Barclays Bank's Tax Planning Through Luxembourg

On May 9, 2022, The Guardian published a report titled "Revealed: How Barclays Bank Avoided Almost £2 Billion in Taxes Through Luxembourg". This British newspaper, after analyzing the tax filings of the investment bank, uncovered that since 2009, Barclays had been shifting part of its global profits to Luxembourg. By leveraging an artificially created $2.6 billion loss, the bank significantly reduced its tax liabilities. According to The Guardian, Barclays had transferred £6.6 billion in profits to Luxembourg since 2013, paying only £46 million in taxes during that time—resulting in an effective tax rate of just 1%. Without the massive artificial loss, the bank would have owed approximately £1.8 billion in taxes, equivalent to around RMB 15 billion.

This series of articles will analyze the case from two dimensions:

1. Why Barclays' profit shifting to Luxembourg has raised concerns.
2. How Barclays artificially created a $2.6 billion loss in Luxembourg.