UK headquartered Barclays banking group has avoided almost £2bn in tax by booking profits through Luxembourg for more than a decade, according to a report by the Guardian.
Barclays paid less than 1% 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 national paper said.
The terms of the sale of the funds business 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.
Senior Labour MP Margaret Hodge said: "These revelations that Barclays is using a scheme in an infamous tax haven leaves the British-headquartered bank with important questions to answer.
"Why is Barclays setting up shop in Luxembourg at all, other than to avoid tax? Does this artificial financial arrangement mean that profits are shifted away from the UK, thus harming our tax coffers? Or have business investments been channelled through this tax haven instead of in Britain, harming our economy in the process?"
Barclays said in a statement: "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."
It said it had not booked any profits from other jurisdictions in Luxembourg, and stressed that it paid more than £14bn in taxes in the UK over the past decade.
