies reached deals with the government of Luxembourg.

The deals, which are legal, allowed companies worldwide to slash their tax bills by setting up new subsidiaries in Luxembourg with few employees - or often none at all.

Those new companies were then used to send loans from one foreign subsidiary to another.

Those loans are then treated as business ’costs’ when the companies are calculating their own tax bills - and help them to slash their tax payments to their own governments.

Food company Glanbia and the construction group Sisk are among the Irish companies who used the tactic. Other global companies include Pepsi and Ikea.

The Irish Times also says other companies used the tactic to create tiny offices in Ireland, and used those to help avoid taxes in their own countries.