The OpenLux investigation last month by journalists, including from Le Monde, Le Soir, Miami Herald and Sueddeutsche Zeitung, said Luxembourg's investment fund industry is a $5.4 trillion "black box" that helps people launder money and avoid tax.
The Luxembourg government has said it was compliant with all EU and international rules on tax abuse and avoidance.
Paolo Gentiloni, the bloc's European Commissioner for Economy, said thanks to OpenLux the EU knows more about how EU anti-money laundering rules are being implemented. The investigation sourced material from new registers on beneficial or ultimate owners of a company, introduced under EU rules.
While the EU is a global "frontrunner" on such transparency, it has to make sure that its rules are effectively enforced by all member states, Gentiloni said.
"The OpenLux investigation revealed that a large number of companies failed to meet their reporting obligations. This is a matter of monitoring and of course it is not acceptable, neither in the case of Luxembourg nor of any other EU member state," Gentiloni said.
The European Commission is working on a proposal on public disclosure of information about income tax at large companies, he said. The EU's anti-tax avoidance directive could also be reinforced as soon as possible to stop the use of "shell" companies in aiding tax avoidance.
Lawmakers told Gentiloni that if an EU state is not applying the bloc's rules, it should be taken to court.
Nicolas Mackel, CEO of Luxembourg for Finance, an agency that promotes the Grand Duchy's financial sector, told Reuters that Luxembourg set up an ownership registry faster than many EU states, resulting in greater transparency that made OpenLux possible.
"If there is an issue, it's at the European or international level, not at the Luxembourg level only," Mackel said.
The European Parliament has endorsed new rules requiring member states from 2023 to automatically swap information for tax purposes on income earned by sellers using online platforms, even if the platforms are based outside the bloc.
The European Commission is expected to formally propose later this year extending this to cover e-money and crypto assets.
(Reporting by Huw Jones; Editing by Giles Elgood)
By Huw Jones