Barclays leverages Luxembourg deal to avoid nearly £2bn in tax
British lender Barclays has avoided almost £2bn in tax by booking profits through tax haven Luxembourg for more than a decade, according to reports.
The firm has paid less than one per cent on profits in Luxembourg by leveraging a 2009 move to book profits from the $15.2bn sale of Barclays Global Investors in Luxembourg, rather than the UK where it is headquartered, the Guardian reported.
The terms of the sale of the fund manager allowed Barclays to offset future profits against a drop in the acquired firm’s shares, allowing the firm to earn billions of pounds nearly tax-free since 2009.
Barclays’ Luxembourg operations have made £6.6bn in profits since 2013, according to annual tax documents released by the bank, but it has paid only £46m on those earnings.
Despite employing just 54 people in the country, Barclays bagged £1.1bn in profits in Luxembourg last year, making it the bank’s third most profitable jurisdiction behind the US and UK. The bank has 46,000 staff in the UK and nearly 10,000 in the US.
In a statement, Barclays said the deal was not designed to drive down its tax bill.
“The structure of the BGI sale was not aimed at securing a tax reduction but intended to secure a simpler and more certain tax treatment and avoid volatility in the bank’s regulatory capital,” a spokesperson said.
It added that the firm had not booked any profits from other jurisdictions in Luxembourg, and underlined the fact it paid more than £14bn in taxes in the UK over the past decade.