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Canada’s Eldorado Gold Corp., the biggest foreign investor in Greece, is engaged in a tax-avoidance scheme that uses mailbox companies in the Netherlands to lower its tax load, a new report from a Dutch foundation says.
The Centre for Research on Multinational Corporations, known as SOMO, made the claim in a detailed 116-page report called Fool’s Gold, which was released in Amsterdam Monday and will be presented Wednesday in Athens at a panel discussion featuring Norway’s Eva Joly, a member of the Green Party in the European Parliament.
The report claims the scheme has cost the Greek government at least €1.7-million ($2.3-million) in revenue in the past two years.
The timing of the report was apparently no accident. It came as Eldorado fights hard to keep its Greek mining operations going in the face of threats from Greece’s new radical left Syriza government to shut down or curtail them over environmental concerns. It also came a month after the European Parliament’s committee on tax rulings revealed it is examining allegations that some European Union countries are using special tax regimes or deals to favour large companies.
The Eldorado tax-avoidance manoeuvre described by SOMO is neither illegal nor rare. Foreign companies often use mailbox companies in the Netherlands, Luxembourg and Cyprus to channel money between entities within corporate groups. They are also known as shell companies or special purpose entities. Usually, they have no operating assets or employees.
Katrin McGauran, a SOMO researcher who is the co-author of the Eldorado report, said the mailbox companies expose Greece’s bailout masters as hypocrites.
“The European Union and the Netherlands have double standards,” she said. “On the one hand, they impose harsh austerity measures, which have devastating social and economic impacts on Greece. On the other hand, they actively facilitate tax avoidance, which costs the Greek state millions of euros.”
Eldorado’s vice-president of investor relations, Krista Muhr, said “we absolutely deny all allegations” put forth by SOMO, but gave few details as to what the company thinks the SOMO report got wrong. “We have not made any tax savings from Greece,” she said. “All revenue generated in Greece is taxable in Greece.”
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