In 2014, VW bundled a large part of its international holdings into Luxembourg and, in the same year, it hauled around two dozen subsidiaries from a Dutch holding company into Volkswagen Finance Luxemburg (VFL).

In its defence, VW said in a statement: “The establishment of holding and financing companies in an attractive regulatory location is done primarily for reasons of finance strategy.”

The company is “taking steps” to avoid multiple taxation on dividends, it says, and this “has nothing to do with a tax-shelter scheme.”

In 2016, the Wolfsburg-based group boasted of paying around three billion Euro in taxes. But it could have been more - especially in Germany.

Der Spiegel and journalistic network EIC analyzed dozens of annual reports and documents and found that Volkswagen took advantage of benefits associated with owning a Luxembourg holding, apparently allowing VW to slash its tax bill. This is worrying for a company which is part-owned by the German state of Lower Saxony.

“When a company, in which the state is a large stakeholder, takes advantage of Luxembourg tax law to optimize its tax bill, it is particularly troublesome,” says Sven Giegold, financial expert for the Green Party in the European Parliament.

Recently, an aggressive tax approach by U.S. multinational Amazon Group sparked debate on the complex models that multinationals use to shift profits to low-tax countries such as Luxembourg, thus undermining the tax base in nations where they operate.

An initiative by the Organization for Economic Cooperation and Development (OECD) aimed at limiting such practices has had little effect. EU member states are also slow to mobilize.

“It is high time that the German federal government abandons its resistance to public tax transparency for large corporations,” adds Giegold.

The Volkswagen Group also used structures in Luxembourg to help a transfer of profits from its group of companies.

VW channels the financial flows of brands such as Skoda, Seat and Bentley, as well as its companies in Brazil, Great Britain, Russia, Japan and Australia through its Luxembourg holding company, VFL.

Meanwhile VFL has a total of 26 subsidiaries and a balance sheet of 14.8 billion Euro. And how many employees does this multi-billion Luxembourg empire need to operate?

A total of five.

“VW and the German government must answer the question as to why such a Luxembourg holding is accepted by [German] tax laws,” says Giegold. “It's rather cute to recognize a company with five employees as sufficient enough to establish a tax home.”

But VW does not believe this is strange.

“The personnel configuration of our companies in Luxembourg is of high quality and adequate for the task at hand,” the company says in a statement.