HSTCQE WUW ( (Z:: Peer Review Report Phase 2 Implementation of The Standard in Practice

GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE OF INFORMATION FOR TAX PURPOSES
Peer Review Report Phase 2 Implementation of the Standard in Practice

LUXEMBOURG
TABLE OF CONTENTS 3
Table of Contents
About the Global Forum 5 Executive Summary 7 Introduction11 Information and methodology used for the peer review of Luxembourg11 Compliance with the Standards 19 A. Availability of Information 19 Overview 19 A.1. Ownership and identity information 21 A.2. Accounting records 54 A.3. Banking information 59 B. Access to Information 65 Overview 65 B.1. Competent Authoritys ability to obtain and provide information 67 B.2. Notification requirements and rights and safeguards 84 C. Exchanging Information 89 Overview 89 C.1. Exchange of information mechanisms 92 C.2. Exchange of information mechanisms with all relevant partners103 C.3. Confidentiality 107 C.4. Rights and safeguards of taxpayers and third parties 109 C.5. Timeliness of responses to requests for information112 Summary of Determinations and Factors UnderlyingRecommendations119
PEER REVIEW REPORT PHASE 2 LUXEMBOURG OECD 2013
4 TABLE OF CONTENTS Annex 1:Jurisdictions Response to the Review Report 125 Annex 2:List of all Exchange-of-Information Mechanisms inForce 126 Annex3: List of all agreements signed, allowing for the exchange of banking information, to the standard and in force, including jurisdictions covered by the EU Council Directive on Administrative Cooperation in the Field of Taxation (2011/16/EU)132 Annex 4:List of Laws, Regulations and OtherMaterialReceived 136 Annex 5:People Interviewed During the On-Site Visit 139
ABOUT THE GLOBAL FORUM 5
About the Global Forum

The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 100 jurisdictions, which participate in the Global Forum on an equal footing. The Global Forum is charged with in-depth monitoring and peer review of the implementation of the international standards of transparency and exchange of information for tax purposes. These standards are primarily reflected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004. The standards have also been incorporated into the UN Model Tax Convention. The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party. Fishing expeditions are not authorised but all foreseeably relevant information must be provided, including bank information and information held by fiduciaries, regardless of the existence of a domestic tax interest or the application of a dual criminality standard. All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase1 reviews assess the quality of a jurisdictions legal and regulatory framework for the exchange of information, while Phase2 reviews look at the practical implementation of that framework. Some Global Forum members are undergoing combined Phase1 and Phase2 reviews. The Global Forum has also put in place a process for supplementary reports to follow-up on recommendations, as well as for the ongoing monitoring of jurisdictions following the conclusion of a review. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes. All review reports are published once approved by the Global Forum and they thus represent agreed Global Forum reports. For more information on the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and for copies of the published review reports, please refer to www.oecd.org/tax/transparency and www.eoi-tax.org.
EXECUTIVE SUMMARY 7
Executive Summary
1. This report summarises the legal and regulatory framework for transparency and exchange of information for tax purposes in Luxembourg as well as the practical implementation of that framework. The assessment of exchange of information in practice covers the three year period 2009 to 2011. The international standard laid down in the Terms of Reference of the Global Forum for monitoring and reviewing progress towards transparency and exchange of information, considers the availability of relevant information within a given jurisdiction, the ability of the competent authority to access it swiftly, and whether the information may be exchanged effectively with its partners in information exchange. 2. Since its commitment to the international standard of transparency and exchange of information, in March 2009, Luxembourg has been very active and quick in negotiating EOI mechanisms that incorporate the full version of article26 of the OECD Model Tax Convention1. Luxembourgs network of bilateral information exchange mechanisms now comprises 752 agreements, 45 of which contain article26 allowing for the exchange of banking information and 43 of which are to the standard. Of the 43 agreements to the standard 23 are in force. Luxembourg is also party to the EU Council Directive on Administrative Cooperation in the Field of Taxation 2011/16/ EU. This Directive has been in effect since 1January 2013. As a result, Luxembourg has EOI relationships to the standard with 54 jurisdictions and can already exchange information with 40 of them (arrangements in force). 3. In two cases Austria and Panama the obligations stipulated in the recently negotiated protocols are more restrictive than those established by the international standard. However, since 2013, Austria has been covered by the EU Council Directive on Administrative Cooperation in the Field
1. 2. The 2005 revised version. See Annex3 for the agreements signed, allowing for the exchange of banking information, to the standard and in force, including the jurisdictions covered by the EU Council Directive on Administrative Cooperation in the Field of Taxation 2011/16/EU.
8 EXECUTIVE SUMMARY
of Taxation (2011/16/EU). Luxembourg has proposed to its treaty partners to update the treaties still not meeting the standard and is in negotiations with 24 jurisdictions. A total of 18 new agreements or protocols3 have been signed since 2011, all of which should be ratified shortly. The two draft laws ratifying 154 of these new agreements or protocols have been enacted by Parliament on 7June 2013 and the laws are expected to be published by the end of June 2013. Luxembourg needs to continue updating of its network of tax treaties so that all its partners can access the information held by financial institutions. 4. In order to conform to the international transparency standard, Luxembourg introduced, legislation, in 2010, governing access to banking information or information protected by secrecy rules. This legislation implements Luxembourgs international commitments into domestic law. 5. Banking information is available due to the anti-money laundering (AML) legislation, amongst other things. The rules according to which information relating to numbered accounts must be kept derive from a grand ducal regulation adopted on 1February 2010. This regulation was complemented by a new CSSF (Financial Sector Supervisory Commission Commission de Surveillance du Secteur Financier) regulation adopted on 14December 2012, which clarifies that these rules are applicable to numbered accounts opened prior to the regulation of February 2010, and addresses concerns expressed in the Phase1 review. 6. Luxembourg law generally guarantees the availability of information on companies and partnerships. All companies and partnerships must register with the Register of Commerce and Companies (Registre du commerce et des socits, RCS) within a month of their creation. The law usually requires the provision of information to the RCS relating to the shareholders and partners of these companies and partnerships as well as updates to this information. However socits anonymes (SAs, or public limited companies), socits en commandite par actions (Se.c.as, or partnerships limited by shares), and socits europennes (SE, European companies) are themselves required to keep information on the holders of registered shares, through a register of shares. Comments received from peers confirm that ownership information has been provided in those cases where it has been requested. 7. Luxembourg law authorises the issuance of bearer securities by SAs, S.e.c.as, and SEs, but there are no mechanisms in place to ensure the
3. 4. Canada, Czech Republic, FYROM, Isle of Man, Italy, Jersey, Kazakhstan, Laos, Malta, Poland, Romania, the Seychelles, South Korea, Sri Lanka, Switzerland, Tajikistan, Chinese Taipei and Russia. Canada, FYROM, Italy, Kazakhstan, Laos, Malta, Poland, Romania, Russia, the Seychelles, South Korea, Sri Lanka, Switzerland, Tajikistan and Chinese Taipei.
EXECUTIVE SUMMARY 9
availability of information on holder of bearer shares in all circumstances. The fact that investment companies (in particular SICAV and SICAF5) are authorised to issue shares in bearer form constitutes a loophole in the legal and regulatory framework in Luxembourg. Therefore, element A.1 is assessed as not being in place. Luxembourg is working on a preliminary draft bill to immobilise bearer shares. It is expected that the law will be adopted in 2013. 8. Information on other relevant entities and arrangements is generally available when the information exchange takes place under a revised treaty. Lastly, Luxembourg legislation guarantees the availability of accounting information. In fact, there are legal obligations applicable to any business entity as well as to trusts, fiducies and foundations. These legal obligations are respected by the legal entities in Luxembourg and information from other relevant entities and arrangements as well as accounting information is provided when requested, although sometimes after delays. 9. The new procedure to access banking information has already been tested in practice in many instances and Luxembourgs treaty partners have indicated that they have obtained the requested banking information in the majority of the cases. 10. With the entry into force of the agreements concluded or updated after 2009 and which are in line with the standard, Luxembourg has been able to collect banking information as well as ownership information and accounting records. For the period under review (2009 to 2011), Luxembourg received 832 EOI requests (242 requests in 2009, 234 in 2010 and 356 in 2011), from more than 30 treaty partners, the most significant being Belgium, France, Germany, Italy, the Netherlands, Russia, Spain and Sweden. Luxembourgs response timeframe improved during the period under review. In 2009, only 18% of the requests were answered in less than 90 days and a further 2% within a period of between 90 days and 180 days. In 2011, Luxembourg answered EOI requests within 90 days in 45% of the cases, in a further 30% of the cases the answer was provided within 90 to 180 days. In 18% of the cases the answer was provided within 180 days to a year and the answer was provided after a period of more than a year in 4% of the cases. 11. However, a peer reported that in certain cases Luxembourgs authorities have not used their information gathering and enforcement powers to gather information in all instances where the holder (the bank) has provided incomplete information. Furthermore in some instances, peers reported that they were unable to receive banking information in relation to individuals resident in Luxembourg as a result of a restrictive interpretation of the foreseeably relevant standard by Luxembourgs authorities. Further, Luxembourg does not allow exchange of banking information that precedes the effective
5. SICAV: open-end investment company; SICAF: close-end investment company.
10 EXECUTIVE SUMMARY
date of a treaty, even where it relates to a taxable period or chargeable event following the effective date. Luxembourg should conform its practices in these areas to the international standard. 12. Finally, in some cases Luxembourg only provided the information directly available to the tax authorities and did not request information from any other person concerned to substantiate its answers, on the basis that the requested information related to the substance of business activities of entities that generally had no substantive presence in Luxembourg. 13. Since 2009, Luxembourg has reorganised its EOI system with the creation of a division dedicated to EOI (DIVECHR de lAdministration des contributions directes, ACD) in order to improve the handling of requests. This division has been granted new access powers to collect on request all types of information, including banking information. However, some issues remain in relation to the practices of Luxembourgs authorities, in particular as regards the use of its enforcement powers to gather all requested information, a disagreement with a treaty partner on its obligation to exchange bank information in certain cases, its ability to maintain the confidentiality of information received, and the provision of status reports to treaty partners. Further, the procedures to collect information have not always been communicated clearly to treaty partners and may not always have been consistently followed. 14. A follow up report on the steps undertaken by Luxembourg to answer the recommendations made in this report should be provided to the PRG within six months after the adoption of this report.
INTRODUCTION 11
Introduction
Information and methodology used for the peer review of Luxembourg

15. The assessment of the legal and regulatory framework of Luxembourg and the practical implementation and effectiveness of this framework were based on the international standards for transparency and exchange of information as described in the Global Forums Terms of Reference, and were prepared using the Global Forums Methodology for Peer Reviews and NonMember Reviews. The assessment has been conducted in two stages: Phase1, performed in 2011, assessed Luxembourgs legal and regulatory framework for the exchange of information, while Phase2, performed in 2013, looked at the practical implementation of that framework, as well as any amendments made to the legal and regulatory framework since the Phase1 review. This assessment is therefore based on the laws, regulations and information exchange mechanisms in force or effect at the end of May 2013, other information, explanations and material provided by Luxembourg and information provided by Luxembourgs treaty partners as well as information collected during an on-site visit to Luxembourg that took place in November 2012. During the on-site visit, the assessment team met with officials and representatives of the relevant Luxembourg government agencies, including the Direct Tax Administration, the Indirect Tax Administration, the Customs and Excise Duties Administration, registration and anti-money laundering authorities. 16. The Terms of Reference breaks down the standards of transparency and exchange of information into 10 essential elements and 31 enumerated aspects under three broad categories: (A)availability of information; (B)access to information; and (C)exchange of information. This review assesses Luxembourgs legal and regulatory framework against these elements and each of the enumerated aspects. In respect of each essential element a determination is made that: (i)the element is in place; (ii)the element is in place but certain aspects of the legal implementation of the element need improvement; or (iii) the element is not in place. These determinations are accompanied by recommendations for improvement where relevant. A summary of the findings against those elements is set out on page of this report.
12 INTRODUCTION
17. In addition, to reflect the Phase2 component, an assessment is also made concerning Luxembourgs practical application of each of the essential elements. As outlined in the Note on Assessment Criteria, following a jurisdictions Phase2 review, a rating will be applied to each of the essential elements to reflect the overall position of a jurisdiction. However, this rating will only be published at such time as a representative subset of Phase2 review is completed. This report therefore includes recommendations in respect of Luxembourgs legal and regulatory framework and the actual implementation of the essential elements, as well as a determination on the legal and regulatory framework, but it does not include a rating of the elements (see Summary of Determinations and Factors Underlying Recommendations at the end of this report). 18. The Phase1 assessment was conducted by a team which consisted of two expert assessors and one representative of the Global Forum Secretariat: Ms Shauna Pittman, Counsel, Canada Revenue Agency and Ms Silvia Allegrucci civil servant in the Department of Finance for Italy and Mr. Rmi Verneau from the Secretariat of the Global Forum. The assessment team assessed the Luxembourg legal and regulatory framework in the field of transparency and exchange of information and its relevant exchange of information mechanisms. 19. The Phase2 assessment was conducted by a team consisting of two assessors and one representative of the Global Forum Secretariat: Ms Shauna Pittman, Counsel, Canada Revenue Agency and Ms Silvia Allegrucci civil servant in the Department of Finance for Italy; and Mlanie Robert for the Global Forum Secretariat. The team evaluated the implementation and effectiveness of Luxembourgs legal and regulatory framework for transparency and exchange of information and its relevant information exchange mechanisms.
Overview of Luxembourg
20. Landlocked between Germany, Belgium, and France, Luxembourg is one of the smallest states of Western Europe in terms of area (2600 km) and population (525000). With a total GDP of nearly EUR40billion and a per capita GDP of nearly EUR80000, it has one of the highest standard of living amongst the OECD member countries. 21. Formerly dependent on the steel industry, the Luxembourg economy is today characterised by the importance of its financial sector, which in 2010 represented 38% of GDP, 11% of employment and 25% of tax revenues. Other features of the Luxembourg labour market are its low unemployment rate (6.2%), its high employment rate (with a workforce of 370000) and its openness, with 150000 cross-border workers. Belgium, Germany and France account for 56% of Luxembourgs exports and more than 75% of its imports. The European Union (EU) as a whole accounts for 80% of Luxembourgs exports and 90% of its imports.
INTRODUCTION 13
22. Luxembourg is a founding member of the EU and the Economic and Monetary Union of countries forming the euro area. The capital city of Luxembourg is also the seat of the Court of Justice of the European Union, the European Court of Auditors and several European administrations. Luxembourg is a founding member of the OECD and the UN. It is also a member of other international organisations such as the IMF and the WTO. As a member of the OECD, Luxembourg takes part in the Global Forum and its Peer Review Group.
General information on the legal and fiscal system Legal system

23. Luxembourg (or the Grand Duchy of Luxembourg) is a constitutional monarchy. The unicameral legislature consists of the Parliament, which has 60 members elected by universal suffrage for a five-year term. The executive branch comprises the Grand Duke as Head of State and the government led by the Prime Minister. The Grand Duke promulgates laws and issues regulations and decrees for execution of laws. Luxembourg has three official languages, Luxembourgish, French and German. 24. The Luxembourg legal system is rooted in Roman and Germanic law known as civil law. International treaties that have been approved by law as well as European legislation stand at the pinnacle of the legal hierarchy. The courts have consistently held6 that international law takes precedence over domestic law, including the Luxembourg Constitution. In domestic law, the Constitution of 17October 1868 is at the summit of the pyramid, followed by laws, grand ducal regulations, ministerial or government-in-council regulations, municipal (communal) regulations, and circulars and memorandums, by descending order of hierarchy. 25. The legal value of circulars depends on the issuing authority. Circulars issued by administrative authorities, such as revenue authorities, only provide guidance relating to the legal and regulatory provisions, while circulars issued by supervisory authorities, such as financial and insurance sectors supervisory authorities, are binding on the persons subject to this supervision7. 26. The Luxembourg legal system is divided into a judicial jurisdiction for civil, criminal and commercial matters and an administrative jurisdiction for administrative matters. While administrative jurisdictions are competent
6. 7. Superior Court of Justice, Decision of 8June 1950; Superior Court of Justice, Decision of 14July 1954; Council of State, Decision of 21November 1984. To the extent that such authorities may be allowed to apply sanctions. This has been the case for the financial sector supervisory authority since 2010.
14 INTRODUCTION
for the matters relating to direct taxations, judicial jurisdictions deal with indirect taxations as well as recovery litigations (whether relating to direct or indirect taxations). There is also a Council of State, an advisory body comprising 21 members appointed by the Grand Duke, which renders its opinion on legislative bills and proposals as well as on draft grand ducal regulations.
Taxation system
27. One feature of the Luxembourg tax system is that it embraces three tax administrations: The Direct Tax Administration (Administration des contributions directes, ACD), which assesses and collects individual income tax, corporate income tax (impt sur les collectivits) and the municipal business tax. The Indirect Tax Administration (Administration de lenregistrement et des domaines, AED) is responsible for assessing and collecting VAT, stamp duties and succession taxes. The Customs and Excise Administration (Administration des Douanes et des Accises, ADA) is responsible for excise duties, consumption taxes on alcohol, and the vehicle tax.
These three administrations have jurisdiction in the field of EOI regarding taxes for which they are responsible. The Ministry of Finance is the competent authority, and the ACD is the central authority for managing EOI requests based on agreements with an updated EOI provision, which means that the ACD receives all EOI requests and transfers them to the appropriate tax administration. 28. Individuals and legal persons resident in Luxembourg are taxable on their worldwide income. All natural persons who have their domicile or habitual abode in Luxembourg are considered residents. Legal persons are considered to be residents if they have their statutory headquarters or their central administration (effective place of management) in Luxembourg. Non-resident individuals or legal persons are taxed on their income from Luxembourg sources. 29. As a member of the European Union, Luxembourg participates in the common VAT system. The normal rate of tax is 15%, and the reduced rate is 6%. The taxation of occupational incomes of individuals is progressive, with a maximum rate of 40%. Corporations (collectivits, i.e.companies and legal persons) are subject to profit tax at a rate of 20% on profits up to EUR15000, and 21% above this amount. They are also subject to the municipal business tax at a rate of 3% multiplied by the municipal rate (200-400%).
INTRODUCTION 15
30. In 2011, total tax revenues amounted to 37% of GDP, with the VAT representing 23% of tax revenues, the personal income tax 30%, and the corporation tax 22%. As indicated above, the financial system alone produces 25% of tax revenues in Luxembourg. 31. Luxembourgs network of bilateral mechanisms for EOI today covers 75 jurisdictions, all of which are covered by double taxation treaties. Since March 2009, when it gave its formal commitment to implement international standards of transparency and exchange of information, Luxembourg has only concluded agreements and protocols that include the full version of article26 of the OECD Model Tax convention, particularly as it concerns the EOI held by banks. 32. As a member of the European Union, Luxembourg also exchanges information in accordance with the EU Council Directive on Administrative Cooperation in the Field of Taxation (2011/16/EU), in effect since 1January 2013 and replacing Directive 77/799/EEC concerning mutual assistance in the field of direct taxation. 33. For the period under review (2009 to 2011), Luxembourg received 832 EOI requests (242 requests in 2009, 234 in 2010 and 356 in 2011), from more than 30 treaty partners, the most significant being Belgium, France, Germany, Italy, the Netherlands, Russia, Spain and Sweden.
Overview of commercial laws and other relevant factors for exchange of information
34. At the end of 2012, the Luxembourg financial sector included 143 banks with balance sheets totalling nearly EUR757.7billion; 114 investment companies, with balance sheets totalling EUR3.4billion; 210 other financial sector professionals with balance sheets totalling EUR11.6billion; 3863 undertakings for collective investment managing assets of EUR2329billion; 281 venture capital/private equity companies (SICAR); 32 securitisation organisms, and 15 pension funds. 35. The financial sector is regulated by the Financial Sector Act of 5April 1993 and various specific laws regarding each category of professionals concerned. The Financial Sector Supervisory Commission (CSSF), which operates under the authority of the Minister of Finance, is the competent authority for the prudential supervision of credit institutions, other financial sector professionals, undertakings for collective investment, pension funds taking the form of SEPCAV8 and ASSEP9, approved securitisation organisms, SICARs, paying institutions, postal financial services proposed
8. 9. Open-end Pension Savings Company. Pension Savings Association.
16 INTRODUCTION
by the mail and telecommunications company, financial instruments markets, including its operators, and auditors. The CSSF also vets the license applications of banks and other financial sector professionals prior to approval by the Minister of Finance. 36. The insurance sector is governed by the Insurance Sector Act of 6December 1991 and regulated by the Insurance Commission (CAA), which conducts prudential supervision. The CAA examines license applications for insurance companies, for granting by the Minister of Finance. At the end of 2011, the Luxembourg insurance sector included 93 direct insurance companies and 242 reinsurance companies, with balance sheets totalling EUR157.9billion. 37. Notaries (limited in number to 36), bailiffs, attorneys (nearly 2000), auditors (nearly 440), accountants (nearly 1400) and real estate agents (nearly 1000) in Luxembourg are all regarded as constituting non-financial professions and enterprises under anti-money laundering legislation and are required, pursuant to this legislation, to perform customer due diligence. 38. Luxembourgs anti-money laundering (AML) legislation is based primarily on the instruments provided by the European Union. The FATF (Financial Action Task Force) evaluation published in February 2010 indicated that Luxembourg legislation could be improved in terms of how professionals covered by AML legislation identify their customers. As well, the simplified due diligence obligations stipulated by legislation were found not compliant with FATF standards. In response to these observations, Luxembourg has amended its AML regulatory framework with publication, on 1February 2010, of a grand ducal regulation and adoption, on 27October 2010, of a law strengthening the legal framework for combating money laundering and the financing of terrorism. In particular, the definition of beneficial ownership has now been amended and rules regulating the opening and holding of numbered accounts are now included in Luxembourg law (see below further developments under section A.1.3). Recent developments 39. A new CSSF regulation was adopted on 14December 2012, which, inter alia clarifies the rules applicable to the opening of numbered accounts and specifies that these rules are applicable to numbered accounts opened before 2010. 40. A draft bill requiring SICARs taking the form of a S.e.c.s. (Socit en commandite simple, limited partnership), to disclose the identity of the partners, has been tabled with the Parliament. 41. Since the Phase1 review, Luxembourg has signed 18 agreements containing EOI provisions consistent with the standard. Two draft laws ratifying
INTRODUCTION 17
15 of these new agreements and protocols have been enacted by Parliament on 7June 2013 and the laws are expected to be published by the end of June 2013. Luxembourg has also signed the multilateral Convention on Mutual Administrative Assistance in Tax Matters on 29May 2013 which, following its entry into force in Luxembourg, will allow for the exchange of information to the standard with 21 more partners.
COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 19
Compliance with the Standards
A. Availability of Information
Overview
42. Effective EOI requires the availability of reliable information. In particular, it requires information on the identity of owners and other stakeholders as well as accounting information on the transactions carried out by entities and other organisational structures. Such information may be kept for tax, regulatory, commercial or other reasons. If information is not kept or the information is not maintained for a reasonable period of time, a jurisdictions competent authority may not be able to obtain and provide it when requested. This section of the report assesses the adequacy of Luxembourgs legal and regulatory framework on availability of information. It also assesses the implementation and effectiveness of these frameworks in practice. 43. Luxembourg has a legal and regulatory framework according to which information on the identity of shareholders of companies and partnerships must generally be available. 44. All companies and partnerships are required to register themselves with the Register of Commerce and Companies (RCS) in the month following their incorporation (cf. Law of 19December 2002). The articles of incorporation must be provided for registration and are published either totally or in the form of extracts. Cooperative companies (socits coopratives) are required to disclose in their statutes the names of their members and must provide to the RCS any amendment made to these statutes. The law requires limited liability companies (socits responsabilit limite,
20 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

S..r.ls), general partnerships (socits en nom collectif, S.e.n.cs), limited partnerships (socits en commandite simple, S.e.c.ss) and partnerships under civil law to report the names of their shareholders and partners upon registration and to update that information thereafter in the RCS. Public limited companies (socits anonymes, SAs), European companies (SEs) and partnerships limited by shares (socits en commandite par action, S.e.c.as) are not bound by this last obligation but must keep a register of registered shares. 45. Luxembourg legislation authorises the issuance of bearer securities by SAs, SEs, and S.e.c.as, including investment companies when they take one of these three forms of companies. The mechanisms in place do not guarantee that information on their holders will be available in all circumstances. 46. Luxembourg is signatory to the Hague Convention on trusts and their recognition. A trust may be administered from Luxembourg, or assets located in Luxembourg may be held through a trust. Luxembourg also authorises the creation of fiducies. The law requires deeds of trust or fiducie to be registered when they cover real properties, boats or aircraft. When there is an EOI request pursuant to information exchange mechanisms that comply with the complete version of article26 of the OECD Model Convention, the trustee or fiduciary ( fiduciaire) is required to provide full information on the trust or fiducie. The AML legislation adopted by Luxembourg, and recently updated, requires service providers to retain information on the settlors (i.e.creators) and beneficiaries of trusts and fiducies. 47. Luxembourg foundations are always created for a philanthropic, usually charitable, purpose, and must be authorised by the Minister of Justice. The conditions for operation of these entities require that information on their founders and beneficiaries be available. 48. All relevant entities and arrangements, companies, partnerships, foundations and fiducies must keep accounting records and substantiating documentation for 10 years, pursuant to accounting regulations. This ensures the availability of such information and allows the entities transactions to be traced for purposes of establishing their financial positions and preparing their financial statements. 49. Pursuant to AML legislation, Luxembourg banks and financial institutions are required to perform customer due diligence and to hold records of transactions conducted by their current customers for a period of at least five years. The rules under which information relating to numbered accounts must be kept derive from a grand ducal regulation adopted on 1February 2010. On 14December 2012, a new CSSF regulation was adopted that clarifies that these customer due diligence rules are also applicable to numbered accounts that were opened prior to the grand ducal regulation issued in February 2010. However, with regard to professionals subject to AML obligations, given that
the supervision of compliance with AML obligations by lawyers and chartered accountants is recent and that experience of the supervisory authorities in this respect is limited, Luxembourg should monitor the respect of AML obligations by lawyers and chartered accountants and therefore, the availability of ownership information kept by these professionals. 50. Luxembourgs legal and regulatory framework, as well as the practices of Luxembourgs authorities generally ensure the availability of ownership and identity information, accounting records and banking information, except for information on the owners of bearer shares and information on the owners of some SICARs. Luxembourgs peers have not identified problems with respect to the availability of ownership, accounting or banking information in relation to any particular type of entity although the provision of the information has sometimes been delayed.
A.1. Ownership and identity information

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities.
Companies (ToR10 A.1.1)

51. Company law is organised in Luxembourg by the law of 10August 1915, as amended. Pursuant to that law, five types of companies can be created in Luxembourg: The socit anonyme (SA), or public limited company, articles23 ff of the law of 10August 1915, is a company the capital of which is divided into shares and which is constituted by one or more persons who are liable vis--vis the company and third parties only to the extent of their invested capital. The statutes of these companies and any amendments thereto must be notarised to be valid (on pain of nullity). Their capital (minimum EUR30986.69) must be fully subscribed. There were around 51000 SAs registered in Luxembourg on 30September 2012. The Socit Europenne (SE) or European Company is a company with a European dimension, and does not strictly fall under the territorial scope of the legislation relating to domestic companies in force in the country where it has been incorporated. European companies are regulated by Council regulation (EC) No 2157/2001 of 8October 2001 on the Statute for a European company (SE), which
10.
Terms of Reference to Monitor and Review Progress towards Transparency and Exchange of Information.

was transposed into Luxembourg law by the law of 25August 2006. Pursuant to Article10 of the EU regulation, the laws that apply to SEs are those that apply to public limited companies (SAs). The minimum capital for an SE is EUR120000. A total of 24 SEs were registered in Luxembourg on 30September 2012. All rules hereafter described for SAs apply to European companies. The Socit en commandite par actions (S.e.c.a) or partnership limited by shares, articles102 ff of the law of 10August 1915, is formed between one or several partners who are jointly and severally liable (the active partners) and one or more limited shareholders whose responsibility is limited to the amount of their contributions (the limited-liability partners). The statutes of these companies and any amendments thereto must be notarised to be valid. The rules applicable to SAs apply to S.e.c.a, unless otherwise provided by law. Ownership and record keeping requirements for SAs and S.e.c.as are the same. There were nearly 1200 S.e.c.as registered in Luxembourg on 30September 2012. The Socit responsabilit limite (S..r.l) or limited liability company, articles179 ff of the law of 10August 1915, is formed by one or more members, to a maximum of 40, whose liability is limited to their contributions. The statutes of these companies and any amendments thereto must be notarised to be valid. The shares are represented by non negotiable securities which may be transferred only under the specific conditions stipulated by law. The capital (minimum EUR12394.68) must be fully subscribed. There were around 52000 S..r.ls in Luxembourg on 30September 2012. The Socit cooprative or cooperative company, articles113 ff of the law of 10August 1915, has at least seven members, whose number and contributions can vary and whose shares are unavailable to third parties. There were 125 cooperative companies registered in Luxembourg on 30September 2012.
Publicity and registration formalities

52. By article27 of the law of 10August 1915, the deed establishing an SA must indicate the form of the company and its name, its headquarters, its business purpose, and the identity of the natural or legal person or persons signing the deed. The same rules apply to SEs and S.e.c.as and, pursuant to Article184 of the law, to S..r.ls. The deed constituting a cooperative company, to be valid, must state the name of the company, its headquarters, its business purpose, and a specific naming of all members (article115).
53. The procedures for registering companies in Luxembourg are stipulated by the law of 19December 2002. Article1 provides that all companies, as well as the branches of foreign companies, must be registered with the Register of Commerce and Companies (RCS). The RCS is a single registry operating under the authority of the Minister of Justice. It can be consulted by the public, and this can be done via Internet. All documentation deposited with the RCS is kept for a period of 20 years after the persons registration is deleted (cf. article23 of the grand ducal regulation of 23January 2003). 54. Pursuant to article6 of the law of 19December 2002, any commercial company must apply for registration, for which it must produce its deed of incorporation and indicate its corporate name, its legal form, the exact address of its headquarters, and the amount of its capital. All companies must also indicate the name of the persons authorised to manage, administer and sign for the company as its legal agents. SAs, SEs and S.e.c.as are not required to provide the names of their members for registration. On the other hand, S..r.ls must report the identity of all their members: full name, date and place of birth in the case of natural persons, and name, legal form and address of legal persons. 55. Registration in the RCS, pursuant to article15 of the law of 19December 2002, and provision of the statutes to the RCS, pursuant to article9 (1) of the law of 10August 1915, must take place within the month after the date of the finalised statutes. This Article also provides that any person may inspect the documents deposited with the RCS. Furthermore, within two months following their deposit with the RCS, those documents are published in section C of the Mmorial, the official gazette of Luxembourg (article9 (3) of the law). 56. Article11 of the law of 10August 1915 provides that, to be valid, any amendment to company instruments must be made in the form required by its constitutive instrument. Thus, amendments to the deeds of SA, S.e.c.a, SE and S..r.l must be notarised. Article11bis 2 requires that any deeds amending provisions that by law must be deposited and published be deposited with the RCS and published in the MemorialC. 57. The instruments of SA, SE and S.e.c.a do not necessarily contain information on their shareholders. This information is not required for registration and consequently is not updated in the RCS. Information on the members of cooperative companies is an integral part of their constitutive instrument. It must therefore be updated in the RCS under the same conditions as those for deposit of the original deed. 58. Article11bis (2) 3 of the law of 10August 1915 provides that all changes relating to S..r.ls shareholders must also be disclosed and published. These changes must be reported to registration authorities in the

month following the changes (article9 of the law). According to the law of 19December 2002 (article1, paragraph3) these changes are recorded in the RCS, published in the MemorialC and kept by registration authorities in the folder of the company concerned. 59. In Luxembourg, articles of incorporation of companies must take the form of a notarised deed. Upon creation of a company in Luxembourg, the notary in charge of preparing the statutes of incorporation will, in accordance with applicable AML requirements, verify all information needed for incorporation. This includes ascertaining and verifying the identity of shareholders (when this information is mentioned in the statutes) and beneficial owners of the company (see SectionA.1.2 below regarding bearer shares). Notaries are required to keep all information about their clients and legal entities they have created in their files for five years after the business relationship has ceased or after the transaction has been carried out. Supervision of the obligations to comply with AML requirements is undertaken by the Chambre des notaires (see below for more information on the supervisory process of AML obligations for notaries). 60. Once the company has been created, its representatives must submit a request for registration to the RCS and provide the RCS with the statutes of incorporation. In practice, this is usually done by the notary. The registration authorities have confirmed that this transmission is carried out within the required timeframe of one month in all cases as it is a prerequisite for a company to start its business activities. 61. Cooperative companies (socits cooperatives) are the only companies in Luxembourg for which articles of incorporation do not need to be in a notarised format. Thus, the registration request is made directly by the cooperative company representatives, along with a copy of the statutes of incorporation and other required information. In practice, the information is provided to the RCS by cooperative companies within the one-month deadline as the registration is required for the company to acquire its legal existence. 62. The RCS carries out a verification of the information submitted (a comparison between the information contained in the statutes and the information listed in the registration request). If an error is found, the RCS sends the request back to the notary (or to the company when the registration request was not submitted by a notary) for correction, without penalty. In the past years, around 23% of the registration requests were sent back for correction, in most of the cases because of editorial errors on the registration form. 63. Once the registration request is accepted, the statutes are published in the MemorialC, which is publicly accessible on the internet. The direct tax administration (ACD) has direct and complete access to the database of the RCS.
64. The RCS must be informed of any amendments made to the statutes of a company within one month. When the statutes are modified by a notary11, the notary will be responsible for providing the information to the RCS. For cooperative companies, if the changes are not made by a notary, the company itself will be responsible for providing the changes to the RCS. These modifications are generally provided to the RCS as the information will not be legally valid and will not have any legal impact if it is not registered with the RCS. Since the information almost always comes through a notary, the information is of a very good quality and filed on time (see below for more information on supervision to which notaries are subject). 65. If the RCS is aware that information concerning a company is not accurate, it will notify the company to make the appropriate correction. If the information is not modified by the company, the RCS will refer the case to the State Prosecutor who can apply judicial penalties. The State Prosecutor can also require the judicial liquidation of a company that does not comply with its obligation. For 2010 and 2011, 707 entities were dissolved following a decision of the Court for not complying with their obligations. The most common reasons for judicial liquidation are the absence of financial statements, the resignation of the board of directors, the failure to file annual accounts and/or the absence of a head office (generally resulting from the cessation of business). 66. Over the past two years, the RCS has undertaken a process of verification of all entries made in the RCS before 2002. All companies have received a letter asking them to verify the information maintained in the RCS and to correct it without charge, if necessary. This process was intended to verify the integrity and quality of the RCS. Statistics on corrections made following this update process are not available as the process is not yet completed. Up to now, approximately 50% of the files have been completed. However, responses received so far have shown that the information kept at the RCS was generally up to date and of very good quality. 67. Currently, to apply sanctions for non compliance with registration requirements, the RCS must refer the case to the State Prosecutor. Luxembourgs authorities are working on a preliminary draft law to introduce administrative penalties that could be applied directly by the RCS.
11.
Which is mandatory for all companies except cooperative companies since a notarial deed can only be modified by another notarial deed, except for cooperative companies that do not need to be created by notary.
Register of registered shares

68. SAs, SEs, and S.e.c.as must keep a register of registered shares at their corporate offices, containing the full name of each shareholder, the number of shares held, and the date of transfer of the shares, with the identity of their new holder (articles39 and 40 of the law of 10August 1915). If registered shares are converted into bearer shares, the date of the conversion must be recorded in the register. 69. Pursuant to article185 of the same law, each S..r.l must keep, at its company headquarters, a register containing complete and authentic copies of the constitutive instrument of the company, of the instruments amending that instrument, as well as a list of the names, professions and addresses of the members, and a record of transfers of corporate units. Every member may inspect the register. Transfers of shares in an S..r.l. may be confirmed by a notary or in a private document (article190). Shares may not be transferred inter vivos to non-members without the agreement of the general assembly of members representing at least three-quarters of the companys capital. 70. Cooperative societies must also maintain a register mentioning the identity of their members (name, profession and address) (article118 of the law). An updated list must be filed every six months with the RCS (article133), and may be consulted by the public (article135). 71. Registers of shares kept by legal entities are available to the tax authorities as these legal entities must provide the information to the tax authorities on request. This record keeping requirement is also verified by the direct taxation administration (ACD) during tax audits. In practice, Luxembourgs authorities have confirmed that the information on companies is always provided when requested.
Tax requirements
72. Companies are required to register with the (ACD, pursuant to paragraph165d of the General Taxation Act (LGI). This provision requires persons others than natural persons to report to the competent local taxation office facts that, in tax matters, create, modify or end a personal obligation to pay taxes. For this reason, in practice, once a companys statutes have been published in MemorialC, the local taxation office registers the company and sends it an opening declaration. 73. On this occasion, companies may be asked to provide, on request, information concerning the company headquarters, its mailing address, the names and addresses of recent directors and managers and of members or shareholders. However, as this information is already publicly available in
MemorialC, it is requested by ACD only to the extent that there are remaining uncertainties as regards its accuracy. 74. Companies subject to the VAT must also register with the indirect taxation administration (AED) and file a declaration with the local tax office when they begin business, or when there is a change or cessation in activity in the manner and form prescribed by the administration (article61 of the VAT law). The registration form requires that the information include the company name, its legal form, the date of publication in MemorialC, the type of activity or the names and addresses of shareholders and members. 75. As persons subject to corporate income tax, companies are required to submit an annual return to the ACD by 31May of each year (articles116 and 162 of the Income Tax Act) in the manner provided for by the grand ducal regulation of 13March 1970 and on the form established by the administration (article7 of the regulation). Tax form No.500 (resident companies) requires communication of information including the names of shareholders holding at least 10 % of the companys capital. Companies are required to disclose such information which is necessary for the application of some fiscal provisions, in particular the exemption of withholding tax on dividends from Luxembourg sources (article166 of the income tax law) and the taxation of the benefits granted to their shareholders as hidden distributions of benefits (article164 of the law). In addition, the tax return indicates that, amongst others, the information that must be submitted upon the filing of this declaration includes the attendance list and the minutes of the general meeting of shareholders. 76. In practice, a legal entity is automatically registered by the ACD for tax purposes once the entry in the RCS and the statutes of incorporation (for SAs, S.e.c.a.s, S..r.l.s, cooperative companies and partnerships under civil law) or an excerpt of the statutes (for general partnerships and limited partnerships) are published in the MemorialC. When the new legal entity is registered with the RCS and this information becomes publicly available, the ACD sends the entity an opening declaration (a questionnaire requesting specific information, such as the expected turnover that will be used to apply instalment payments). The legal entity has one month to complete and return the questionnaire. Once registered, the legal entity receives a tax identification number from the ACD, which is different from the number given by the RCS. The ACD authorities verify the information during the registration process and periodically. Information provided in tax returns filed by legal entities is checked against information available in files maintained by the ACD. 77. With regard to the filing of tax returns, the follow up and sanction process by the ACD is very strict. Automatic reminders are sent for late filing and fines are applied for information missing or for late filing. For 2009,

1224 legal entities received fines for late filing or missing information for a total of EUR837617, 1457 in 2010 for a total of EUR1122495 and 2227 in 2011 for a total of EUR1655908.The ACD authorities may also perform on-site visits to verify the information and apply sanctions through the State Prosecutor. 78. In principle, there is no automatic registration with the AED for VAT purposes and the legal entity itself has to request a registration if it is liable for VAT. If the entitys activities are outside the scope of the VAT, no VAT registration is required. The expected turnover will determine whether the legal entity needs to file a VAT return on an annual, quarterly or monthly basis. 79. The VAT authorities (AED) can proceed to automatic VAT registration if a legal entity has failed to do so spontaneously. The ACD can also inform the VAT authorities that a legal entity should be registered for VAT purposes if it is discovered that this entity failed to fulfil this obligation. 80. In practice, VAT information is available and verified based on a system of audit for VAT returns. There is an automatic reminder for late filing and fines are applicable. The VAT authorities have the power to perform on-site visits to verify the information and the Indirect Tax Administration can apply sanctions, suspend or even cancel the VAT number, which has proved to be the best way to stop cases of VAT fraud. During the year 2011, the number of fines for non-compliance with filing obligations amounted to 13847. 81. In addition to registration with the RCS, family wealth management companies (Socits de patrimoine familial, SPFs) have to be registered with the AED. The registration is done automatically based on the information published in the MemorialC. The AED confirmed that when requests for ownership information are received by the AED, the information has always been available to answer these requests.
Obligation to publicise major holdings in the company

82. Pursuant to EU regulations (Directive 2004/109/EC of 15December 2004), on 11January 2008 Luxembourg adopted a law on transparency of information on the issuers of securities12. That law establishes the obligation regarding notification of major shareholdings in issuing bodies whose shares are eligible for trading on a regulated stock exchange (primarily SA, SE and S.e.c.a) and where Luxembourg is the member state of origin.
12.
Law of 11January 2008 on transparency requirements for issuers of securities.
83. Pursuant to articles8 to 14 of this law, any natural person or legal entity that directly or indirectly acquires securities conferring on it a voting rights percentage of 5% or more of all voting rights must advise the issuer and the CSSF. Such notification is also required when the percentage of voting rights reaches or exceeds 10%, 15%, 20%, 33 2/3%, 50% and 66 2/3%. The issuing company must immediately publish any change in the voting rights attached to the different categories of shares. 84. The effect of this obligation is that all shareholdings in excess of 5% in listed Luxembourg companies must be publicly disclosed.
Professionals providing registered offices

85. The law of 31May 1999 establishes specific rules governing professionals providing registered offices to companies. Article1 of that law provides that only a credit institution or another professional of the financial sector and the insurance sector, an attorney-at-law (avocat la Cour), a European lawyer, an external auditor, an approved external auditor, and an accountant can provide registered offices to companies. 86. Under article2 of that law, such agents must know the real identity of the members of the bodies of the company registered with it and must hold the relevant documentation and keep it up to date. That information must be retained for at least 5 years after the relations between the company and the agent have ceased. 87. As service providers, agents providing registered offices are also subject to the rules contained in Luxembourgs AML legislation. In particular, this legislation provides that all professionals providing services to companies, partnerships and fiducies fall specifically within the scope of application of the AML law when they provide registered offices or an administrative or postal address to third parties (article2 of the law of 12November 2004). Pursuant to article3 of that law, these service providers must identify their clients and retain information on the identity of their clients and beneficial owners, as well as all information regarding transactions conducted, for five years (see below). In addition, agents providing registered offices must inform the RCS of any changes with regard to the legal entities for which they provide a registered office. This obligation is examined during the AML verification process to which agents providing registered offices are subject. A credit institution or another professional of the financial sector and the insurance sector, an external auditor, an approved external auditor, and an accountant are in all cases professionals covered by AML/CFT legislation and are required to perform CDD towards their customers in all circumstances. Practical aspects of professionals AML obligations are described below.
Foreign companies
88. Foreign companies that have their principal establishment in Luxembourg (effective seat of management) are subject to the same formalities as companies established under Luxembourg law (cf. article158 of the law of 10August 1915). 89. These companies are required to register with the RCS in Luxembourg, following the same rules as those that apply to Luxembourg companies; they must register with the ACD, and they must submit annual tax returns to the ACD (model No 500, resident companies). They are also required to keep a register of shares in the same conditions as those that apply to Luxembourg companies. Further, they can issue bearer shares, if so allowed pursuant to the legislation under which they are incorporated. 90. Consequently, information on these companies is available under the same conditions as those described above for Luxembourg companies. 91. There were 1335 foreign companies registered with the RCS as of 30September 2012. Luxembourgs authorities have confirmed that the information on foreign companies is available to the same extent as information on companies incorporated in Luxembourg, as foreign companies need to be registered with the RCS and the ACD (and for VAT if applicable). In practice, Luxembourg has never experienced any problem in accessing information on foreign companies, and no issues in relation to such companies were identified by Luxembourgs treaty partners.
Investment companies, financial holding companies (SOPARFIS) and family wealth management companies (SPFs) Investment companies (SICAV, SICAF, and SICAR)
92. A SICAV, according to the law of 17December 2010, is an openended (i.e.share capital not fixed) investment company which may, in principle, issue new shares at any time, and shareholders may redeem their shares. This type of company must adopt the form of an SA or an SE (art.25 and 32 of the law) and be approved by the CSSF. The minimum capital upon formation is EUR31000 but a threshold of EUR1250000 must be reached six months after the approval by the CSSF at the latest. A SICAV is subject to the rules that apply to SAs, unless the law provides otherwise (art.25). There were almost 2000 SICAVs registered on 30September 2012. 93. SICAFs are also governed by the law of 17December 2010. These are closed-ended (i.e.share capital is fixed) investment companies. This type of investment company can take the form of an SA, an SE, a S.e.c.a, a S..r.l, an S.e.c.s (limited partnership, see below section A.1.3 of this report),
an S.e.c.n (general partnership, see below section A.1.3 of this report) or a cooperative company and be approved by the CSSF. The minimum capital upon formation is EUR31000 but a threshold of EUR1250000 must be reached six months after the agreement by the CSSF, at the latest. The rules that apply to SAs, SEs, S.e.c.as, S..r.ls, S.e.c.s, S.e.c.ns and cooperative companies apply to a SICAF in the absence of any contrary requirements in the law. There were 4 SICAFs registered on 30September 2012. 94. A SICAR (investment company in risk capital) is, according to the law of 15June 2004, an investment company taking the form of an SA, a S..r.l, a S.e.c.a or an S.e.c.s (limited partnership, see below section A.1.3 of this report), the purpose of which is to invest in private equity. Before operating, a SICAR must be approved by the CSSF. Only institutional and professional investors can invest in a SICAR (minimum investment: EUR125000). The minimum capital is EUR1000000 and must be reached in the 12 months following the approval granted to the investment company. Unless otherwise provided by the Law of 15June 2004, SICARs are subject to the rules that apply to companies after which they are modelled. There were 274 SICARs registered in Luxembourg on 30September 2012. 95. The rules regarding the establishment of companies under the company law of 10August 1915 apply to SICAVs, SICAFs and SICARs. Accord ingly, investment companies must be registered in the RCS and provide their deeds of incorporation including the identity of the natural or legal persons signing the deed as well as the identity of their representatives. For SICARs taking the form of an S.e.c.s, there is no obligation to disclose the identity of the partners (art.4 of the law of 15June 2004). These investment companies can issue bearer shares when they take the form of an SA, an SE, or a S.e.c.a. Luxembourg has nevertheless advised that SICARs mainly issue registered shares since SICARs securities can only be held by some specific categories of investors whose legal status must be checked systematically. 96. A draft bill requiring SICARs taking the form of an S.e.c.s., to disclose the identity of the partners (partners of SICARs in the form of S.e.c.s will be subject to the same general legal requirements as partners of S.e.c.s not taking the form of a SICAR), was tabled at the Parliament. It is expected to be adopted shortly. 97. For tax purposes, SICAFs and SICAVs are not subject to corporate income tax (art.173 of the law of 17December 2010) but to an annual subscription tax of 0.05% or in specific cases 0.01%, of the companys assets. These companies are therefore required to submit a declaration for payment of this tax to the AED, but are not subject to other tax requirements in terms of registration by tax authorities or declaration of income. Dividends paid by investment companies, when paid to foreign investors, are exempt from withholding tax.

98. SICARs are subject to corporate and communal taxes. Income from transferable securities and capital gains are tax exempt. As entities liable and subject to taxes, SICARs must be registered by the ACD. All dividends paid by a SICAR to its investors are not subject to any withholding tax and these dividends are not subject to tax in Luxembourg. 99. SICAVs, SICAFs and SICARs must take the form of limited companies or limited partnerships. Therefore, the rules applicable to these legal entities concerning the availability of information are exactly the same as for all other legal entities in Luxembourg and are not affected by their status of SICAVs, SICAFs or SICARs. Information needed for incorporation (such as information on shareholders and beneficial owners) is verified by the notary upon creation of the legal entity (and when the statutes are modified), and again, during the registration process with the RCS. SICARs also have to be registered with the ACD, whilst SICAFs and SICAVs need to be registered with the AED for the subscription tax. 100. In summary, with the exception of SICARs in the form of a S.e.c.s. which are currently the subject of the draft bill mentioned above, information for SICARs, SICAFs and SICAVs is available and verified by various means, on the same basis as all other companies. There are currently only 12 SICARs out of 274 in the form of a S.e.c.s.
Financial holding companies (SOPARFI)

101. SOPARFIs do not constitute a specific type of company. These are SAs, S.e.c.as or S..r.ls that are regulated by the general law applicable to companies (law of 10August 1915) and whose purpose is to manage holdings in a group of companies but that can also have a commercial activity, directly or indirectly attached to holding management. 102. As previously mentioned in paragraph43 to 49, all SAs, S.e.c.as or S..r.ls must be registered in the RCS and provide, to this extent (i) the deed of incorporation including the identity of the natural or legal person or persons signing the deed as well as the identity of their representatives and (ii) when these companies take the form of a S..r.l the identity of all members (information further required to be updated). SOPARFIs are also required to keep a register of registered shares in the same conditions as those applicable to SAs, S.e.c.as and S..r.ls. When these companies take the form of an SA or an S.e.c.a they can issue bearer shares. 103. As a SOPARFI does not constitute a specific type of company for tax purposes, it is subject to general taxation rules provided for by Luxembourg legislation for companies. A SOPARFI:
is subject to corporate and communal taxes at the normal rate on its income. It can, under conditions, be tax exempt on the dividends received from companies in which it has a substantial interest (article166 LIR); is not taxed on the capital gains resulting from the disposition of holdings; is subject to a 15 % withholding tax on the dividends paid subject to double taxation conventions concluded by Luxembourg and the EU Parent Companies Directive; is subject to corporate, communal and wealth taxes and VAT for all its commercial activities.
104. SOPARFIs must register with the ACD and file an annual tax return with this administration. 105. Given the fact that SOPARFIs are not a specific type of legal entity, they are subject to the same legal obligations as all other legal entities with regard to the availability of information. A large number of EOI requests received by Luxembourg in the last three years were in relation to SOPARFIs, mainly for information on ownership. In practice, all SOPARFIs are registered and handled by the same tax office (Bureau dimpt des Socits 6 ), which facilitates the treatment of incoming requests pertaining to these companies since the information is centralised. Luxembourgs authorities have stated that when requested, this information is available either internally or from the companies themselves although a peer indicated that in certain cases, substantive information was not available or could not be provided (see section B.1.2 below).
Family wealth management companies (SPF)

106. The Luxembourg law of 11May 2007 allows the creation of family wealth management companies (socits de gestion de patrimoine familial, SPF). These entities do not constitute a new type of company as such; they take the form of an S..r.l, an SA, an S.e.c.a, or a cooperative company (article1 of the law): the exclusive purpose of which is to acquire, hold, manage and realise financial assets; the shares of which are reserved to investors who are individuals or entities acting in the interest of the private wealth of one or more individuals, or an intermediary acting for the account of the investor representing individuals;

the statutes of which provide explicitly that it is subject to the provisions of the law of 11May 2007.
2720 SPFs were registered on 1st January 2012. 107. The rules for registering an SPF are the same as those for the type of company after which it is modelled. Therefore, SPFs must be registered in the RCS and provide, to this extent, the deed of incorporation, the identity of the natural or legal person or persons signing the deed as well as the identity of their representatives and, when these companies take the form of an S..r.l the identity of all members (information which is required to be updated). These companies, when they take the form of an SA or an S.e.c.a can issue bearer shares. They are also required to keep a register of registered shares under the same conditions as those applicable to SAs, S.e.c.as and S..r.ls. 108. On the other hand, there are special tax rules applicable to these companies. It is specified that SPFs are not subject to corporate income tax but to an annual subscription tax of 0.25% of the companys capital, with a minimum of EUR100 and a maximum of EUR125000. The SPF is therefore required to submit a declaration for payment of this tax, but it is not subject to other tax requirements in terms of registration or declaration of income. Controls to which an SPF is subject are designed to search for and audit facts concerning the fiscal status and elements necessary to ensure and validate the correct and precise collection of taxes owed by the company (article6 (2) of the law of 11May 2007 concerning the creation of an SPF). 109. SPFs, like SICAVs, SICAFs, SICARs and SOPARFIs have to be created under one of the legal forms available for legal entities in Luxembourg. Availability of ownership information is ensured under the conditions applicable to the legal form they take. They have to be registered with the AED and file a quarterly return for the payment of the subscription tax. The AED verifies that all the conditions required for the creation of an SPF are met; otherwise, the entity loses its SPF qualification and special tax treatment. The AED also performs audits in order to control the payment of the annual subscription tax and sanctions can be applied in case of default. In 2009, 44 SPFs were subject to sanctions for default, 193 in 2010 and 149 in 2011. 110. Given that a large number of SPFs use a professional providing a registered office and given that these professionals are subject to AML obligations, ownership information in relation to SPFs is also maintained by these professionals to comply with the AML requirements. For the period 2009-11, six requests for information in relation to SPFs were received by Luxembourg. They were answered by the AED within 90 day and the information was available in all cases. Luxembourgs treaty partners have not made any comments on the availability of information in relation to SPFs.
Anti-money laundering legislation and information held by nominees Anti-money laundering legislation
111. The anti-money laundering rules are set out in the law of 12November 2004 as most recently amended by the law of 27October 2010.13 For the bodies and persons to whom the law applies, these rules include obligations regarding the identification of customers and verification of their identities. 112. Pursuant to article2 of the law, the persons and entities subject to the obligation concerning customer identification are, amongst others: Credit institutions and financial institutions authorised to exercise their activities in Luxembourg; Insurance companies authorised to exercise their activities in Luxembourg; Undertakings for collective investment (including SICAV) and investment companies (which covers SICAF, SICAR and other securitisation companies); Notaries; Tax advisors, accountants, accounting professionals and statutory auditors; and Attorneys, when acting as trust and company service providers14, when assisting their clients in preparing or conducting transactions involving the purchase and sale of real properties or businesses, the opening or management of bank accounts, the constitution, domiciliation, management or direction of fiducies, companies or similar structures, or where they are involved on behalf of their clients in any financial or real estate transaction.
113. The identification obligations deriving from article3 of the law apply when: A customer wishes to enter into business relationships;
13. The current AML/CFT legislation mainly derives from Directive 2005/60/ EC of the European Parliament and of the Council of 26October 2005 on the Prevention of the use of the Financial System for the Purpose of Money Laundering and Terrorist Financing. 14. According to article1 of the law of 12November 2004, these services include forming companies, serving as director or in a similar capacity, providing a registered office or a business address, serving as a trustee, acting as a nominee (proxy) shareholder for another person.

A customer wishes to conduct a transaction in which the amount reaches or exceeds EUR5000, whether the transaction is carried out in one or several operations that appear to be related; Money laundering or the financing of terrorism is suspected; There are doubts about the truthfulness or accuracy of the identification data concerning a customer already identified.
114. Pursuant to article3 of the law, the identification and verification of the customer are to be done on the basis of documents, data or information from reliable and independent sources. CSSF Regulation 12-02 of 14December 2012 provides for specific measures to be taken in order to verify this information. In addition, it requires professionals to take complementary measures of verification in accordance with the assessment of the AML/CFT risk profile of the customer. The CSSF Regulation 12-02 of 14December 2012 specifies the documents on which the identification must be based. It provides in particular that: the identification and verification of customers who are natural persons shall be made in principle on the basis of an official identification paper established by a public authority which carries the signature and a photograph of the client (e.g.passport, identity card, residence permit). Additional verification measures shall be taken in accordance with the professionals risk assessment of the client. the identification and verification of customers who are legal persons or other legal arrangements shall be made on the basis of (1)articles of incorporation (or equivalent), (2)recent extract from the trade register (or equivalent). In addition, identification and verification of the identity of the representatives (agents) of legal persons or persons delegated by those bodies is to be done on the basis of the same rules as those for natural persons. Furthermore, additional verification measures shall be taken in accordance with the professionals risk assessment of the client.
115. Moreover, the organisations and persons targeted by AML legislation must identify any beneficial owner of the customer as defined in article1 of the law of 12November 2004 and take reasonable steps to verify the customers identity.15 Following the assessment conducted by the FATF as it results
15. Directive 2005/60/EC of the European Parliament and of the Council of 26October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing. The Directive defines beneficial owner as the natural person(s) who ultimately owns or controls the customer and/or the natural person on whose behalf a transaction or activity is being conducted: In the case of corporate entities, it include (i)the natural
from the report adopted in 2010, Luxembourg has adopted the grand ducal regulation of 1February 2010 which provides in article1(2) more detailed obligations to identify and verify the identity of beneficial owners. For all customers, the obligation to identify the beneficial owner requires determining whether the client is acting on behalf of another person and then taking all reasonable measures to obtain sufficient identification data to ascertain the identity of that other person. For customers that are legal persons or arrangements, the obligation requires taking all reasonable steps to: understand the ownership and control structure of the client; determine the individuals who ultimately own or control the customer.
CSSF Regulation 12-02 of 14December 2012 specifies professionals obligations with regard to beneficial ownership, e.g.by requiring professionals to obtain information on the name, first name, nationality, date of birth and address of the beneficial owner and by making clear that beneficial ownership is also possible where the 25% threshold referred to in Directive 2005/60/EC is not reached. 116. The entities and professionals covered by the law of 12November 2004 must retain all information relating to identification and transactions for five years after the business relationship has ceased or after the transaction has been carried out (article3.6 of the law). They must also inform, without delay, the financial information unit located in the prosecutor office of the local Luxembourg district court (tribunal darrondissement de Luxembourg) in case of any suspicion of money laundering (art 5 of the law). 117. The number of notaries is limited to 36 in Luxembourg. They are all supervised by la Chambre des notaires du Grand Duch du Luxembourg. Amongst its functions, the Chambre des notaires ensures that AML obligations are respected (AML obligations were strengthened by the law of 27October 2010 amending the law of 2004). 118. The Chambre des notaires launched a program of audits in mid-2011 that was completed at the end of 2012. During this period, all notaries were audited by a team of two persons, which had access to all documents and notarial acts of the notary under audit. Verifications were performed on a
person(s) who ultimately owns or controls a legal entity through direct or indirect ownership or control over a sufficient percentage of the shares or voting rights in that legal entity, including through bearer share holdings, other than a company listed on a regulated market that is subject to disclosure requirements consistent with Community legislation or subject to equivalent international standards; a percentage of 25 % plus one share shall be deemed sufficient to meet this criterion; (ii)the natural person(s) who otherwise exercises control over the management of a legal entity.

sample basis and specific controls were made on sensitive documents and notarial deeds, such as those relating to the creation of a legal entity, acquisition of real estate through a legal entity and mergers. Further controls were possible in instances where errors or defaults were detected, which did not happen in practice. 119. These audits have shown that notaries were well informed of their AML obligations, that the information was available and that appropriate controls were in place. The Chambre des notaires has extensive sanction powers in case of breach of AML obligations by a member. It can issue a warning, a reprimand, a fine or a suspension (from 15 days to a year). A very limited numbers of breaches were noted during the audit process, none of them being serious, so no sanctions were applied. A new round of AML verifications will begin in 2013. During the review period, notaries did not receive any notices from the ACD to answer incoming EOI requests but audits performed over the last two years have shown that information is available within notaries offices in all circumstances. 120. Lawyers are also subject to the same AML obligations when acting as trust and company service providers, when assisting their clients in preparing or conducting transactions involving the purchase and sale of real properties or businesses, the opening or management of bank accounts, the constitution, domiciliation, management or direction of fiducies, companies or similar structures, or where they are involved on behalf of their clients in any financial or real estate transaction. 121. The nearly 2000 lawyers in Luxembourg are under the supervisory authority of either the Bar of Luxembourg or the Bar of Diekirch (the Bars). The Bars have a power of self-regulation and have an audit process to ensure the respect of AML obligations by its members. 122. A first round of audits was launched in 2011 and audits were performed in law firms of different sizes, ranging from small (1 lawyer) to large (over 50 lawyers). All audited lawyers were asked to fill out a questionnaire issued by the Bar with questions focused on AML obligations related to the identification of clients, the origin of funds, internal AML procedures, awareness of lawyers/staff to comply with AML obligations as well as continuous training, and all audited lawyers were interviewed in their law firm by the members of the Anti-Money Laundering Commission, a commission set up by the Bar to monitor compliance with AML obligations. Its main purpose was to raise awareness about AML obligations for lawyers rather than sanction them. During this first round and up to 2012, 500 lawyers were audited. In general, the results demonstrated that lawyers are well aware of their AML obligations including obligations regarding the identification of clients and verification of their identities. No sanctions were applied by the Bars during the first round.
123. Sanctions that can be applied range from a warning, to disciplinary sanctions through the disciplinary council such as fines, temporary suspension and even permanent suspension. The first round of audits has helped to raise and achieve a high level of awareness amongst lawyers and the second round that will start soon will check whether these requirements are carefully applied and will sanction defaults. 124. There are 1400 chartered accountants in Luxembourg that are subject to AML obligations on all their activities and that are supervised by LOrdre des Experts-Comptables (OEC). The verification of respect for AML obligations, including those in relation to identity information, is made through samples. The audit team has access to all the documents and files. In case of default, sanctions can be applied, such as warnings, fines and even suspension of the professional. When a sanction is applied, verification is scheduled shortly afterwards to ensure that the appropriate corrective measures have been implemented. The OEC has initiated controls in recent years the process began in 2007 and was strengthened in 2012 in order to ensure that its members are fully aware of and comply with AML obligations. 125. Since the new audit process is recent, no official results are available, although the preliminary results show good compliance of chartered accountants with the AML obligations and no major breaches have been identified so far. 126. Statutory auditors have the same legal obligations in relation to AML obligations. The nearly 440 members are under the supervision of lInstitut des Rviseurs dEntreprise du Luxembourg (IRE). The obligations of the members, including AML obligations, are subject to an audit process. Each professional is audited at least once every six years. The verification is based on a questionnaire filed by the members and the on-site verification is made by samples to control whether processes are applied, such as the client identification process. 127. Sanctions for breaches include a simple warning, a reprimand, a fine, the removal of the right to vote in the general assembly with a prohibition on being a member of the Council of the IRE for a maximum of six years, the suspension from or the definitive prohibition on exercising some activities, and the suspension of or the definitive prohibition on the right to practice the profession. The audit process has shown that knowledge and compliance of the professionals with these AML obligations are very high. Very few sanctions were applied, and those were mainly warnings for non-serious breaches. 128. In conclusion, given that in Luxembourg, supervision of compliance with AML obligations by lawyers and chartered accountants is recent the respect of AML obligations by lawyers and chartered accountants should be monitored by Luxembourg on an on-going basis.
Nominees
129. Anti-money laundering legislation establishes an obligation regarding identification of customers for a whole series of service providers. Thus, article1 of the law of 12November 2004, as amended, provides that any professional serving as nominee shareholder for another person is considered to be providing services to companies and fiducies. This professional is furthermore subject to due diligence obligations with respect to the customer. 130. Moreover, the Luxembourg tax authorities have the power to require any person, including attorneys and financial institutions, to provide any information for purposes of the EOI, provided that such exchange takes place under the aegis of a treaty that contains an article26 consistent with the standard (see section B.1 below). Thus, any person acting as nominee must disclose the identity of the person for whose account the shares are held. 131. In practice, given that the professionals acting as nominees (lawyers, accountants, notaries and service providers) are subject to the AML obligations, ownership and identity information in cases of professionals acting as a nominee is available. Luxembourgs authorities, including the ACD and the AML authorities, have confirmed that the number of professionals acting as nominees is limited and that their experience in relation to nominees is strictly limited. They do not have knowledge of any non-professional nominees that would have acted in such capacity in Luxembourg and consider any potential gap to be very limited.
Conclusion
132. In light of the obligations imposed by the various regulations in force in Luxembourg: SAs, SEs and S.e.c.as must keep a register of registered shares and, if they are listed, they must know the identity of shareholders who own more than 5% of their capital. However, these companies are also authorised to issue bearer securities (see section A.1.2 below). The names of the members of a cooperative company are indicated in its statutes and are reported to the RCS. This information must be kept up-to-date in the statutes and in the RCS. The names of S..r.ls shareholders are disclosed to the RCS upon initial registration and all changes must be reported to registration authorities. Moreover, these companies are required to keep an upto-date register identifying their shareholders. Foreign companies are subject to the same obligations as Luxembourg companies when they have their place of effective management in
Luxembourg (including maintaining a register of shares or issuing bearer shares if also allowed pursuant to the legislation under which they are incorporated). The branches of foreign companies are required to register with the RCS and must at that time provide information that includes the name of the country in which they have their principal registration. All these companies are required to register with the tax administration and are subject to reporting and filing obligations that include the identity of their members under certain circumstances. There is however no clear requirement to provide the identity of shareholders or members in companies in all situations. Investment companies, SPFs and SOPARFIs are subject to the same registration and record keeping requirements as companies after which they are modelled (registration in the RCS, share register, bearer securities). SICAVs, SICAFs and SPFs have specific tax obligations which can limit, for tax administrations, the availability of their information.
133. Approximately 20% of EOI requests received are in relation to ownership and identity information. Given the various sources of information that exist in Luxembourg and based on the legal and regulatory framework, the practices of the Luxembourg authorities and the experience of its peers, it is concluded that, ownership and identity information with regard to companies is available in Luxembourg.
Bearer shares (ToRA.1.2)

134. Shares of SAs, SEs, and S.e.c.as may be issued in bearer form (articles37.4 and 103 of the law of 10August 1915). The holders of these shares are not identified in the register of shareholders that these companies must keep. 135. Luxembourg law provides mechanisms for ensuring the availability of information on the identity of the holders of bearer shares under specific circumstances: for companies listed on a regulated market, as described above, when the percentage of voting rights exceeds certain thresholds (10%, 15%, 20%, 33 1/3%, 50% and 66 2/3%). In this case, the shareholder must declare himself to the company and to the Financial Sector Supervisory Authorities (CSSF); through the information that must be supplied in support of the declaration that companies are to file with the Luxembourg tax authorities, in particular the lists of attendance at general meetings

of shareholders. In addition, holdings of over 10% of the capital of the company must be reported on this return, in particular for the application of the Luxembourg Parent-subsidiary directive and for the taxation of hidden distributions of profits. 136. However, although there are parallel mechanisms that ensure the availability of this information in specific situations, there is no overall obligation to identify the holders of bearer shares under all circumstances in Luxembourg. 137. Luxembourgs authorities have stated that a preliminary draft bill to immobilise bearer shares has been prepared by the Ministry of Justice (which provides that bearer shares issued by SA, S.e.c.a and SE have to be immobilised with a depository designated by the company. The depository is subject to AML obligations and keeps a register containing all relevant information for identifying the shareholders. Existing bearer shares have to be immobilised within a certain timeframe. Specific sanctions apply in case of violation of these obligations by the company or the depositary). This law is expected to be enacted by the Parliament later in 2013.
Partnerships (ToRA.1.3)
138. Under the Luxembourg legislation (law of 10August 1915 and Civil Code), three types of partnerships can be created in Luxembourg: The Socit en Nom Collectif (S.e.n.c, general partnership or unlimited company), articles14 and 15 of the law of 10August 1915, is one formed by at least two partners who are jointly and severally liable without limitation for the companys obligations. The shares of an S.e.n.c cannot, in principle, be transferred. No minimum capital is required to form an S.e.n.c. The partnership may be formed by notarial or private deed. On 30September 2012 there were 442 S.e.n.cs registered in Luxembourg. The Socit en Commandite Simple (S.e.c.s, limited partnership), article16 of the law of 10August 1915, is a partnership formed by one or several partners who are jointly and severally liable without limit (the active or general partners), and one or more limited partners (the silent partners) whose liability is limited to the level of their contribution. Limited partners cannot engage in management activity, even through a power of attorney. No minimum capital is required to form such a partnership. An S.e.c.s may be formed by notarial deed but this is not mandatory. On 30September 2012 there were more than 900 S.e.c.ss registered in Luxembourg. It is also possible to create a Socit civile (partnership under civil law), articles1832 et seq. of the Civil Code, which is partnership the
purpose of which can only be civil (not commercial). This partnership comprises two or more members that decide to pool something with a view to sharing the benefit that may result from this pooling or, in the cases provided by the law, by one person that allocate goods to a non-commercial activity. A partnership under civil law may be formed by notarial deed but this is not mandatory. On 30September 2012, 3889 such partnerships were registered in Luxembourg.
Publicity and registration formalities

139. Article5 of the law of 10August 1915 provides that the deeds establishing S.e.n.cs and S.e.c.ss are to be published (in MemorialC) under the form of extracts at the expense of the company and that the extract must, under sanction, contain the personal particulars of all active partners in S.e.n.cs and S.e.c.ss and silentpartners in S.e.c.ss. Deeds establishing partnerships under civil law are entirely published and must contain, amongst others, the personal particulars of all partners (article8 of the law). Pursuant to article9 of the law this information must be provided to the RCS in the month following the date of the finalised statutes, any document being then kept in the folder of the partnership concerned. 140. Article1 of the law of 19December 2002 provides for the registration of S.e.n.cs and S.e.c.ss as well as partnerships under civil law in the RCS. Article6 of the same law provides expressly that S.e.n.cs and S.e.c.ss must provide, for registration in the RCS, their business name, their legal form, the full address of their head office, a description of the business purpose, the amount of corporate capital as well as the full names and date of birth of the members or, in the case of legal persons, their corporate name, legal form, full private or professional address, and the number of shares held by each. The application for registration must be submitted within the month following the event that makes registration necessary (article15 of the law of 19December 2002. This last information must also be provided by partnerships under civil law for registration (article10 of the law). 141. As all partnerships deeds are published, all changes concerning these deeds must, pursuant to article11bis 2 of the Law of 10August 1915, be published and provided, on this occasion, to registration authorities. 142. In Luxembourg, information on partnerships provided upon creation and subsequent changes is verified by the notary (if created by a notary). This information is again verified by the RCS upon registration (within one month of the creation) since the registration requirements for partnerships are the same as for any other legal entity. If the entity is not created by a notary, the information is verified by the RCS upon registration. Modifications to

the deed also need to be registered with the RCS. In addition, information on partnerships is also available from the tax authorities (see below).
Information held by S.e.n.c, S.e.c.s, and partnerships under civil law

143. S.e.n.cs, S.e.c.ss and partnerships under civil law are not required to keep registers recording the identity of their members.
Tax requirements
144. Partnerships are required to register with the ACD, pursuant to 165d of the General Taxation Act (LGI). This provision requires persons others than natural persons to report to the competent local taxation office facts that, in tax matters, create, modify or end a personal obligation to pay taxes. For this reason, in practice, once an extract relating to a partnership has been published in Memorial C, the local taxation office registers the partnership and sends it an opening declaration. 145. On this occasion, partnerships may be asked to provide, on request of the ACD, information concerning the partnership headquarters, its mailing address, the names and addresses of recent directors and managers, and of members or partners. Indeed, as this information is already publicly available in MemorialC, additional information is requested by ACD only in case of uncertainty. 146. Partnerships subject to the VAT must also register with the indirect taxation administration (AED) and file a tax declaration with the local tax office when they begin business, or when there is a change or cessation in activity in the manner and form prescribed by the administration (article61 of the VAT law). The registration form requires that the information include the entity name, its legal form, the date of publication in Memorial C, the type of activity or the names and addresses of members. 147. Although the income of partnerships is taxable in the hands of their members, such entities are required to submit an annual declaration to the ACD in their own name (articles116 and 162 of the Income Tax Act) in the manner provided for by the grand ducal regulation of 13 Mach 1970 and on the return established by the administration (article7 of the regulation). Declaration No.300 requires communication of information including the names of partners. As this information is necessary for the calculation of the personal income tax of all of the partnerships members, its provision is mandatory, and failure to provide it can lead to the application of sanctions by the local taxation office pursuant to 166 and 202 of the LGI. 148. In practice, information is also held at the ACD because partnerships need to register with the ACD (for this registration they need to complete an
opening declaration, in the same manner as do companies) and file an annual declaration. Thus, the information is verified upon registration and every year, when the tax return is filed. VAT registration and declaration may also be needed if the activities performed by the partnership are subject to VAT. Again, in such a case, the information is verified upon registration with the VAT authorities and every year when the VAT return is filed. Hence, identity information on partnerships is verified in various contexts (upon creation, registration with the RCS, registration for direct taxes and VAT, and each year, when tax and VAT returns are filed) and is therefore available through various sources to the relevant authorities.
AML legislation
149. The obligations described under section A.1.1 for companies apply as well to partnerships. Attorneys and tax advisors as well as all professionals deemed to be company service providers fall specifically within the scope of application of the AML law when they assist their clients in the preparation or conduct of transactions concerning the establishment, management or direction of companies (article2 of the law of 12November 2004). By article3 of that law, these service providers must identify their clients and retain information on the identity of their clients and the beneficial owners of partnerships, as well as all information regarding transactions conducted, for five years.
Conclusion
150. Information that Luxembourg partnerships must provide upon registration includes the identity of their members. This information must be updated in the RCS. The tax administration also receives this information on an annual basis, through the compulsory declarations that partnerships must file. 151. For the period under review, approximately 1% of the requests received related to information on partnerships. Incorporation and registration requirements for partnerships in Luxembourg are the same as those applicable to companies, as confirmed by Luxembourgs authorities. Considering these multiple requirements for registration (with the RCS, the direct taxes and VAT authorities upon creation and when a change is made) and the practices of the Luxembourg authorities, the availability of information (including identity and ownership information), is verified and available through different means and hence, is in line with the standard set out in the Terms of Reference.
Trusts and fiducies (ToRA.1.4)

152. Luxembourg is signatory to the Hague Convention of 1July 1985 on the Law Applicable to Trusts and on their Recognition. In addition, Luxembourg legislation allows the creation of fiducies under Luxembourg law (cf. law of 27July 2003 on trusts and fiduciary contracts).
Fiducies under Luxembourg law

153. Pursuant to article5 of the law of 27July 2003, a fiduciary contract is a contract by which one person, the settlor ( fiduciant), agrees with another person, the fiduciary ( fiduciaire) that, subject to the obligations determined by the parties, the fiduciary becomes the owner of assets which shall form a fiduciary property. In contrast to a trust, a fiducie involves a definitive transfer of ownership of the assets placed in fiducie. Article6, however, stipulates that the fiduciary property is distinct from the property of the fiduciary, and that the fiduciary must, in its accounts, record the fiduciary property separately from its own property. 154. Article4 of the same law specifies only a credit institution, an investment firm, an investment company with variable or fixed share capital, a securitisation company, a fiduciary representative acting in the context of a securitisation transaction, a management company of common funds or of securitisation funds, a pension fund, an insurance or reinsurance undertaking or a national or international public body operating in the financial sector can act as fiduciary. All of these professionals are covered by AML obligations. 155. Luxembourg law requires the registration16 of fiducie contracts whenever they concern real estate, aircraft, ships or boats registered in Luxembourg (article12.1). This registration is done by the AED, which keeps a copy of the fiduciary contract. Moreover, in any public register in which the capacity of owner is inscribed, irrespective of the reason or circumstance, the fiduciary must be mentioned in that capacity after the indication of the owner of the property (article11 of the law). It should be noted, however, that if no real estate, ship or boat is held through the fiducie, there is no requirement for the deed to be registered. The AED has advised that there are currently no fiducies in Luxembourg that are holding real estate, aircraft, ships or boats and that should be registered based on such holding. 156. Luxembourg taxation rules provide that income from Luxembourg sources received via a fiducie is taxable in the hands of the settlor (pursuant to article11 of the tax adaptation law). The resulting tax obligations depend
16. Registration in this case means the formality by which certain deeds must be deposited with the indirect taxes administration; it will, in principle, be subject to payment of a stamp tax.
on the nature of the settlor (natural or legal person). Then as well, section164 of the LGI provides that any person holding an asset in the capacity of fiduciary must be able, upon demand, to identify the real owner of the property, and this implies the availability of such information. In practice, the use of fiducies in Luxembourg is rather limited. In any case, the fiduciary must be able to identify the settlor to the tax authorities.
AML legislation
157. The obligations described under section A.1.1 for companies apply as well to fiducies. Attorneys, notaries, tax advisors, credit institutions and financial intermediaries are covered by the AML law and must perform CDD in all situations. In addition, all other professionals providing services to companies and fiducies fall specifically within the scope of application of the AML law when they assist their client in the preparation or conduct of transactions concerning the establishment, management, provision of registered offices or direction of fiducies (article2 of the law of 12November 2004). By article3 of that law and the grand ducal regulation of 1February 2010, these service providers must identify their clients and retain information on the identity of their clients and beneficial owners, as well as all information regarding transactions conducted, for five years. For customers that are legal persons or arrangements, the obligation requires taking all reasonable steps to: understand the ownership and control structure of the client; determine the individuals who ultimately own or control the customer.
158. As previously mentioned, it is impossible by law for a non-professional to act as a fiduciary of fiducies created in Luxembourg. Moreover all professionals legally allowed to act as a fiduciary in Luxembourg are subject to AML obligations in all cases. Considering AML obligations applicable to professionals and other financial institutions in Luxembourg, it appears that information on fiducies will be available if requested, although no EOI requests in relation to a fiducie have been received from Luxembourgs treaty partners so far. In addition, notaries have confirmed that although fiducies exist this is not a widely used tool.
Foreign trusts
159. There is no provision in Luxembourg law that would prohibit a resident from acting as trustee, administrator or manager or from having the responsibility to distribute profits or to administer a trust that is constituted under foreign legislation. The law of 27July 2003 merely ratifies the Hague Convention without creating a legal framework covering trusts created under foreign law.

160. Thus, for example, and contrary to the situation of fiducies, a trustee administering a foreign trust does not have to belong to a specific category of professionals. 161. As with fiducies, the property held in a trust is separate from the personal property of the trustee. Luxembourg law requires the registration of trust contracts when they concern real estate, aircraft, ships or boats registered in Luxembourg (article12.1). There is no obligation to register these deeds in other situations. This registration is done by the AED, which keeps a copy of the trust contract. Moreover, in any public register in which the capacity of owner is inscribed, irrespective of the reason or circumstance, the trustee must be mentioned in that capacity after the indication of the owner of the property (article11 of the law). 162. The law of 27July 2003 requires the registration of deeds of trust when the property, aircraft or boat is placed in trust after the effective date of the law. Deeds of trust established pursuant to grand ducal regulation of 19July 1983, the previous body of regulations applicable to trusts, are not subject to the registration requirement. Currently, no trusts are registered in Luxembourg because they hold real estate, aircraft or boat in Luxembourg and trusts are more used for the purposes of administering assets. 163. Luxembourg taxation rules provide that income from Luxembourg sources received via a trust is taxable in the hands of the settlor (pursuant to article11 of the tax adaptation law). The resulting tax obligations depend on the nature of the settlor (natural or legal person). As well, section164 of the LGI provides that any person holding an asset in the capacity of fiduciary must be able, upon demand, to identify the real owner of the property.
AML legislation
164. The obligations described above for fiducies apply to trusts under the same conditions. Professionals acting as trust service providers are required to identify their clients and the beneficial owners of trusts. 165. Trustees of foreign trusts may be professionals to which AML obligations apply. It is also conceivable that non-professionals act as trustees of a foreign trust but overall the number of trustees of foreign trusts is limited, and the business is handled mainly by financial institutions. Further, Luxembourg authorities have stated that non-professional trustees are extremely rare and that no request of information concerning trusts (either trusts with a professional trustee or trusts with a non-professional trustee) has ever been received by Luxembourg.
Conclusion
166. Luxembourg law provides mechanisms ensuring that: the tax authorities have available information on trusts and fiducies when the deeds governing those entities have been registered (this is the case when real estate, aircraft and boats registered in Luxembourg are transferred to a trustee or a fiduciary); the tax authorities may require any fiduciary or trustee to disclose the identity of the settlors of trusts and fiducies; under all circumstances, clients and the beneficial owners of trusts administered by professional trustees and fiducies will be identified pursuant to the obligations flowing from AML legislation.
167. These multiple requirements, taken together, ensure the availability of information on the settlors and beneficiaries of fiducies and trusts administered by professional trustees in Luxembourg. In practice, the number of fiducies is very limited in Luxembourg and the number of foreign trusts that may be managed from Luxembourg is not known, but is thought to be limited. Nevertheless, considering AML obligations for professional trustees and considering information which must be made available to the tax authorities when requested, information on trusts and fiducies is available in Luxembourg.
Foundations (ToRA.1.5)
168. In Luxembourg, foundations are non-profit entities established for purely philanthropic purposes. 169. Pursuant to article27 of the law on associations and foundations of 21April 1928, as amended, any person may, by means of a notarial will or testament, subject to approval by grand ducal decree, assign all or part of his property to the creation of a foundation which shall enjoy civil personality. Foundations are deemed to be establishments that, with the income from the capital allocated at their creation or received thereafter, and excluding the pursuit of material gain, assist in the realisation of a work of philanthropic, social, religious, scientific, artistic, pedagogic, sporting or tourism-related nature. As at 30September 2012 there were 201foundations registered in Luxembourg. 170. A foundation may possess, in ownership or otherwise, only the properties needed to fulfil its purposes. All bequests to a foundation must, pursuant to article36 of the law, be authorised by the authorities responsible for supervising foundations (Ministry of Justice). For the duration of its existence, a foundation is subject to supervision by the authorities, who must in

particular ensure that the properties deeded to the foundation are being used in accordance with its objective (article40). To this end, an annual report must be submitted to the supervisory authority. If the foundation is incapable of performing the services for which it was created it may be dissolved by decision of the competent court (article41). 171. Article30 of the law on foundations states that a foundations articles of association must contain the following, at a minimum: the purpose or purposes for which the institution is created; the name of the institution and its headquarters, which must be in Luxembourg; the full name, address and nationality of its directors.
172. The deed creating the foundation must be notarised, and is thus subject to AML obligations, including identification of the founder. The beneficiaries, of which there may be only a class of persons, are known through the purpose for which the foundation is created. 173. Any deed creating a foundation must be reported to the Minister of Justice for approval (article28 of the law) and the statutes of the foundation must be approved by grand ducal decree. After such approval, the statutes and any amendments thereto must be published in Memorial C. Lastly, the foundation (although it cannot pursue a commercial activity) must be registered with the RCS. All the foundations statutes must be submitted with the application for registration (article32 of the law). 174. Information relating to foundations including information required upon creation is verified by the notary in charge of drafting the articles of association (see above CDD requirements to which notaries are subject) as well as by the Ministry of Justice that approves the creation of the foundation. In addition, all changes in the deed of creation must be notarised, meaning that information will again be verified by the notary and by the Ministry of Justice which must approve the changes. Given that a foundation must be registered with the RCS, information is also verified at this step of the registration process. Foundations are also subject to annual filing with the Ministry of Justice, which verifies their annual accounts. If a foundation does not respect its legal obligations, the case is referred to the State Prosecutor for the dissolution of the foundation. In general compliance is very good and over the past years there has been only one case of dissolution of a foundation for breach of its obligations. 175. As a non-commercial entity, a foundation is not subject to corporate tax. Thus, foundations do not have to be registered with the ACD. However, as a relevant entity within the meaning of Luxembourg tax legislation, a foundation is subject to supervision by the Luxembourg administration in order to
ensure, in particular, that the conditions under which it is administered make it indeed a non-commercial entity. To this end, the foundation must keep all the records needed to demonstrate that the funds collected have been used in accordance with the stated purpose of the foundation.
Conclusion
176. Given the philanthropic nature of Luxembourg foundations, the obligations concerning their registration and recognition, and the obligations for reporting information to the supervisory authorities, Luxembourg legislation ensures conservation of the necessary information with respect to the founders, directors and beneficiaries of foundations. 177. Luxembourgs authorities have mentioned that they have not faced any difficulty in relation to the availability of information on foundations. In addition, no requests for information concerning foundations have been received by Luxembourg. Given the legal requirements and practices of Luxembourg upon registration of foundations, information on foundations is available.
Enforcement provisions to ensure the availability of information (ToRA.1.6) Penalties for failure to legally document the establishment of bodies, to register them, or to keep information
178. Failure to register with the RCS within the time limit prescribed by the law of 10August 1915 entails liability for a fine of EUR25 to 250 (article10). A fine of EUR500 to 25000 applies to those who fail to include the information required by law in the instruments, draft constituent instruments, or notices published in MemorialC or deposited with the RCS (article163 (8) of the law) and to the managers of S..r.ls who have not published changes in their membership. The persons responsible for managing Luxembourg branches are also liable to a fine of EUR500 to 25000 if they fail to perform the publicity formalities (article163 (8) of the law). In addition, any persons having omitted to ask for registrations required under the law of 19December 2002 (article21 (5) of the law) are liable to a fine from EUR251 to 5000. In 2009, 934 cases were referred by the RCS to the State Prosecutor for sanctions (for failure to register with the RCS or for failure to provide modifications or corrections to the register). In 2010, 809 cases were referred to the State Prosecutor and in 2011, 694. Of these cases, 707 entities have been dissolved following a decision of the Court, but the precise number of these cases that relate to filing of identity and ownership information is unknown. 179. In the case of foundations, the law of 21April 1928 provides that, if it fails to produce the publications required by law, the foundation may not

assert its legal personality vis--vis third parties, who shall, however, have the ability to hold that fact against it (article43 of the law). 180. Persons who fail to deposit their declarations with the ACD within the prescribed time limits are liable to a penalty of up to 10% of the amount of tax owing (168 of the LGI). The amount collected under the 10% penalty amounted to EUR38356 in 2009, EUR12594 in 2010 and EUR932 in 2011. Furthermore, when information needed to determine the income of this person or a third party (as partners in a partnership) has not been provided, a fine (astreinte pcuniaire) not to exceed EUR1239.47 (202 of the LGI) may be applied. For 2009, 1224 legal entities received fines for late filing or missing information amounting to a total of EUR837617, 1457 in 2010 totalling EUR1122495 and 2227 in 2011 totalling a total of EUR1655908. Finally, pursuant to 217 of the LGI, when no taxation information has been provided to the tax administration, the tax office will make the tax assessment. 181. Luxembourg law provides no specific penalty for situations in which SA, S.e.c.a, S..r.l and cooperative companies fail to keep a register of shares. However, article203 of the law of 10August 1915 provides that companies that have seriously violated the provisions of the Commercial Code or the laws governing commercial companies will be dissolved under request of the State Prosecutor. This sanction can be applied when the register of the shares has not been kept or has been inconsistently kept. For 2010 and 2011, of the respective 809 and 694 cases referred to the State Prosecutor by the RCS, 707 entities were dissolved following a decision of the Court. This confirms that Luxembourgs authorities verify the compliance of companies with their legal obligations and refer these cases to the State Prosecutor when required. It is moreover noted that for S..r.ls and cooperative companies, the share register is only an additional means to ensure the availability of ownership information, this information being already disclosed and updated in the RCS. The Luxembourg authorities have indicated that they are willing to use this sanction in cases in which a company would fail to maintain its share register.
Disclosure of major interests

182. In the case of failure to respect the provisions of the transparency law, article25 of the law of 11January 2008 provides for the application of administrative fines of EUR125 to 125000 while article26 provides for criminal sanctions of the same amount. Article28 of the law provides that in this case the exercise of voting rights relating to the shares exceeding the fraction that should have been notified is suspended. This suspension is lifted when the shareholder makes the notification. For the period under review (2009-11) only one penalty was applied for failure to disclose a major interest under article25 of the law of 11January 2008 for an amount of EUR10000.
183. Moreover, according to the same Article, where the voting rights of the company incorporated in Luxembourg have been exercised notwithstanding their suspension provided for by the law, the district court (Tribunal darrondissement) in the district in which the companys registered office is located, sitting in commercial matters, may, on request of the company or one of its shareholders holding voting rights or any other person having a justifiable interest, pronounce the nullity of part or all of the decisions of the general meeting if, without the voting rights exercised unlawfully, the quorum or majority requirements for the decision in question had not been reached. The nullity action shall [expire] five years [after] the date on which the voting rights were exercised. Luxembourg authorities have confirmed that this has never happened in practice.
AML legislation
184. Failure to respect AML obligations is punished with a criminal penalty ranging from EUR1250 to EUR1250000, depending on the severity of the violation (article9 of the Law of 12November 2004). The CSSF may also impose administrative sanctions (see below). In 2010, there were two cases (concerning three persons in total) where sanctions were applied in this respect, there were no cases in 2011, and there was one case in 2012.
Conclusion
185. Luxembourg legislation provides for sanctions in situations in which the information required by law is not kept. There is a variety of possible sanctions provided by Luxembourg law depending of the level of the infraction. Each requirement to maintain ownership information is complemented by sanctions. Luxembourgs authorities have confirmed that the application of sanctions, when necessary, has a deterrent effect and rarely needs to be repeated. The enforcement provisions to ensure the availability of ownership information appear to be dissuasive enough to ensure the legal requirements are respected.

Determination and factors underlying recommendations
Phase1 Determination The element is not in place. Factors underlying recommendations Luxembourg allows for the issuance of bearer securities by SAs, SEs and S.e.c.as without having mechanisms allowing for the identification of such securities holders in all circumstances. This possibility is also open to investment companies taking the form of an SA or a S.e.c.a. Ownership information relating to foreign partners of SICARs which take the form of an S.e.c.s is not available in Luxembourg in all circumstances. Recommendations Luxemburg should ensure the availability of information relating to SAs, SEs and S.e.c.a bearer securities holders in all circumstances.
Luxembourg should ensure that ownership information relating to SICARs which take the form of an S.e.c.s is available in all circumstances
Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed.
A.2. Accounting records

Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements.
General requirements (ToRA.2.1) Obligations flowing from accounting legislation

186. The Terms of Reference set out the standards for the maintenance of reliable accounting records and the necessary accounting record retention period. It provides that reliable accounting records should be kept for all relevant entities and arrangements. To be reliable, accounting records should: (i)correctly explain all transactions; (ii)enable the financial position of the entity or arrangement to be determined with reasonable accuracy at any time; and (iii)allow financial statements to be prepared. Accounting records should further include underlying documentation, such as invoices, contracts, etc. Accounting records need to be kept for a minimum of five years.
187. Pursuant to articles8 to 21 of the Commercial Code, as well as articles24 et seqq of the law of 19December 2002, all companies and partnerships (SA, SE, S.e.c.a, S..r.l, S.e.n.c, and S.e.c.s) must keep accounting records (article8 of the commercial code). These obligations also apply to investment companies such as SICAVs, SICAFs, SICARs or SPFs. Foreign companies having their place of effective management in Luxembourg as well as the branches of foreign companies are subject to the same obligations. 188. The accounts must cover all operations, assets and obligations of any kind, debts, obligations and commitments of any kind (article10 of the code). All accounting is based on a system of books and accounts and conducted in line with the customary regulations for double entry bookkeeping (article11). All transactions are recorded promptly, reliably and fully, in chronological order (article11). 189. All enterprises must conduct a complete annual inventory of assets and entitlements of any kind, and their debts, obligations and commitments of any kind (article16 of the code). These accounts must be filed annually with the RCS in the month following their approval, and no later than seven months after the close of the calendar year (article75 ff of the law of 19December 2002). These annual accounts must provide a fair picture of the net worth, the financial situation and the earnings of the enterprise (article26 of the law). 190. S.e.n.c and S.e.c.s whose turnover in the most recent financial year, excluding value-added tax, is no more than EUR100000 before taxes may keep simplified accounting records. This simplification allows for such firms to keep their books without reference to a specific chart of accounts, and to avoid having to file their accounts on an annual basis with the RCS. Nevertheless, these two types of partnerships must submit an annual tax return to the tax authorities (see below). 191. Fiduciaries, who must be professionals, are subject as such to the same obligations as those described above. In addition, the law of 27July 2003 on trusts and fiduciary contracts provides specifically that fiduciaries must keep separate accounts of fiduciary properties. Lastly, professional trustees are required to observe general accounting obligations applicable to all professionals established in Luxembourg. 192. Foundations are required to deposit their annual accounts and budget with the Ministry of Justice, as the supervisory authority, within two months after the close of the year (article34 of the law of 21April 1928 on foundations). These accounts must be published in MemorialC. They must contain data to demonstrate that the foundation is operating in accordance with its objectives, for purposes of supervision.

193. Companies Managers or administrators that have not provided to the annual general meeting the companys annual account within the six months following the end of the accounting period as well as managers or administrators that have failed to make these documents public, are sanctioned with a fine from EUR500 to 25000 (art.163 2 of the company law of 10August 1915). In 2010, 23 managers or administrators were subject to this fine, 19 in 2011 and 36 in 2012. Managers or administrators that have, in a fraudulent intention, not published the annual accounts are sanctioned by imprisonment from one month to two years and a fine from EUR5000 to 125000 or one of these two sanctions only (art 166 2 of the company law of 10August 1915).
Obligations flowing from tax legislation

194. Section160 of the LGI requires the keeping of accounting data. This article provides that all persons required to keep accounting data pursuant to laws other than tax legislation must also keep such data for tax purposes. 195. In addition to the provisions of the commercial code and the law of 19December 2002, the LGI imposes supplementary obligations with respect to record-keeping (section162 of the LGI). Thus, it requires that entries in the books must be continuous and complete, prohibits the use of fictitious names and any changes to the accounting data, and requires that accounting documents be numbered consecutively. 196. All legal persons must file with the ACD an annual tax return by the end of May following the taxation period (article116 LIR) on the tax forms established by the administration (article7 of the grand ducal regulation). This obligation applies whether the legal entity is directly taxed on the income received (such as companies) or is transparent such as a partnership (see art.162 LIR). Article8 of this regulation also provides that taxpayers having accounts and books must enclose a copy of the balance sheet as well as a profits and losses account. 197. Only SICAVs, SICAFs, and SPFs are excused from filing earnings declarations with the ACD; they are required to declare and pay the subscription tax to the AED. As entities subject to commercial laws, these companies are however not exempted from record keeping requirements
In practice
198. All enterprises and fiduciaries are required to file annual accounts with the RCS. In practice the accounts are filed electronically and the follow up by the RCS for late filing is automatic and based on the same electronic system. Penalties through the State Prosecutor are applicable for failure to file
the accounts as required. SPFs are required to file their accounting records with the RCS, and the AED has direct access to the RCS database. 199. Banks and other financial institutions are subject to the same requirements with regard to the filing of their accounts with the RCS on an annual basis, but with a specific filing format for security reasons. The follow up from the RCS on banks and financial institution is more rigorous than for other types of enterprises and for these entities, the level of compliance is higher. 200. Simplification measures have recently been introduced and legal entities that are under the obligation to file accounting records with the RCS are no longer required to file them with the ACD along with their tax returns. Accounting records can now be filed with the RCS only and the ACD has direct access to them. In any event, a tax return has to be filed with the ACD by all legal entities (unless an exception applies). If accounting records are neither filed with the RCS nor with the ACD, the ACD will consider the tax return to be incomplete and will impose fines and a tax surcharge. 201. Luxembourgs authorities have confirmed that in practice, accounting information is available for all types of legal entities and they have always been able to respond to requests for accounting records. Considering the record keeping requirements provided by law, accounting records kept by relevant entities correctly explain all transactions, enable the financial position to be determined with reasonable accuracy at any time and allow financial statements to be prepared, Information received from partner jurisdictions with an EOI relationship with Luxembourg, supports this, although the provision of information has sometimes been delayed.
Conclusion
202. Given both the accounting and the tax legislation, Luxembourg ensures the availability of accounting data from which it is possible to accurately review all transactions, to assess the financial position of all entities, and to prepare financial statements.
Underlying documentation (ToRA.2.2)

203. Luxembourg accounting legislation requires that all book entries be backed by supporting documentation, which is to be kept in chronological order (article14 of the commercial code). These documents may be kept in the form of copies, which must be true copies of the original documents. 204. Furthermore, since Luxembourg is an EU member and thus party to the intra-community VAT system, its businesses are subject to special requirements regarding evidence of transactions carried out. In particular,

it is necessary to keep all documents that can be used to review intra-community flows of goods and services, including invoices issued and received, goods delivery notes, or the contracts under which purchases and sales have been conducted. 205. These various requirements ensure that when Luxembourg enterprises are required to keep accounting data, those data are backed by the necessary documentation on the transactions performed. 206. Given Luxembourgs practices in exchange of VAT information (in 2010 and 2011, Luxembourg answered more than 689 incoming VAT requests), which rely mostly on accounting records and underlying documentation such as invoices and contracts, it appears that Luxembourg is able to provide underlying documentation on request. Over the last three years there has been no indication of cases where Luxembourg was not in position to provide information on underlying documents upon request in direct taxes.
Document retention (ToRA.2.3)

207. Luxembourg accounting legislation requires that all accounting records of any kind must be kept for 10 years after the close of the accounting year to which they relate (article16 of the commercial code). 208. In case of dissolution, commercial companies are deemed to exist for their liquidation and all documents must be kept for at least five years after liquidation. 209. The documents kept in the RCS may be destroyed when 20 years have elapsed after the entity concerned has been deleted. 210. For tax purposes, the books and accounting records as well as all commercial documents must be kept for 10 years after the end of the calendar year that follows the close of the fiscal year (section162 of the LGI). All documents required by law to be kept for VAT purposes must be retained for 10 years. 211. Given the legal requirements in relation to record keeping and retention periods and considering the practice of the Luxembourg authorities, as well as the comments received from Luxembourgs treaty partners, the assessment team concluded that accounting records are kept and available for exchange when requested.
Phase1 Determination The element is in place.
A.3. Banking information

Banking information should be available for all account-holders.
Record-keeping requirements (ToRA.3.1)

212. In Luxembourg, the obligation to keep banking information flows from the simultaneous application of several laws and regulations: the financial sector law of 5April 1993, article37.1 of which provides that credit institutions and investment companies must keep a record of all services they have provided and all transactions they have conducted, sufficient to allow the Commission to ensure that they are observing their legal obligations, and in particular their obligations to their customers; grand ducal regulation of 13July 2007, which requires banking data to be kept for five years; the commercial code, which requires the keeping of books and records for accurately tracing transactions conducted (cf. section A.2.1 above); article3 of the law of 12November 2004 on the fight against moneylaundering requires identification and verification of the identity of customers who seek to establish an ongoing business relationship with financial institutions; grand ducal regulation of 1February 2010 prohibits accounts opened under fictitious names and provides rules for keeping information on numbered accounts; lastly, CSSF Regulation 12-02 of 14December 2012, which provides further details on the scope of the record-keeping requirements.
213. By article3 of the AML law, the situations in which bodies and persons subject to the law are required to identify their customers are as follows: the customer wishes to enter into business relationships; the customer wishes to carry out a transaction of which the amount reaches or exceeds EUR15000, whether the transaction is carried out in one or several operations that appear to be related; money laundering or the financing of terrorism is suspected;

there are doubts about the truthfulness or accuracy of the identification data concerning an already identified customer.
214. In particular, a professional who is unable to identify the customer and determine the purpose for which the business relationship is established may not carry out a transaction through a bank account, establish a business relationship, or carry out a transaction. 215. Article3.6 of the law requires that all financial institutions preserve all documents necessary to reconstitute transactions. The law requires that substantiating documentation and records concerning transactions conducted under a business relationship shall be kept for at least five years. 216. The Financial Sector Supervisory Commission (CSSF) is the supervisory authority for banks and other financial institutions (other financial sector professionals, undertakings for collective investment, pension funds taking the form of SEPCAV17 and ASSEP18, approved securitisation entities, SICARs, paying institutions and electronic money institutions, financial services proposed by the mail and telecommunications companies (Entreprise des Postes et Tlcommunication), financial securities markets, including their operators, and auditors). The CSSF is also the competent authority in Luxembourg for the purposes of applying Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16September 2009 on credit rating agencies, as amended. 217. The CSSF supervises, amongst other things, compliance with AML obligations by entities under its authority. To carry out this mission, the CSSF systematically analyses the information received from banks and other financial institutions, such as the annual internal report that must be provided by each institution, the report from the compliance officer, the report from the external auditors and information received by other authorities, if any. In addition, a programme of specific AML controls is put in place on an annual basis and follows a risk based approach. These specific AML audits are performed by way of on-site visits and the audit team comprises staff specifically dedicated to AML obligations who have powers to access all documents. Institutions that will be subject to a specific AML audit during the year are chosen on the basis of information collected, for example from the aforementioned reports but also on the basis of the types of activities they perform (e.g.private banking, fiduciary services) and other relevant information such as the number and quality of STRs. Random/ad hoc AML audits can also be conducted.
17. 18.
Open-end Pension Savings Company. Pension Savings Association.
218. An audit will be conducted through (1) interviews with the management about specific questions on AML; (2) analysis of the institutions AML processes; (3) the opening of files to make sure all information is available including information on identity of clients, nominees, and beneficial ownership; (4)verification of the institutions process to detect unusual or suspicious transactions; (5) verification of record keeping requirements i.e.whether documents are available for at least 5 years after the closing of the account and (6) verification of the requirements on cooperation with authorities competent for AML.
Numbered accounts
219. A numbered account is a bank account where the identity of the holder is not known to all staff of the bank but is limited to a very restricted number of persons within that bank. Most staff of the institution where this account is held cannot contact a specific customer and have access to its data. Transactions relating to a numbered account are conducted with the number of the account and not the identity of its holder. 220. Recent Luxembourg legislation grand ducal regulation of 1February 2010 explicitly and in a general manner prohibits the keeping of accounts under fictitious names with the exception of numbered accounts. The purpose of the new grand ducal regulation, the publication of which followed the 2009 FATF evaluation, clarifies that the holding of these accounts is subject to the same customer due diligence requirements as is the holding of nominal accounts. 221. Article5 of the regulation provides that the holding of numbered accounts is allowed to credit and financial institutions, but in strict compliance with specific rules adopted by establishments that use this type of accounts. These rules should determine the conditions under which such accounts can be opened and should clarify their operation. These rules should provide adequate administration of these accounts so as to fully comply with the provisions of the law (i.e.: the law to combat money laundering of 2004) and in particular the provisions concerning the customer due diligence requirements, the recording and storage of data, and the unrestricted access to these data both internally by the people responsible for the fight against money laundering and financing of terrorism and other appropriate staff and by the competent authorities. A circular19 of the CSSF published in 2008 already provided that when numbered accounts or saving books are opened, professionals must manage them in a way allowing them to always fully respect the requirements they are subject to according to the amended Law of 12November 2004 and this circular (see paragraph30 of this circular).
19. Whose value is different from a law or a grand ducal regulation.

222. Questioned on the breadth of the obligations under this new regulation, Luxembourg authorities clarified that the numbered accounts opened since the entry into force of the grand ducal regulation as well as accounts opened prior to its entry into force are covered by these new rules. Thus, the customer due diligence obligations apply to all of the numbered accounts held in Luxembourg including numbered accounts open before the 2010 grand ducal regulation. Although no exact figures are available, it is estimated by Luxembourgs authorities that approximately 5% of the accounts of private banking business are numbered accounts. 223. It is noted that the Luxembourg legislation refers, as regards the implementation of these legal obligations, to the internal rules adopted by financial institutions. It is further noted that the grand ducal regulation provides that these rules must allow for full compliance with the provisions of the law (i.e.the anti-money laundering legislation). The administrative authorities have not issued any guidelines detailing these legal requirements and specifying how financial institutions must comply with these obligations. 224. To clarify the preceding, a new CSSF regulation was adopted on 14December 2012 that clarifies the rules applicable to the opening of numbered accounts and specifies that these rules are applicable to numbered accounts opened before the 2010 grand ducal regulation. Article38(2) provides that AML/CFT policy of the professional must include all its professional obligations, in particular [] Procedures to be followed when numbered accounts are opened in accordance with article5 paragraph2 of the grand ducal regulation [of 2010]. These procedures, applicable to all numbered accounts opened with the professional, including those opened before the entry into force of the CSSF regulation 12-02, must respect all professional obligations both at the moment of the opening of the numbered account and during the monitoring of the business relationship. The procedure must ensure that the identity of the client is known by all persons who need to know the client for the purpose of applying the customer due diligence rules. 225. The CSSF has confirmed that numbered accounts are always verified when a bank is audited. The audit team verifies the opening of numbered account files to make sure that the identity of clients and necessary ownership information is available in these files. The internal procedure of the bank with respect to the opening of numbered accounts is also reviewed. 226. The results of the audits performed by the CSSF on numbered accounts have shown that in practice, information on identity and ownership is always present in the file of numbered accounts. A breach was found
in only one case, where the bank had not performed one of the controls on time. In addition and due also to the new CSSF regulation that clarifies the application of CDD rules to all numbered accounts, including accounts that were opened before the 2010 regulation, it is concluded that the framework in relation to numbered accounts has been clarified and is in line with the Terms of Reference.
Sanctions
227. If an institution covered by the financial sector law is in breach of the obligations under the law of 12November 2004, the CSSF may impose sanctions ranging from a notification to a warning, followed by a fine of EUR250 to 250000, and finally a ban on operations. Any violation of the obligations provided for by the law on the fight against money laundering is punished with a criminal penalty under section9 of the Act of 12November 2004 (sanctions from EUR1250 to 1250000). 228. In case a breach of the AML obligations by a bank is detected, the institution faced with the findings of the CSSF, is required to explain its position pursuant to the application of the applicable administrative procedure. If the breach is minor, the bank will need to communicate to the CSSF the improvement and/or correction measures that have been implemented. In such a case, if it is considered sufficient by the CSSF, no additional visit will be required. If the breach is more serious, the bank will have to communicate its corrections and improvements to the CSSF and an on-site visit will also be performed to check the implementation and effectiveness of the corrective measures taken. The bank always has a deadline to report on this. 229. Prudential measures and sanctions will be based on the seriousness of the breach and can take the form of a letter of observation, an injunction to correct the situation within a certain timeframe or the application of administrative fines. More than one measures/sanction can be applied at once and sanctions can be made public. The sanctions are decided upon by an enforcement committee. In the case of a serious breach or if the corrective measures are not implemented, sanctions can be applied on a daily basis. For very serious breaches, the institution can ultimately be prohibited from continuing its activities (which has never happened in practice). In general, a simple letter of observation is sufficient as the institution in most cases will implement corrective measures as requested. An injunction letter will be issued to order corrective measures if the breach is serious. If the injunction letter is not complied with, an administrative fine will be automatically applied. When a sanction is applied, a new audit will be made shortly afterwards to make sure it is respected.

230. In 2009, 10 audits were performed by the CSSF, without administrative fine and in 2010, 31 audits were performed also without an administrative fine being applied. In 2011, 47 audits were performed and 9 administrative fines were applied amounting to a total of EUR51250. 231. Thus, given the legal provisions and the practices of the Luxembourg authorities, Luxembourgs legal and regulatory framework ensures that banking information in relation to account holders is maintained and available. For the years 2009 to 2011, Luxembourg received 59 requests for banking information. In practice, banking information is requested from the bank first when the person concerned by the request is not resident in Luxembourg. Otherwise, the information is collected from the person concerned first unless the requesting jurisdiction specifically asks that the request be kept confidential (see SectionB.2 below). From comments received from Luxembourgs treaty partners, there were no situations where Luxembourg was not in a position to provide the banking information requested solely because it was not available in the hands of the bank, as distinct from other reasons (lack of suitable access powers or treaty) for not providing banking information.
Phase1 Determination The element is in place. Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed.
COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 65
B. Access to Information
Overview
232. A variety of information may be needed in respect of the administration and enforcement of relevant tax laws and jurisdictions should have the authority to access all such information. This includes information held by banks and other financial institutions as well as information concerning the ownership of companies or the identity of interest holders in other persons or entities. This section of the report assesses Luxembourgs legal and regulatory framework and the effectiveness of its practice and whether it gives to the authorities access powers that cover the right types of persons and information, and whether the rights and safeguards that are in place would be compatible with effective EOI. 233. Luxembourg legislation provides two different procedures for access to information: In the context of treaties concluded before March 2009 and not updated, the Luxembourg authorities use, to comply with the EOI provisions contained in non-updated treaties, the information gathering powers conferred on them by domestic legislation. Under those powers, they may require taxpayers and third parties to provide information of all kinds, except banking information or information held by insurance companies and SPFs, and may request information from other Luxembourg administrations. These powers are backed by provisions to compel the production of the information requested. For new conventions and protocols updating existing conventions that have been concluded since March 2009 and are covered by the Law of 31March 2010 and for the EU Council Directive on Administrative Cooperation in the Field of Taxation 2011/16/ EU replacing the Mutual Assistance Directive 77/799/EEC, specific information gathering measures have been introduced by Luxembourg. These measures allow for the gathering of information of all kinds, including banking information, regardless whether it is
66 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

held by taxpayers themselves or by a third party. The Luxemburg authorities have advised that this new procedure grants access to information in accordance with the conditions provided for by the international standards. 234. Access to information powers are supported by measures to compel the provision of information. For the implementation of treaties that have not yet been updated, this includes administrative fines and powers to seize documents. The new procedure introduced by the law of 31March 2010 provides for administrative fines up to EUR250000 in case of refusal to provide the requested information. 235. In the context of treaties signed since 2009 the rules governing professional secrecy, and in particular banking secrecy, are to be applied within the strict limits established by the commentaries to article26 of the OECD Model Convention. Thus, access to information held by financial institutions is ensured in the context of these treaties. For the other conventions, the same information, as well as information held by insurance companies and SPF cannot, for the moment, be obtained by competent authorities in the field of EOI. 236. Over the last three years (2009-11), Luxembourg has received more than 800 EOI requests from treaty partners and has used its powers to collect the information under both the old and the new procedures. Of the 832 requests received by Luxembourg, 660 were processed under the old procedure and 172 under the new procedure (for requests based on new agreements concluded after March 2009). In practice, approximately 80% of the requested information is already available either at the CLO or local tax office and does not require a specific collection process from these services. A number of treaty partners have stated that they were unable to obtain banking information and other information protected by secrecy rules (such as information on 1929 holding companies) since this information was specifically excluded from the scope of the treaties concluded before March 2009 and which have not been updated. 237. With the entry into force of the agreements concluded or updated after 2009 and which are in line with the standard, Luxembourg has been able to collect banking information as well as ownership information and accounting records. However, a peer reported that in certain cases, Luxembourg provided banking information that was partly unreadable because certain details had been blacked out by the banks. Luxembourg claimed that the information was not foreseeably relevant, without having seen the information, as it was blacked out by the banks themselves. Luxembourgs authorities do not use their information gathering powers and enforcement powers to gather the missing information in all instances where the holder (the bank) has provided incomplete information.
238. Furthermore it has been reported by a peer that Luxembourg refused to supply information on the grounds that it was covered by commercial secrecy. However, Luxembourg did not provide an adequate explanation of the legal basis for this decision. 239. Finally, in some cases Luxembourg only provided the information directly available to the tax authorities and did not request information from any other person concerned to substantiate its answers, on the basis that the requested information related to the substance of business activities of entities that generally had no substantive presence in Luxembourg.
B.1. Competent Authoritys ability to obtain and provide information

Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information).
Luxembourgs competent authority and its powers

240. In Luxembourg, the Ministry of Finance is the competent authority and the Direct Tax Administration (Administration des contributions directes, ACD) is the central authority for managing EOI requests based on any agreements with an EOI provision signed by Luxembourg. The ACD receives the EOI request and either processes the request or passes it on to the appropriate tax administration (AED or ADA, see below). The ACD acts as the Direct Tax Central Liaison Office (CLO) and processes incoming requests received from other jurisdictions concerning direct tax matters. To improve and speed up the process of answering incoming requests, the CLO was reorganised in 2009 and is staffed with three persons exclusively working on EOI since the end of 2010. 241. The responsibility for responding to EOI requests is divided between the three tax administrations: the ACD which is responsible for EOI requests in relation to all direct taxes including individual income tax, corporate income tax (impt sur les collectivits) and the municipal business tax; the Indirect Tax Administration (Administration de lenregistrement et des domaines, AED) which is responsible for requests in relation to VAT, stamp duties and succession taxes; and the Customs and Excise Administration (Administration des Douanes et des Accises, ADA) which is responsible for excise duties, consumption taxes on alcohol, and the vehicle tax.

242. The three administrations work in collaboration under the central control of the ACD, based on the law of 19December 2008 on inter-administrative and judicial co-operation. 243. Information about the CLO is available to treaty partners in the databases of the Global Forum, the OECD and the EU. In addition, the internet websites of the ACD, the AED and the ADA mention the respective phone numbers and other contact details of the competent authorities in Luxembourg. Updated information is also regularly transmitted to treaty partner jurisdictions. 244. The ACD is divided into 48 offices in the territory of the Grand Duchy, including eight offices for corporations and other legal entities. Once received by the CLO, incoming requests are treated either: under the old procedure, if it is based on an agreement concluded before March 2009 and not updated, under which requests are dealt with by the local tax offices, or under the new procedure provided by the Law of 31March 2010 for EOI based on an agreement concluded or updated since March 2009, under which requests are dealt with directly by the CLO (see SectionC.5 for more details).
245. The AED and ADA are only allowed to exchange information under the new procedure provided by the Law of 31March 2010 (see below for more details). Since the introduction of this new procedure, the AED has received 23 requests for EOI and three persons are in charge of answering them. Although the ADA has not received any request for EOI so far, two persons have been designated to handle incoming requests for EOI. All other requests are processed by the ACD. 246. Luxembourg has a total of 7520 bilateral agreements providing for EOI. Of these 75 agreements, 45 allow for the exchange of banking information and 43 are in line with the standard. Of the 43 agreements signed and in line with the standard, 23 are currently in force. Luxembourg is also party to the EU Council Directive on Administrative Cooperation 2011/16/ EU. As a result, Luxembourg has EOI relationships to the standard with 54 jurisdictions and can already exchange information with 40 of them, due to the arrangements being in force and having taken effect.
20. See Annex3 for the agreements signed, allowing for the exchange of banking information, to the standard and in force, including the jurisdictions covered by the EU Council Directive on Administrative Cooperation in the Field of Taxation 2011/16/EU.
247. When an incoming request relates to more than one year: a year covered by an agreement concluded before 2009 and not updated, and another year covered by the updated version of the agreement (after 2009), recent case law21 has confirmed that the request should be dealt with using the information gathering powers applicable to the years in question. This means that the ordinary domestic information gathering procedure is applicable for the old agreements and the new procedure stated in the Law of 31March 2010 is applicable for the updated agreements, given that updated agreements are only effective for the future, the old agreements remaining applicable for the years preceding the update of the agreement. This means that a request including years covered by two different agreements (the original one and the updated one) will be handled under the two information gathering procedures that exist in Luxembourg. The new procedure is applicable only to a request concerning a tax year that is after the effective date of the new or updated agreement. Luxembourgs authorities have adapted their processes to answer requests in compliance with the case law.
Access to information powers provided by Luxembourg domestic tax legislation (pre-2010 position)
248. As regards access to information for purposes of international EOI, the Luxembourg competent authoritys information gathering powers are set out in domestic legislation (LGI, the general taxation act). In the context of treaties that do not provide for the exchange of banking information, it is these provisions that are applicable for responding to requests for information. 249. The Luxembourg administration has broad powers of access to information held by taxpayers and third parties. It may summon taxpayers and require them to provide any information and to present all their accounting documents (cf. LGI 204 ff). If the request for information from the taxpayer does not produce the expected results, the Luxembourg authorities may require third parties to produce the information requested or to submit their own accounts. 250. The LGI empowers the ACD to request information from other administrations, including tax administrations and financial intelligence unit, for purposes of responding to information requests received (LGI 188). A cooperation agreement between tax administrations was in fact adopted on 19December 2008 to organise such exchanges.
21. Administrative Court N28742 of 12December 2011, Administrative Court N 28728 of 25January 2012, Administrative Court N30630 of 3March 2012 and Appeal Court N 29655C of 9February 2012.

251. It should be noted that the AED may also requisition information and documents. However, as each administration has its own information access procedures, the ACD cannot use these powers, as it is the competent authority only for EOI on request in direct taxation matters. In addition, according to Luxembourg legislation control and supervision of SPFs are under the responsibility of the AED and the Law on the SPF indicates that searches for audit facts concerning the fiscal status and elements necessary to ensure and validate the correct and precise collection of taxes owed by the company can be done by the AED.
Access to information powers provided by the Law of 31March 2010

252. The absence of provisions in Luxembourgs domestic tax legislation, prior to 2010, that would allow the tax administrations to access information held by financial institutions, insurance companies and SPFs has led Luxembourg to take specific measures in order to give effect to the treaties concluded since March 2009 that call for the exchange of banking information. These new provisions were introduced into Luxembourg legislation by the law of 31March 2010. They cover not only access to information held by financial institutions, insurance companies and SPFs but, more generally, access to all types of information. 253. The law of 31March 2010 ratifying the first 20 treaties concluded since March 2009 provides (article2) that for the application of EOI as stipulated in the conventions cited [by the law], Luxembourg tax administrations (the ACD, with respect to direct taxation but also the AED or the ADA for taxes for which they are competent) are authorised to requisition the information requested. This new procedure applies to the 2022 treaties, plus the treaty with India (through application of a most-favoured-nation clause). Six other agreements23 were ratified in 2011 and the law ratifying them confirmed the application of the same rules for access to information. Two similar draft laws for the ratification of 15 new agreements have been enacted by Parliament on 7June 2013 and the laws are expected to be published by the end of June 2013, which means that this new procedure is applicable to all treaties signed or updated after 2009. 254. The new procedure provides for an initial screening of the incoming request received by the Luxembourg competent authority.
22. Armenia, Austria, Bahrain, Belgium, Denmark, Finland, France, Germany, Iceland, Liechtenstein, Mexico, Monaco, Netherlands, Norway, Qatar, Spain, Switzerland, Turkey, United Kingdom and United States. 23. Barbados, Hong-Kong (China), Japan, Portugal, San Marino and Sweden.
255. These applications will be examined on a priority basis against the requirements set forth in the exchanges of letters annexed to the treaties. These exchanges of letters specify how the foreseeable relevance of requests must be understood (see section C.1.1 below). The Luxembourg authorities have explicitly confirmed that the identification of the person who is the subject of the request can be made by disclosure of the name and address of that person. All other forms of identification are accepted, where they allow the identification of the person with sufficient precision, such as by the disclosure of a bank account number. 256. When it is established that the request can be favourably received, article3 of the law authorises the tax administrations (that is the ACD, AED, or ADA) to requisition the requested information from the holder of that information. That person has one month as of notification of the requisition decision to communicate the information to the ACD. 257. This new procedure applies in principle to all requests for information made under a treaty concluded or updated after March 2009 and that has entered into force. 258. Luxembourg has also indicated that the new rules do not prevent the ACD from using tax information held on the file of the taxpayer or another taxpayer, when responding to a request for information. Such information can be transmitted to the requesting jurisdiction without notice to the person who is the subject of the request in Luxembourg. 259. Similarly, it has been indicated that the ACD will also be able to consult other public authorities if they hold the information requested. The ACD will pursue this route whenever it would facilitate the EOI. In this situation the person who is the subject of the request does not have to be informed of the transmission of the information.
Banking information (ToRB.1.1)

260. Access to banking information takes place through the procedure stipulated by the law of 31March 2010. 261. This procedure allows for waiver of the banking secrecy enshrined in Luxembourgs financial and tax legislation. Such information is now accessible for the 40 agreements in force that allow for this possibility as well as for including EOI requests made under the EU Council Directive on Administrative Cooperation since 1January 2013. 262. In light of the wording of article3 of this law, information may be requested from the holder, i.e.the banks as the first resort, but this does not preclude, if necessary, requiring the person concerned by the request to produce information. From the provisions of the law, however, it is not clear

whether the Luxembourg authorities will avail themselves of this dual possibility. Luxembourgs authorities have confirmed that in practice, banking information is requested from the bank first when the person concerned by the request is not resident in Luxembourg. Otherwise, the information is requested first from the person concerned unless the requesting jurisdiction asks for the information to be kept confidential (see SectionB.2 below). 263. After the Luxembourg authorities have reviewed and validated the request for information, the holder of the information requested will be required to provide it within one month (article3 of the law of 31March 2010). 264. The Luxembourg authorities were asked about the conditions of access to banking information in situations in which an incoming request for information is accompanied only by a bank account number. They replied that such access is possible and would be granted. It was stated that the provisions of the procedure implemented by the law of 31March 2010 are broad enough to allow the tax authorities to question Luxembourg banks in these circumstances, including where such requests refer to a numbered account. Only a very limited number of requests for banking information relying only on a bank account number was received by Luxembourg for the period under review (less than 1% of the requests received). The information was provided and exchanged with the requesting jurisdiction in all cases. 265. Access to banking information is currently impossible in cases in which the respective treaty does not expressly provide for it. This is in fact the case for the 32 treaties to which Luxembourg is party that have not yet been brought up to the standard. 266. The collection of banking information, when exchange is allowed under the applicable treaty, is directly handled by the CLO which, upon receipt of the incoming request will be in charge of sending an injunction letter to provide the information within one month. 267. With the introduction of the new procedure to collect information, informal meetings have been organised with banks to explain the new process and for each bank to designate a contact person within the institution who will be in charge of receiving the injunction letters issued by the CLO. Although the implementation of the process initially raised some issues with financial institutions, the process is now well understood. 268. Since the entry into force of the new agreements providing for exchange of banking information, 59 requests for banking information were received by Luxembourg in 2011 and 125 requests in 2012. In practice, banks generally answered within the timeframe allowed and as a result, requests for banking information based on agreements concluded after March 2009 are generally answered by the banks within the 30-day deadline provided by the Law of
31March 2010. With regard to requests for banking information, in 2011, 36% of such requests were answered in less than 90 days, 58% were answered between 90 and 180 days, 3% were answered in less than a year and 3% in more than a year. For 2012, 46% of such requests were answered in less than 90 days, 39% between 90 and 180 days, 4% in less than a year and 11% have not yet been answered. 269. If a bank does not provide the information requested within the allocated timeframe (one month), a first reminder is sent and the bank is given an additional two weeks to answer. Banks are also advised of the sanctions that can be applied in case of default. If the bank does not answer after the reminder, penalties of up to EUR250000 can be applied, although this has not happened yet. Penalties are cumulative (with a maximum of EUR250000) and ultimately, the case can be transmitted to the State Prosecutor for criminal sanctions. 270. Notwithstanding the new law, a number of peers continue to point to problems in obtaining banking information from Luxembourg. These relate to a range of issues, including the issue of foreseeable relevance, the date of entry into effect of the provisions of the agreements and the extent to which Luxembourg uses the full range of its laws and practices to obtain and provide bank information for its treaty partners. Cases involving the standard of foreseeably relevance and the date of entry into effect of the agreements are examined in SectionC.1 below. 271. One peer reported that a request for banking information that was foreseeably relevant for the levying of taxes in the requesting jurisdiction was refused on the basis that the information had an illegal origin. This issue is discussed further in SectionC.4. 272. Concerning the exercise of its powers to obtain information, one peer reported that it received in several instances bank statements where information was partly unreadable, which prevented its authorities from using the information. In answer to a follow-up question from the treaty partner, Luxembourg responded that the requesting authorities cannot undertake a fishing expedition or ask for information which is probably not relevant to clarify the tax position of the taxpayer who is the subject of the request. During the on-site visit, Luxembourg indicated that the information was rendered unreadable because it related to a taxpayer that was not implicated in the request and therefore the information was not relevant for the requesting jurisdiction. Luxembourg stated that the information had been blacked out directly by the banks and the Luxembourg tax authorities had never received the complete documents, implying that the Luxembourg tax authorities accepted the decision of the banks on the relevance of the information without having seen the information.

273. In conclusion, with the entry into force of the agreements providing for exchange of banking information and with the law of 31March 2010 providing for access to banking information, Luxembourg has been able to provide banking information to its treaty partners in the vast majority of cases where it has been requested under a new agreement or agreement updated since 2009. However, Luxembourgs willingness to accept partial information from the bank and not to pursue the matter further and use its information gathering and enforcement powers to gather the missing information if necessary, is not consistent with the standard.
Ownership and identity information (ToRB.1.1) and accounting records (ToRB.1.2)

274. If the EOI takes place under a tax treaty that has not been updated since March 2009, the Luxembourg authorities, to comply with the EOI provisions contained in these non-updated treaties, use their domestic information gathering mechanisms to provide the information to the requesting jurisdiction. All types of information concerning ownership and all accounting data can be obtained by this route unless secrecy provisions would apply (see below section B.1.5). 275. For the treaties ratified by the law of 31March 2010, Luxembourg authorities will use the procedure provided for by this law.
Information gathering in practice

276. In order to gather information requested, the CLO first checks whether the information is available internally, either within the tax authority or with another of Luxembourgs administrative authorities. If the information is not available internally, the CLO will need to request the information from the taxpayer or from a third party in possession of the information. As already explained, two procedures exist for requesting information. One is based on the domestic powers, which is applicable to requests based on agreements concluded before March 2009 and not updated. The other is the new procedure, which provides for the collection of banking information and other information protected by secrecy rules, and is applicable to all requests based on agreements concluded or updated after March 2009 as well as for requests based on the EU Council Directive on Administrative Cooperation. Information directly available to the central tax authority 277. When an EOI request pertaining to ownership or accounting records is received, the CLO first checks whether the information is available internally with one of Luxembourgs administrative authorities. Information that may be available directly at the CLO includes all the information on legal
entities that is available in the Register of Commerce and Companies (RCS) such as deeds of incorporation, the address of headquarters, the amount of capital, the names of the persons authorised to manage, administer and sign for the entity as its legal agents and the identity of the shareholders or members of certain legal entities. The ACD also has access to accounting records through the RCS or with tax returns. 278. The CLO also has access to the RPNI (Registre National des Personnes Physiques, National Register of Natural Persons) which provides information on natural persons including name, address, date of birth, civil status, name of spouse, date of arrival in Luxembourg (if applicable), and name and date of birth of children. This register indicates whether the taxpayer (resident or non-resident of Luxembourg) holds real estate in Luxembourg. Information on real estate, including date and acquisition price, date of construction and percentage of holding is available to the CLO through KOBI, a database storing information on real estate in Luxembourg which is shared with the AED. 279. Tax returns of individuals and legal entities are also available at the local tax office, including income tax due and accounting records. Various IT programs exist to access the information by specific search (such as NRCO a database of information on non-resident individuals and QF08 a database of information from employers including information such as salary paid and date of employment). Information available through other administrative authorities 280. Additional information can be obtained from other services such as the social security office. VAT, real estate information and information on family wealth management companies (socits de gestion de patrimoine familial, SPFs) is available to the AED and information on excise duties, consumption taxes on alcohol, and the vehicle tax are available from the ADA. Ownership information and accounting records directly available to tax administrations 281. When an EOI request dealing with ownership information or accounting records is received and the CLO does not have the information available itself, the information can be requested from the local tax office of the relevant tax administration (addressed to the Director of the local tax office) that has access to the tax file of the person concerned, including tax returns. All information directly available to a local tax office of one of the three tax administrations can be provided to the treaty partner without informing the person concerned. 282. No specific deadline is provided when the CLO requests information from another tax administration in Luxembourg but cooperation between the

three administrations is very efficient and information is usually provided rapidly to the CLO (generally between a few days to two weeks). A reminder, if needed, will be made by an informal telephone call, three to four weeks after the first request made by the CLO. 283. If the information is not available internally, the process for obtaining information will depend on whether the request is made under an agreement that was concluded before 2009 and was not updated (in which case, the old procedure will apply, see below) or whether the request is based on a new agreement concluded or updated since 2009 (in which case the new procedure will be applicable, see below). In practice, approximately 80% of the requested information is already available either at the CLO or local tax office and does not require a specific collection process from these services. Process for handling requests based on agreements concluded before March 2009 and not updated (old process) 284. If the request received by the CLO is based on an agreement that was concluded before March 2009 and not updated, the procedure used to gather information for domestic purposes is still applicable. The request is passed on to the competent tax office which will be in charge of gathering the requested information. Of the 832 requests received by Luxembourg for the period 2009-11, 660 were treated under the old procedure. 285. The local tax officer designated to handle the request will be responsible for collecting the information from the taxpayer or from a third party. Local officers have no powers to collect banking information or information protected by secrecy rules. 286. The local tax officer will send an injunction letter first to the taxpayer with, in practice, a one month deadline to provide the information. In principle, the injunction is sent first to the taxpayer based on the principle of proportionality, i.e.the taxpayer must always be the first person from whom the information is requested before it can be requested from a third party. However, Luxembourg has stated that in EOI cases where it is established that the person concerned by the request is not present in Luxembourg, they will directly ask the information holder in Luxembourg. 287. If the taxpayer does not answer within the one month deadline, a first reminder will be sent, granting an additional two weeks. After the expiration of the second deadline, sanctions can be applied (fine and administrative penalties). All domestic measures can be used to collect the information, including on-site visits and interviews, if agreed to in advance by the taxpayer. In practice, letters are preferred. 288. If the taxpayer does not answer the injunction letter, an injunction letter can be sent to a third party in possession of the information with a one
month deadline to provide the information. If the third party does not answer within the one month deadline, a first reminder will be sent, granting an additional two weeks. After the expiration of the second deadline, sanctions can be applied (fine and administrative penalties). For the years 2009-11, 832 requests for EOI were received by Luxembourg. 660 of which were dealt with under the old process. Luxembourgs tax authorities indicated that, when requested, the person concerned or the third party provided the information in almost all cases. Default in providing the requested information occurred in 2 to 3% of the cases. Approximately 1% of the cases have led to a fine. Process for handling requests based on new agreements concluded or updated after March 2009 covered by the Law of 31March 2010 (new process). 289. If the request for EOI received by the CLO is based on an agreement that was concluded after March 2009 the collection of specific information to respond to the incoming request is directly handled by the CLO. 172 incoming requests were processed under this procedure over the years 2009-11. 290. The CLO will send an injunction letter to the taxpayer, based on the proportionality principle as explained above unless the person is a non-resident of Luxembourg or the requesting jurisdiction asks for the information to be kept confidential (see SectionB.2 below). As provided by the law of 31March 2010, injunction letters provide a 30-day deadline to answer. In general, the information is received within this timeframe, unless the person asks for an extension (generally one week or two), or when an appeal right is exercised. 291. If the person concerned fails to answer in due time or after the agreed extension, fines (up to EUR250000) will be applied, although this has not yet been the case, as all injunction letters sent under the new procedure have been answered in due time. An injunction letter requesting the information can be sent to a third party in possession of the information, if the person concerned has not provided the requested information. 292. Luxembourg confirmed that under the new procedure, the persons requested to provide information generally respond within the allocated timeframe. Luxembourgs authorities have confirmed that so far, no penalties for failure to provide the information have been applied under the new procedure. However, some partners pointed to difficulties in obtaining information in certain circumstances. 293. One peer reported that it asked Luxembourg to provide information in relation to the activity of certain companies in Luxembourg to justify the deduction of fees paid to Luxembourg-based entities for tax purposes. According to the peer, in its answers, Luxembourg only provided information directly available to the tax authorities and did not request information (such as underlying documents, invoices) from any other persons or from the

company concerned to substantiate its answers. Luxembourgs authorities explained that these cases concerned SOPARFIs (i.e.holding companies) and that the requested information related to the substance of their business activities. As these entities generally have no premises in Luxembourg but only a registered office provided by an agent, Luxembourg stated that it was impossible for them to research further or to request information from other persons as there were no additional elements in relation to the business in Luxembourg. Luxembourg stated that they nevertheless provided all the requested information. 294. Luxembourg would be expected to use its information gathering powers, where necessary, to obtain information from any person within its territorial jurisdiction in possession and control of the information requested regardless of the substance of their business activities there. Luxembourg is encouraged to fully engage with its treaty partners to ensure that the maximum amount of information available in response to a request is provided. 295. Another case reported by the same peer concerned information in relation to a potential transfer of a client list without consideration. At the time a company was dissolved in the requesting jurisdiction, a company was created in Luxembourg, owned by the same shareholders and with the same activity. The requesting jurisdiction suspected a transfer of activity and clients, an event that is taxable in the requesting jurisdiction. A request was sent to Luxembourg to establish the date of formation of the company in Luxembourg, along with details of its shareholders, premises, activities, tax regime, number of employees and accounting data, including the name of its clients. The Luxembourg authorities declined to provide the name of clients (the client list), arguing that this constituted a fishing expedition and a breach of commercial secrecy. In the absence of this information, the requesting jurisdiction was not in a position to confirm the transfer of the client list and consequently to determine whether tax avoidance had taken place or not. 296. The claim that this request did not meet the foreseeably relevant standard is examined further in section C.1 below. Concerning the claim in relation to the information being covered by commercial secrecy, the manner in which Luxembourg responded is not consistent with the standard. Luxembourg did not provide any explanation for this conclusion, for example, whether it had requested the information from the company concerned and had received a refusal on grounds that were supported in Luxembourg law. The international standard envisages exchange of information to the widest possible extent and if there are claims that information is covered by the narrow range of secrecy provisions permitted by the standard a full explanation of the applicable legal basis should be provided in such cases. 297. In sum, it appears that Luxembourg does not use its information gathering powers in all instances to answer incoming requests or adequately
communicate with the requesting partner in cases where it has refused to provide the information requested. It is recommended that Luxembourg exercise its powers to compel production of information and apply sanctions as appropriate. The exercise of these powers and application of sanctions should be carefully monitored.
Use of information gathering measures absent domestic tax interest (ToRB.1.3)

298. The concept of domestic tax interest describes situations in which a contracting party can only provide information to another contracting party if it has an interest in gathering this information for its own needs. 299. There is nothing in Luxembourg legislation to restrict the use of domestic information gathering powers to situations in which the information is required by the ACD for its own use. 300. In practice no requests for EOI have been turned down because of a domestic tax interest requirement.
Enforcement provisions to compel production and access to information (ToRB.1.4) Law of 31March 2010
301. In the context of the new procedure for access to information, article5 of the law of 31March 2010 provides that if the information requested is not supplied within a month after notification of the decision to requisition it, an administrative fine of up to EUR250000 may be imposed on the holder of the information. The amount is set by the director of the competent tax administration or the person delegated to this effect. Luxembourgs authorities have clarified that in practice, the fine can be cumulated over days until the information is provided (up to a maximum of EUR250000), which means that the impact can be significant. 302. The Luxembourg tax authorities have also confirmed that, beyond this fine, there are no other means to compel communication of the documents sought by the requesting jurisdiction. The Luxembourg authorities have no power to seize documents, in particular banking documents, in connection with the international exchange of banking information. 303. Luxembourgs authorities have indicated that no official guidelines exist for the application of sanctions and that it has no experience in applying these fines. If the need arose, certain principles would be respected in the determination of the amount of the fine, such as the size of the entity concerned or its usual compliance with tax requirements e.g.for the same

default, a bank refusing to provide requested information would receive a more significant fine than would an individual. 304. Of the 832 requests received by Luxembourg for the period 2009-11, 172 were dealt with under the new procedure. The application of the new procedure is successful as reported by Luxembourgs partners and the potential penalties applicable for failure to answer seem to have a deterrent effect as all injunction letters sent under the new procedure were answered within the allocated timeframe (except for cases where the appeal right was exercised). Consequently, no penalties for default were applied. The sanctions provided by Luxembourgs legal framework for failure to comply with these requirements are adequate. 305. However, in the cases reported by a peer where the information on the banking statements was partly unreadable, which prevented the requesting jurisdiction from using the information, Luxembourg stated that the information had been blacked out directly by the banks and the Luxembourg tax authorities never accessed the original documents. 306. When the banking statements were received by the Luxembourg tax authorities, partially unreadable, the Luxembourg tax authorities did not request the original documents, which means that the Luxembourg tax authorities accepted the decision of the banks on the relevance of the information without seeing the information. Luxembourg refused to provide the complete documents to the requesting jurisdiction on the basis that the information was not relevant for their investigations, without having seen the original documents. Luxembourgs authorities should have pursued the matter further and used their enforcement powers to gather the missing information, if necessary. It is recommended that Luxembourg use its enforcement powers, as required, in all cases when the holder provides only partial information or refuses to provide the information.
Provisions applicable to old treaties or treaties that were not updated

307. Access to information is regulated by the LGI. Section202 of that law provides that the ACD may enforce its communication orders by fines not exceeding EUR1239.47, by execution at taxpayers cost, and by documents seizure. 308. Before a constraining measure is decided upon, the taxpayer must be summoned to provide the information requested, under threat of a constraining order and with the stipulation of a reasonable deadline for compliance. In situations in which such a summons is fruitless, the tax authorities may seize documents to obtain the information.
309. For the years 2009-11, 832 requests for EOI were received by Luxembourg. 660 of which were dealt with under the old process. Luxembourgs tax authorities indicated that when requested, the person concerned or the third party provided the information in almost all cases. Default in providing the requested information occurred in 2 to 3% of the cases. Approximately 1% of the cases have led to a fine. In practice, Luxembourg has not experienced any situation where information could not be obtained because of inadequate sanctions.
Secrecy provisions (ToRB.1.5) Secrecy obligations of financial institutions and insurers

310. Article41 of the law of 5April 1993 on the financial sector provides that information received from persons working in the banking sector in the context of their professional activity must be kept secret. Disclosure of this information is punished, pursuant to article458 of the Criminal Code, by imprisonment of 80 days to six months and a fine of EUR500 to 5000. The secrecy obligation ceases when the disclosure of the information is authorised by virtue of a legislative provision, including those predating the law cited (article41). 311. Section111-1 of the law of 6December 1991 on the insurance sector imposes the same obligations of confidentiality for persons working in the insurance sector. 312. Lastly, article178bis of the LGI provides expressly that the ACD may not, for tax purposes, request information from credit institutions, professionals of the sector, finance companies, undertakings for collective investment, or family wealth management companies. 313. To overcome the inaccessibility of banking information in the context of the international EOI, a specific instrument for access to information was included in the law of 31March 2010 ratifying the treaties concluded by Luxembourg containing provisions similar to article26(5) of the OECD Model Convention. 314. The Council of State confirmed this point in its opinion of 2February 2010, repeated in the parliamentary report preceding adoption of the law: According to the draft law, a request for information received from a competent foreign authority shall henceforth cause the Luxembourg tax authorities to collect information from third-party holders, including financial institutions []. The information thus obtained may however be used only for purposes of the exchange of information organised by the draft law.

The draft law authorises the tax administrations to collect information both from the taxpayer and from third parties, and in particular from financial institutions. The information thus obtained may be communicated to foreign tax administrations[]. 315. It is clear that the legal and regulatory framework in place in Luxembourg allows the exchange of banking information for the treaties ratified since 2010 by Luxembourg that provide for this possibility. The same holds, by extension, for the convention with India.24 316. For the treaties that have not yet been brought up to standard by Luxembourg, restrictions on access to information held by financial institutions and insurance companies continue to apply. These restrictions have an impact that extends beyond banking information, in that these professionals, together with attorneys, are part of the only professions authorised to act as professionals providing registered offices and fiduciaries.
Professional secrecy for attorneys and accountants

317. The professional secrecy of lawyers is covered by article35 of the law of 10August 1991 on the legal profession. Lawyers are subject to professional secrecy in criminal matters. Law offices as well as communications by any means between lawyers and their clients are sacrosanct and hence protected by the professional secrecy of lawyers. Any violation of secrecy is punishable pursuant to article458 of the Criminal Code. 318. Section176 of the LGI provides that any person interrogated may refuse to respond to questions if the response would be incriminating for the person or a member of his family. 319. Section177 of that law allows the following persons to refuse to supply information: defenders and lawyers when involved in criminal matters; lawyers, for any information they obtained in the exercise of their profession. However, this rule does not apply to facts that lawyers may have learned in the course of counsel or representation in tax matters.
320. Therefore, Luxembourg legislation provides that information received by an attorney during communications the purpose of which was to seek or provide legal advice is covered by confidentiality rules. However, any other information, and in particular factual information, acquired in the course of counsel must be disclosed on request of the revenue authorities. The
24. Pursuant to the most favoured nation clause.
attorney-client privilege provided for by Luxembourg law is consistent with the Terms of Reference. In addition, there are no other professional secrecy rules that would prevent the access to information for EOI purposes.
Other rules
321. Luxembourgs domestic legislation does not allow access to information held by SPFs under the treaties that have not yet been updated.
Conclusion
322. While the law of 31March 2010 has removed restrictions relating to professional secrecy rules, those restrictions remain in place for treaties that are not covered by the rules set forth in that law. Luxembourg should ensure an EOI in accordance with the standard with all its relevant partners. 323. Luxembourgs authorities have confirmed that although lawyers are protected by standard confidentiality rules with regard to criminal matters, the professional secrecy of lawyers has never been invoked against an EOI request in Luxembourg.
Phase1 Determination The element is place but certain aspects of the legal implementation of the element need improvements Factors underlying recommendations Limitations in access to information provided for by Luxembourgs domestic legislation are currently overridden in respect of only 45 of the 75 bilateral agreements. Only these new rules allow for access to information held by financial institutions, insurance companies, and SPFs. Recommendations Luxembourg should ensure access to information held by financial institutions, insurance companies, and SPFs for all its relevant partners.

Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed. Factors underlying the recommendations In one case, Luxembourg refused to provide requested information on grounds of commercial secrecy and it did not adequately explain the basis on which it was unable to exercise its information gathering powers. Luxembourg has the legal framework and compulsory powers in place to access information under its updated and new agreements but has failed to use the powers in practice in a number of cases, including access to banking information. It has also not used its powers to obtain information from certain entities (i.e.SOPARFIs). Recommendations In cases where Luxembourg does not use its information gathering powers in response to an EOI request it should fully explain the basis on which it was unable to do so. Luxembourg should exercise its powers to compel production of information and apply sanctions as appropriate. The exercise of these powers and application of sanctions should be carefully monitored.
B.2. Notification requirements and rights and safeguards

The rights and safeguards (e.g.notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information.
Not unduly prevent or delay exchange of information (ToRB.2.1)

324. The procedure for collecting information under Luxembourgs domestic tax law (LGI) does not provide for the notification of the person who is the subject of the request for information. 325. For the new procedure instituted by the law of 31March 2010, the Luxembourg authorities indicated that in situations in which the information is in the possession of the administration, or is part of publicly available data in Luxembourg, the new exchange procedure does not require the person who is the subject of the request to be informed and creates no specific right to seek annulment of the decision to transmit the information to the requesting party. 326. However, when the information needs to be collected, the procedure is as follows:
327. If the person concerned by the request is a resident of Luxembourg, an injunction letter to request the information is sent directly to this person. If the person concerned by the request is a non-resident of Luxembourg, the injunction letter requesting the information is sent to the holder of the information (for banking information, this injunction letter is sent directly to the bank). 328. Whether the person concerned by the request is a resident of Luxembourg or not, if the requesting jurisdiction asks that the person concerned not be notified, the Luxembourg authorities first inform the requesting jurisdiction that they will not inform the person concerned but they cannot guarantee that the person concerned will not be informed by the holder of the information (since there is no anti-tipping off provision). It then asks the requesting jurisdiction whether it wants them to proceed to request the information, generally from the bank. 329. If the requesting jurisdiction does not want to proceed with the request under these conditions, the request is not dealt with further. If the requesting jurisdiction agrees to proceed with the request, the Luxembourg authorities send the injunction letter directly to the holder of the information, and the person concerned by the request is not notified by the Luxembourg tax authorities. 330. However, one peer mentioned that in some cases in response to requests for banking information about a resident of Luxembourg, Luxembourg answered that because the taxpayer is a resident of Luxembourg, requests for banking information cannot be made directly to the bank. 331. In addition, requests for banking information had been systematically declined when the person concerned was a non-resident of Luxembourg and where the requesting jurisdiction had asked that the request be kept confidential from the taxpayer and that the person concerned not be notified. The Luxembourg authorities have informed the peer that in order to process the request, the peer should withdraw its stipulation that the request be kept confidential from the taxpayer. When the peer accepts to proceed with the request, in some cases, the person concerned by the request was then informed of the request by the holder of the information and appealed the administrative decision to collect and exchange the information. In practice these procedures created additional delays in obtaining the information. 332. Luxembourg should ensure that in all cases its process and procedures to collect information are clearly communicated to all of its treaty partners and these processes are followed in all cases. 333. With regard to appeals, the law of 31March 2010 provides (last sentence of article4) that the notification of the decision to the holder of the requested information constitutes notification to any other person

concerned. Any person targeted by the requisition decision as well as all third parties concerned have the right, under that provision, to appeal the decision before the administrative tribunal. This appeal has a suspensive effect (article6 of the law). 334. The possibility that any person concerned or having an interest in the EOI may challenge the decision to transmit that information constitutes a right, which while in substance is not objectionable, must be compatible with the effective EOI. 335. Since the injunction letter notifying the person concerned reflects an administrative decision that can be appealed, it has to be justified. During the on-site visit, Luxembourgs authorities explained that the injunction letter notifying the person concerned and requesting the information must detail: (1) that the information is sought for the purpose of answering an EOI request; (2) a short description of the case (including the legal entities and the years and taxes concerned as well as the reasons why the partner jurisdiction has requested the information); (3) the requesting jurisdiction; (4) the legal basis on which the request is made; (5) whether the taxpayer is the subject of an audit or an investigation; and (6) information on the right to appeal. However, Luxembourg never provides the incoming request received to the person from whom the information is requested. Since the end of the review period, Luxembourg has informed the assessment team that it has changed its practice and that injunction letters do not now provide information on the taxes concerned or on whether the taxpayer is the subject of an audit or investigation. 336. Once the collection process has started, any person concerned by the injunction letter can appeal the decision to exchange the information to the Administrative Tribunal pursuant to article6(1) of the law of 31March 2010. This has to be done within the month following the notification (generally made by the injunction letter) and the appeal has a suspensive effect. The written submission of the governmental delegate in answer to this appeal must be filed with the Administrative Tribunal no later than one month after the appeal has been introduced, along with the incoming request and attached documents received from the requesting party. These documents can be consulted by the appellant but not circulated nor copied. If the request and its attached documents are not filed with the written submission of the ACD, the Administrative Tribunal will reject the request for information. The Administrative Tribunal must give its decision no later than one month after the written submission of the State has been filed. 337. The decision of the Administrative Tribunal can be appealed to the Administrative Court pursuant to article6(2) of the law of 31March 2010 (for cancellation of the decision of first instance). The deadline for appealing is 15 days following the decision of the Administrative Tribunal. In practice,
and to accelerate the judicial procedure, cases in relation to EOI are always prioritised over any other cases. It generally takes approximately six months to complete the judicial process up to the decision of the Administrative Tribunal. The complete procedure including an appeal to the Administrative Court to overturn the decision of the Administrative Tribunal can take up to one year. 338. Once the final decision is reached, and if so decided by the Administrative Tribunal (if there is no appeal in the 15 days following the decision) or by the Administrative Court, the information is collected and exchanged. 339. Luxembourg has reported that since the introduction of the new procedure and out of 172 requests received under the new procedure, 23 injunction letters sent under the new procedure have been appealed (of which 5 are related), 12 decisions have been rendered and only four decisions of the Administrative Tribunal on EOI have been appealed to the Administrative Court for cancellation. Whilst an appeal has been made in 13% of the incoming requests received, Luxembourg expects this percentage to decrease in the future, in conjunction with the process becoming better known.
Phase1 Determination The element is place Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed. The practices and procedures used to collect information in Luxembourg have not always been clear to its treaty partners and may not always have been followed in practice. Luxembourg should ensure that in all cases its processes and procedures to collect information are clearly communicated to all of its treaty partners and that these processes are followed in all cases.
COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION 89
C. Exchanging Information
Overview
340. Jurisdictions generally cannot exchange information for tax purposes unless they have a legal basis or mechanism for doing so. In Luxembourg, the legal authority to exchange information is derived from double tax conventions (DTCs) and tax information exchange agreements (TIEAs) once they become part of Luxembourgs domestic law. This section of the report examines whether Luxembourg has a network of information exchange agreements that would allow it to achieve effective EOI in practice. 341. Luxembourg today has a network of bilateral information exchange mechanisms covering 7525 jurisdictions. Of these 75 agreements, 45 allow for the exchange of banking information and 43 are in line with the standard. Of the 43 agreements signed and in line with the standard, 23 are currently in force. Luxembourg may also exchange information with its EU partners under the EU Council Directive on Administrative Cooperation in the Field of Taxation 2011/16/EU replacing the Mutual Assistance Directive 77/799/ EEC. 342. Luxembourg has concluded 40 protocols or conventions for the exchange of banking information since March 2009, to which should be added the convention negotiated with India, by application of the most favoured nation clause. All these agreements contain a complete article26, supplemented by an exchange of letters. Three of the information exchange arrangements negotiated by Luxembourg with Austria, Panama and Switzerland include in their exchange of letters restrictions that are not consistent with the international standard. Those agreements require communication of the name and address of the person covered by the request and the person in possession of
90 COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION

the information requested. Luxembourg has undertaken steps with Austria, Switzerland and Panama to bring these agreements to the standard. The agreement with Switzerland has been updated (with a new protocol) to bring it in line with the standard and it has been signed by Luxembourg and the law ratifying the protocol has been enacted by Parliament on 7June 2013 and the law is expected to be published by the end of June 2013. No agreements with Austria and Panama have been reached yet, although since 1January 2013, Austria is covered by the EU Council Directive on Administrative Cooperation in the Field of Taxation (2011/16/EU). The other agreements concluded by Luxembourg, since March 2009, are consistent with the standard. 343. Luxembourg was quick to ratify the first 20 treaties signed26, calling for the exchange of banking information, plus the treaty with India (through application of a most-favoured-nation clause). Those agreements have now been put into effect through the law of 31March 2010, which instituted a new access to information procedure covering banking information. The other seven27 signed agreements that contain this possibility have been ratified in 2011. In general, once signed, the agreements are ratified rapidly in Luxembourg. Moreover, 18 agreements signed by Luxembourg and in conformity with the international standard are not yet in force (including the new version of the agreement with Switzerland that is in line with the standard) but should be ratified shortly. Two draft laws providing for the ratification of 15 new or updated agreements have been enacted by Parliament on 7June 2013 and the laws are expected to be published by the end of June 2013. The agreements with Belgium and the United States have already been ratified by Luxembourg, but need to be ratified by the other jurisdiction to enter in force. 344. The network of mechanisms that Luxembourg has in place for exchanging banking information covers its principal trading partners (Luxembourg conducts 60% of its trade with its three neighbours, Belgium, France and Germany). Luxembourg has in addition undertaken steps to conclude agreements meeting the standard with all its treaty partners. 345. In this context, it is also noted that since 1January 2013, Luxembourg is in a position, thanks the new EU administrative co-operation Directive, to exchange information in a manner consistent with the standard with all EU Member States. 346. Apart from a few old treaties, all the agreements concluded by Luxembourg and in particular the 41 treaties most recently signed, contained provisions on the confidentiality of the information received. Those
26. To which should be added the treaty with India, in application of a most favoured nation clause. 27. Barbados, Hong-Kong (China), Japan, Portugal, San Marino, Seychelles and Sweden.
provisions are also accompanied by domestic legal rules with equivalent effects. Similarly, all treaties concluded by Luxembourg contain provisions ensuring that the rights and safeguards of taxpayers and third parties are preserved. 347. Since the end of 2010, Luxembourgs authorities have completely reorganised their EOI division, hiring new staff and reviewing their processes to better follow the incoming requests, improve their collection process and reduce the answering timeframe. In 2009, only 18% of the requests were answered in less than 90 days and only a further 2% in less than 180 days. In 2011, Luxembourg answered EOI requests within 90 days in 45% of the cases, and in a further 30% of the cases the answer was provided in 180 days. However, in response to comments, Luxembourg has agreed to provide more targeted responses to requests and to make efforts to provide answers and comments to each of the individual issues raised in the requests. 348. Some peers have noted that status updates are not provided notwithstanding that answers cannot be provided within 90 days. It is recommended that Luxembourg establish a process to update requesting authorities on the progress of their requests where a full response cannot be provided within 90 days. 349. Nevertheless, some peers have reported that in certain cases they were unable to receive banking information from Luxembourg when it pertained to individuals who were resident in Luxembourg. This is the result of an interpretation by Luxembourg of the foreseeably relevant requirement which is not in line with the standard. It is recommended that Luxembourg amend its practice in this regard to bring it into line with the international standard. 350. In addition, in relation to the failure to supply a client list in the case outlined in SectionB.1 a claim by Luxembourg that the information was not foreseeably relevant was not in accordance with the standard. 351. Luxembourg has also stated that it does not exchange banking information that precedes the effective date of the agreement but which relates to a taxable period or chargeable event following the effective date, even if the information is available. This limitation is not consistent with the international standard, which provides that such information preceding the effective date of the agreement must be exchanged if available. A recommendation is therefore included in this regard. 352. Finally, the unnecessary disclosure of information, in injunction letters, which is not otherwise public information, is not in accordance with the principle that the information contained in an EOI request should be kept confidential and accordingly a recommendation is included.
C.1. Exchange of information mechanisms

Exchange of information mechanisms should allow for effective exchange of information.
353. Luxembourg has signed a total of 7528 agreements providing for EOI. Of these 75 agreements, 45 allow for the exchange of banking information and 43 are in line with the standard. Of the 43 agreements signed and in line with the standard, 23 are currently in force. Luxembourg is also party to the EU Council Directive on Administrative Cooperation, which came into effect on 1January 2013. As a result, Luxembourg has an EOI relationship to the standard with 54 jurisdictions and can already exchange information with 40 of them. 354. In sum, Luxembourg has signed 45 agreements that allow exchange of banking information and with the EU Council Directive on Administrative Cooperation, Luxembourg can exchange banking information with a total of 55 jurisdictions29. 355. Luxembourg has also started to negotiate new agreements for EOI with 24 jurisdictions, including 5 TIEAs, and 12 of these agreements are already initialled.30
28. See Annex3 for the agreements signed, allowing for the exchange of banking information, to the standard and in force, including the jurisdictions covered by the EU Council Directive on Administrative Cooperation in the Field of Taxation 2011/16/EU. 29. See Annex3 for the agreements allowing for the exchange of banking information, including the jurisdictions covered by the EU Council Directive on Administrative Cooperation in the Field of Taxation 2011/16/EU. 30. Initialled: Botswana, Brunei, Croatia, Estonia, Guernsey, Hungary, Kyrgyzstan, Mauritius, Oman, Saudi Arabia, Singapore and South Africa; in negotiation: Burkina Faso (TIEA), Chile (DTC), Cyprus (DTC), Egypt (DTC), Kenya (TIEA), Ireland (DTC), Latvia (DTC), Lebanon, (DTC), Lithuania (DTC), Malaysia (DTC), Mongolia (DTC), Morocco (DTC), Niger (TIAE), New Zealand (DTC), Pakistan (DTC), Senegal (DTC), Serbia (DTC), Slovenia (DTC), Syria (DTC), Thailand (DTC) Turks and Caicos (TIEA) Ukraine (DTC), Uruguay (DTC), Vietnam (DTC). Footnote from Turkey: the information contained in this document refers to Cyprus, meaning the southern portion of the island. There is no single authority representing both Turkish and Greek Cypriots on the island. Turkey recognises the Turkish Republic of Northern Cyprus (TRNC). Until such time as a lasting and equitable solution is found in the United Nations context, Turkey will maintain its position on the Cyprus question. Footnote from all European Union states members of the OECD and the European Union: The Republic of Cyprus is recognised by all members of the United Nations except Turkey. The information shown in this document concerns the zone under the effective control of the Government of the Republic of Cyprus.
356. For the three years under review (2009 to 2011), Luxembourg received more than 800 EOI requests from more than 30 different jurisdictions. Its main EOI partners are France and Belgium, two of its neighbouring jurisdictions. During this period the other main EOI partners were Germany, Italy, the Netherlands, Russia, Spain and Sweden. 357. Beyond the EOI on request in direct tax matters Luxembourg, as a member of the European Union, is party to the Community VAT system and consequently to the EOI in VAT matters under EC regulation 1798/2003. In 2010 and 2011, Luxembourg answered more than 689 incoming VAT requests. 358. Luxembourg is also involved in spontaneous EOI. Between 2009 and 2011, Luxembourg exchanged 217 pieces of data spontaneously, mainly to Belgium, Denmark, France, Germany, Portugal and the United Kingdom. Moreover, Luxembourg is also party to the EU Council Directive on Administrative Cooperation applicable since 1January 2013 and is currently implementing measures to meet the requirements of the Directive, which provides, amongst other, for automatic EOI. 359. Finally, as part of its co-operation program, Luxembourg is also involved in multilateral audits for VAT under the EU Council regulation (No 904/2010) of 7October 2010 on Administrative Cooperation and Combating Fraud in the Field of Value Added Tax.
Foreseeably relevant standard (ToRC.1.1)

360. The international standard for EOI envisages information exchange upon request to the widest possible extent. Nevertheless it does not allow fishing expeditions, i.e.speculative requests for information that have no apparent nexus to an open inquiry or investigation. The balance between these two competing considerations is captured in the standard of foreseeable relevance which is included in Article26(1) of the OECD Model Taxation Convention set out below: The competent authorities of the contracting states shall exchange such information as is foreseeably relevant to the carrying out of the provisions this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the contracting states or their political subdivisions or local authorities in so far as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Articles1 and 2.

361. Of the 75 agreements signed by Luxembourg, the 45 agreements31 concluded or updated since 2009 refer to paragraph1 of article26 and the notion of foreseeable relevance as stipulated by the international standard. 362. All the agreements concluded since March 2009 provide, as well, for an exchange of letters which clarifies the notion of foreseeably relevant. These exchanges of letters, which have the same force as the treaties, normally include: a definition of the notion of foreseeably relevant the purpose of which is to provide for EOI in tax matters to the widest possible extent, without leaving contracting states at liberty to engage in fishing expeditions or to request information that is unlikely to be relevant to the tax affairs of a given taxpayer; a list of information that must be provided by the competent authority of the requesting party to the competent authority of the requested party, normally corresponding to paragraph5 of article5 of the model TIEA. The information that must be communicated includes the identity of the person under examination; a statement of the information sought, including its nature and the form in which the requesting state wishes to receive the information from the requested state; the tax purpose for which the information is sought; and, to the extent known, the name and address of any person believed to be in possession of the requested information.
363. Luxembourgs authorities confirmed that these provisions were interpreted in light of the commentaries on paragraph1 of article26 of the model tax convention and on paragraph5 of article5 of the model information exchange agreement published by the OECD. 364. It is, however, noted that the provisions of the exchanges of letters concluded by Luxembourg deviate from the wording of article5 (5) of the OECD model TIEA in the case of the protocols concluded with Austria, Panama and Switzerland. These three protocols require communication of the name of the person under examination in the requesting state as well as the name and address of the person in possession of the information in the requested state. In requiring the communication of this information, these three protocols are not up to the standard. Nevertheless, since 1January 2013, Luxembourg can exchange information to the standard with Austria on the basis of the EU Council Directive on Administrative Cooperation 2011/16/EU.
365. Luxembourg has also approached Austria, Switzerland and Panama with a view to making, as quickly as possible, the agreements signed with these countries consistent with the standard. The modifications proposed in the agreement with Panama have been provided to Panama and Luxembourg is awaiting Panamas answer. For Austria, the new version is being considered by the Austrian authorities and for Switzerland, the new protocol has been signed and ratification is under way. 366. The 32 agreements concluded by Luxembourg before its commitment to the standard, and which have not yet been updated, contain no reference to the notion of foreseeable relevance, but instead use the terms necessary or relevant. The commentary on article26 of the OECD Model Convention considers that the terms necessary or relevant mean the same thing for the EOI as the expression foreseeably relevant. Thus, these treaties may be recognised as conforming to the standard with respect to foreseeable relevance. 367. In practice, however, a number of issues have arisen regarding Luxembourgs interpretation of the foreseeably relevant standard. A peer reported that banking information cannot be obtained when the account holder is a resident of Luxembourg given that Luxembourgs authorities are not allowed to obtain information from the banking institutions regarding their own residents for their own purposes and that they consider the information requested as being not foreseeably relevant for the requesting jurisdiction. Two examples were provided by the partner jurisdiction to illustrate this issue. In the first case, the answer provided by Luxembourg to the requesting jurisdiction stated: Since [the taxpayer] is a resident of Luxembourg, the banking information cannot be requested from the bank. However, Luxembourgs authorities have now clarified that they did not provide an answer to this request because they did not consider the request to be foreseeably relevant. The incoming request was rejected on this basis. During the on-site visit, Luxembourg indicated that as a general rule, when an individual is considered to be tax resident in Luxembourg, the information requested is not regarded by Luxembourg as being foreseeably relevant for application and enforcement of the laws of the requesting jurisdiction. Another case reported by the peer concerned a request made in respect of an individual resident in the requesting country using a credit card linked to a bank account held in Luxembourg by a natural person resident in Luxembourg. All banking transactions were made by the individual in the requesting country using the card of the Luxembourg resident via the bank account in Luxembourg. Luxembourg declined to provide the requested banking information, on the grounds that the account holder was resident for tax purposes in Luxembourg. The answer provided to the

requesting jurisdiction stated: The account holder is an individual resident of Luxembourg. Therefore, we cannot answer your request. Luxembourg considers that in this type of situation the foreseeably relevant criterion is not met. This line of reasoning does not conform to the standard as the information requested can be foreseeably relevant to another jurisdiction irrespective of the residence status of the account holder. 368. Luxembourg has stated that this is not a general rule but that it is has occurred in some cases. Luxembourgs unwillingness to exchange banking information in certain cases where its own residents were concerned, on the grounds of lack of foreseeable relevance, is not consistent with the standard. It is recommended that Luxembourg review its interpretation of the foreseeable relevance concept to conform to the standard. 369. In addition, Luxembourg has confirmed that in a number of cases, where bank account information was requested in respect of a company that was situated in a third jurisdiction, and where the shareholders of the company were resident in the requesting jurisdiction, Luxembourg requested confirmation that the requesting jurisdiction had pursued all means available to obtain the information including requesting such information from the third jurisdiction. A requirement to request information from a third jurisdiction when the initial request relates directly to a bank account in Luxembourg is not in accordance with the standard. 370. Another case reported by a peer and already described in section B.1 concerned information in relation to a potential transfer of client list without consideration. In that case the Luxembourg authorities declined to provide the name of the companys clients (the client list), arguing that this constituted a fishing expedition and involved a breach of commercial secrecy. In the absence of this information, the requesting jurisdiction was not in a position to confirm the transfer of the client list and consequently to determine whether tax avoidance had taken place or not. 371. The reasons given by Luxembourgs authorities to decline the request based on foreseeable relevance are not in keeping with the standard. The issue of the client list being a commercial secret for which Luxembourg could refuse to provide the information in accordance with the standard is examined in Sections B.1 and C.4. 372. In addition, there are some recent Court decisions32 in Luxembourg in relation to the interpretation of the foreseeably relevance criterion
32. Decision number 30644C of 12July 2012 (on appeal from the decision number 29869 of 6February 2012), decision number 30251C of 24May 2012 (on appeal from the decision number 29592 of 9December 2011), decision number 30658 of 7June 2012 and decision 30164 of 27March 2012.
regarding exchange of information. These reflect a very strict interpretation of the standard in Luxembourg. 373. In summary, the interpretation of the foreseeably relevant standard in Luxembourg is unduly restrictive and prevents it from engaging in effective exchange of information in line with the international standard in certain cases. It is recommended that Luxembourg review its practices in this regard to align them with the international standard.
In respect of all persons (ToRC.1.2)

374. For EOI to be effective it is necessary that a jurisdictions obligations to provide information are not restricted by the residence or nationality of the person to whom the information relates or by the residence or nationality of the person in possession or control of the information requested. For this reason the international standard for EOI envisages that EOI mechanisms will provide for EOI in respect of all persons. 375. In this area, the 43 of the 45 agreements concluded by Luxembourg since March 2009 are on all points consistent with the OECD model tax convention33. Of the 30 treaties not already updated to meet the standard, 21 specifically mention that the EOI is not restricted by article1 of the convention.Exchange of all types of information (ToRC.1.3) 376. Jurisdictions cannot engage in effective EOI if they cannot exchange information held by financial institutions, nominees or persons acting in an agency or a fiduciary capacity. Both the OECD Model Tax Convention and the Model Agreement on Exchange of Information, which are the authoritative sources of the standards, stipulate that bank secrecy cannot form the basis for declining a request to provide information and that a request for information cannot be declined solely because the information is held by nominees or persons acting in an agency or fiduciary capacity or because the information relates to an ownership interest. 377. Article26 (5) of the OECD Model Convention provides that a contracting state may not decline to supply information solely because it is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity, or because it relates to ownership interests in a person. Luxembourg authorities have advised that exchange of information relating to SPFs can take place under agreements signed since 2009.

378. The 45 agreements concluded by Luxembourg since its commitment to the standard contain provisions equivalent to paragraph5 of article26 of the OECD Model Convention. 379. These are the agreements with Armenia, Austria, Bahrain, Barbados, Belgium, Canada, Czech Republic, Denmark, Finland, France, FYROM, Germany, Hong Kong (China), Iceland, Isle of Man, Italy, India34, Japan, Jersey, Kazakhstan, Liechtenstein, Laos, Malta, Mexico, Monaco, Netherlands, Norway, Panama, Poland, Portugal, Romania, Qatar, Russia, San Marino, Seychelles, South Korea, Spain, Sri Lanka, Sweden, Switzerland, Tajikistan, Chinese Taipei, Turkey, United Kingdom and United States. 380. While the current agreements in force withAustria, Switzerland and Panama contain a provision equivalent to paragraph5 of article26 of the OECD Model Convention, other provisions of these agreements are not in line with the standard with regard to the identification requirement of the person who is the subject of the request (see section C.1.1 above for more information). With the entry into force of the new EU Council Directive on Administrative Cooperation in the Field of Taxation, the exchange of banking information is now possible with 1235 additional jurisdictions (including Austria). 381. The possibility of exchanging banking information does not exist under the conventions that have not yet been updated to meet the standard.
Absence of domestic tax interest (ToRC.1.4)

382. The concept of domestic tax interest describes a situation where a contracting party can only provide information to another contracting party if it has an interest in the requested information for its own tax purposes. A refusal to provide information based on a domestic tax interest requirement is not consistent with the international standard. EOI partners must be able to use their information gathering measures even though invoked solely to obtain and provide information to the requesting jurisdiction. 383. All the information exchange mechanisms concluded since March 2009 contain, without exception, an express provision (equivalent to article26 (4) of the OECD Model Tax Convention) according to which the
34. 35. With respect to India, by application of the most-favoured-nation clause. Austria, Bulgaria, Cyprus, Czech Republic, Estonia, Greece, Hungary, Ireland, Latvia, Lithuania, Slovak Republic, Slovenia. See Annex3 for the agreements signed, allowing for the exchange of banking information, to the standard and in force, including the jurisdictions covered by the EU Council Directive on Administrative Cooperation in the Field of Taxation 2011/16/EU.
requested party will submit the information requested regardless of whether it has a domestic tax interest in obtaining that information. 384. The agreements that have not been updated since March 2009 contain no express provision relating to the non-application of the principle of domestic tax interest. However, these treaties are interpreted by Luxembourg as allowing access to all information without reference to that principle.
Absence of dual criminality principles (ToRC.1.5)

385. The principle of dual criminality provides that assistance can only be provided if the conduct being investigated (and giving rise to an information request) would constitute a crime under the laws of the requested jurisdiction if it had occurred in the requested jurisdiction. In order to be effective, EOI should not be constrained by the application of the dual criminality principle. 386. None of the information exchange mechanisms concluded by Luxembourg since March 2009 contains the principle of dual incrimination for limiting the EOI. This is also the case with the agreements not yet updated.
Exchange of information in both civil and criminal tax matters (ToRC.1.6)

387. Information exchange may be requested both for tax administration purposes and for tax prosecution purposes. The international standard is not limited to information exchange in criminal tax matters but extends to information requested for tax administration purposes (also referred to as civil tax matters). 388. Every information exchange mechanisms concluded since March 2009 provides for EOI in both civil and criminal matters. This is also the case for the agreements signed before that date.
Provide information in specific form requested (ToRC.1.7)

389. According to the Terms of Reference, EOI mechanisms should allow for the provision of information in the specific form requested (including depositions of witnesses and production of authenticated copies of original documents) to the extent possible under a jurisdictions domestic laws and practices. 390. In some cases, a Contracting State may need to receive information in a particular form to satisfy its evidentiary or other legal requirements. Such forms may include depositions of witnesses and authenticated copies of original records. Contracting States should endeavour as far as possible to

accommodate such requests. The requested State may decline to provide the information in the specific form requested if, for instance, the requested form is not known or permitted under its law or administrative practice. A refusal to provide the information in the form requested does not affect the obligation to provide the information. 391. There are no restrictions in the information exchange mechanisms concluded by Luxembourg that might prevent it from providing information in the form requested, as long as this is consistent with its administrative practices. 392. The Luxembourg authorities have stated that they can exchange information in the form requested to the extent permitted by Luxembourg laws and administrative practices. According to comments received from Luxembourgs treaty partners, there do not seem to have been any instances where Luxembourg was not in a position to provide the information in the specific form requested.
In force (ToRC.1.8)
393. EOI cannot take place unless a jurisdiction has EOI arrangements in force. The international standard requires that jurisdictions take all steps necessary to bring information arrangements that have been signed into force expeditiously. 394. In Luxembourg all tax treaties, whether double taxation conventions, protocols amending existing conventions, or information exchange agreements, must be ratified by the Parliament. 395. Luxembourgs network of bilateral agreements covers to date a total of 7536 jurisdictions. Of these 75 agreements, 45 allow for the exchange of banking information and 43 are in line with the standard. Of the 43 agreements signed and in line with the standard, 23 are currently in force. Luxembourg is also party to the EU Council Directive on Administrative Cooperation 2011/16/EU. As a result, Luxembourg has an EOI relationship to the standard with 54 jurisdictions and can already exchange information with 40 of them.
36.
See Annex3 for the agreements signed, allowing for the exchange of banking information, to the standard and in force, including the jurisdictions covered by the EU Council Directive on Administrative Cooperation in the Field of Taxation 2011/16/EU.
396. 18 agreements37 signed by Luxembourg which are in conformity with the international standard are not in force yet (including the new version of the agreement with Switzerland). It is important that Luxembourg ensures the completion of the procedure for these agreements to enter in force. 397. Agreements concluded with Belgium and the United States have been ratified in Luxembourg and will enter into force once ratified by the partner jurisdiction. Two draft laws providing for the ratification of 15 agreements have been enacted by Parliament on 7June 2013 and the laws are expected to be published by the end of June 2013. 398. Once agreed and initialled, the text of the agreement is translated into French by the international division of the ACD and transmitted to the Ministry of Finance for the signature process. A draft law is prepared (by the ACD and approved by the Ministry of Finance) and submitted to the Government Council for its approval. The Council of State then provides its comments before the approval by the Parliament. 399. To accelerate the signature and ratification process, it is also possible to sign and ratify an agreement that is only in English or in German. 400. Generally, a number of agreements are included in the same draft law and approved by the Parliament at once. No specific disposition is required for the implementation of the agreement into domestic law; international agreements take precedence over domestic law and are directly applicable. Since the ratification of the agreements concluded or updated since March 2009 and providing for the exchange of all types of information, including banking information and since the introduction of the new law providing for the collection of banking information, there has been no legal challenge in Luxembourg on the legality of these new measures.
In effect (ToRC.1.9)
401. For information exchange to be effective, the parties to an EOI arrangement need to enact legislation necessary to comply with the terms of the arrangement. 402. In the case of Luxembourg, the crucial point is to ensure access to banking information in a situation in which domestic tax legislation provides for banking secrecy and does not authorise access to such information for the purposes of international information exchange.
37. Canada, Czech Republic, FYROM, Isle of Man, Italy, Jersey, Kazakhstan, Laos, Malta, Poland, Romania, Russia, Seychelles, South Korea, Sri Lanka, Switzerland, Tajikistan and Chinese Taipei.

403. In addition to ratifying its agreements by means of the law of 31March 2010, Luxembourg has instituted a specific procedure for access to banking information, described above under section B.1. These provisions guarantee access to banking information notwithstanding the secrecy rules to which the Criminal Code subjects all financial institutions in Luxembourg. 404. Luxembourg has also given express effect to the agreement concluded with India, through the law of 31March 2010, thus respecting the most favoured nation clause in that treaty. In addition, seven agreements were ratified in 2011 and two draft laws providing for the ratification of 15 new agreements have been enacted by Parliament on 7June 2013 and the laws are expected to be published by the end of June 2013. 405. In practice, however, one peer reported that Luxembourg does not exchange banking information with regard to requests that relate to a tax period that is after the effective date of the agreement but where the information precedes the effective date of the agreement. Luxembourg reported that it is not possible to exchange banking information that precedes the effective date of an agreement based on their interpretation of the EOI mechanism. Only information originating after that effective date can be exchanged even in instances where the information is otherwise available and would be relevant for a taxable period beginning after the effective date of the agreement. This is not consistent with the international standard. 406. Luxembourgs unwillingness to provide banking information preceding the effective date of its agreements is not consistent with the standard and it is therefore recommended that Luxembourg access and exchange banking information with regard to requests that are relevant to a tax period that is after the effective date of the agreement where the information precedes the effective date of the agreement.
Phase1 Determination The element is in place, but certain aspects of the legal implementation of the element need improvement. Factors underlying the recommendations Of the 45 agreements concluded by Luxembourg, since its commitment to the standard in March 2009, 2 establish restrictions which are inconsistent with the standard. Recommendations Luxembourg should ensure, in line with its commitment to the standard, that each of its EOI mechanisms strictly respects the standard of transparency
Phase1 Determination The element is in place, but certain aspects of the legal implementation of the element need improvement. Factors underlying the recommendations As a result of domestic law limitations with respect to access to information, only 43 of the 75 signed EOI mechanisms allow for exchange of information in accordance with the international standard. Of these 43 agreements, 23 are in force. Recommendations Luxembourg should ensure that all the treaties signed could allow for an exchange of information in accordance with the international standard.
Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed. Luxembourg has interpreted the foreseeably relevant standard in an unduly restrictive way resulting in information not being exchanged in some cases. Furthermore, in some cases Luxembourg has sought unnecessary confirmations from the requesting jurisdiction. Luxembourg interprets its obligations under its EOI agreements as not obliging it to exchange banking information with regard to requests that relate to a tax period that is after the effective date of the agreement where the information precedes that date, even in instances where the information is otherwise available. Luxembourg should review its interpretation of the foreseeable relevance concept to conform with the standard.
Luxembourg should access and exchange banking information with regard to requests that are relevant to a tax period that is after the effective date of the agreement where the information precedes the effective date of the agreement.
C.2. Exchange of information mechanisms with all relevant partners

The jurisdictions network of information exchange mechanisms should cover all relevant partners.
407. The standard requires that jurisdictions exchange information with all relevant partners, meaning those partners who are interested in entering into an information exchange arrangement. Agreements cannot be concluded only with counterparties without economic significance. If it appears that a

jurisdiction is refusing to enter into agreements or negotiations with partners, in particular ones that have a reasonable expectation of requiring information from that jurisdiction in order to properly administer and enforce its tax laws it may indicate a lack of commitment to implement the standards. 408. Since March 2009, when it gave its formal commitment to implement the international standard of transparency and exchange of information, Luxembourg has contacted all its existing treaty partners to update its treaty network to bring the agreements to the standard, by including the full version of article26 of the OECD Model Tax convention, particularly as it concerns the EOI held by banks, to all its agreements. Luxembourg has entered into negotiations with all partner jurisdictions that have answered positively, but has also reported that some of them have still not yet responded to its proposals. Since its commitment to the standard, all the exchange-of-information agreements concluded by Luxembourg contain a full version of article26 of the OECD Model Convention. 409. Over the last four years, Luxembourg has given priority to the update of treaties not meeting the standard while negotiating at the same time with new treaty partners to expand its EOI network, including negotiation of TIEAs. 410. Currently, Luxembourg has a network of 75 agreements38. Of these 75 agreements, 45 allow for the exchange of banking information and 43 are in line with the standard. Of the 43 agreements signed and in line with the standard, 23 are currently in force. Luxembourg is also party to the EU Council Directive on Administrative Cooperation since 1January 2013. As a result, Luxembourg has an EOI relationship to the standard with 54 jurisdictions and can already exchange information with 40 of them. 411. The two draft laws ratifying 15 agreements39 (including the revised agreement with Switzerland that is in line with the standard), have been enacted by Parliament on 7June 2013 and the laws are expected to be published by the end of June 2013. The agreements with Belgium and the United States have already been ratified by Luxembourg and will enter into force once ratified by the partner jurisdiction. 412. Luxembourgs policy with respect to conventions favours the conclusion of double taxation treaties containing provisions for EOI. Thus, since
38. See Annex3 for the agreements signed, allowing for the exchange of banking information, to the standard and in force, including the jurisdictions covered by the EU Council Directive on Administrative Cooperation in the Field of Taxation 2011/16/EU. 39. Canada, FYROM, Italy, Kazakhstan, Laos, Malta, Poland, Romania, Russia, Seychelles, South Korea, Sri Lanka, Switzerland, Tajikistan and Chinese Taipei.
2009, Luxembourg has sought to negotiate protocols amending the conventions already in force (29 in total: Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Hong Kong (China), Iceland, Italy, Japan, Kazakhstan, Malta, Mexico, Netherlands, Norway, Poland, Portugal, Romania, Russia, San Marino, South Korea, Spain, Sweden, Switzerland, Turkey, United Kingdom and United States) and to negotiate new tax conventions with a view to developing its economic relations. Luxembourg indicated that it does not refuse to propose in the future to its relevant partners to conclude tax information exchange agreements. 413. Luxembourg has started to negotiate new agreements for EOI with 24 jurisdictions, including 5 TIEAs. 12 agreements are already initialled40. 414. The Luxembourg treaty network covers to date: 22 OECD members;41 All of Luxembourgs EU partners;42 12 of the G20 members;43 63 of the Global Forum member jurisdictions; and its 3 neighbour countries (Belgium, France and Germany).
415. These figures shows that Luxembourgs neighbouring countries (60% of its trade takes place with its three neighbours (Belgium, France and Germany)) as well as a significant number of EU and OECD member states now have an exchange-of-information agreement with Luxembourg allowing for the exchange of banking information. 416.
40.
In addition to these signed agreements, Luxembourg has reported that:
Initialled: Botswana, Brunei, Croatia, Estonia, Guernsey, Hungary, Kyrgyzstan, Mauritius, Oman, Saudi Arabia, Singapore and South Africa; in negotiation: Burkina Faso (TIEA), Chile (DTC), Cyprus (DTC), Egypt (DTC), Kenya (TIEA), Ireland (DTC), Latvia (DTC), Lebanon, (DTC), Lithuania (DTC), Malaysia (DTC), Mongolia (DTC), Morocco (DTC), Niger (TIAE), New Zealand (DTC), Pakistan (DTC), Senegal (DTC), Serbia (DTC), Slovenia (DTC), Syria (DTC), Thailand (DTC) Turks and Caicos (TIEA), Ukraine (DTC), Uruguay (DTC) and Vietnam (DTC). 41. Austria; Belgium; Canada; Denmark; Finland; France; Germany; Iceland; Italy; Japan; Malta; Mexico; the Netherlands; Norway; Poland; Portugal; Spain; South Korea; Sweden; Switzerland; Turkey; the United Kingdom and the United States. 42. Austria; Belgium; Denmark; Finland; France; Germany; Italy; Malta; the Netherlands; Poland; Portugal; Romania; Spain; Sweden; the United Kingdom. 43. With either an agreement to the standard or with the EU Directive on Administrative Cooperation.

it has initialled standard-consistent agreements with Botswana, Brunei, Croatia, Estonia, Guernsey, Hungary, Kyrgyzstan, Mauritius, Oman, Saudi Arabia, Singapore and South Africa. it is now negotiating agreements with Chile, Cyprus, Egypt, Ireland, Latvia, Lebanon, Lithuania, Malaysia, Morocco, New Zealand, Pakistan, Senegal, Serbia, Slovenia, Syria, Thailand, Ukraine and Uruguay. it is starting negotiations with: Burkina Faso, Kenya, Mongolia, Niger, Turks and Caicos Islands and Viet Nam. and it has proposed to Albania, Australia, Azerbaijan, Brazil, Bulgaria, China, Georgia, Greece, Indonesia, Israel, Moldavia, Slovak Republic, Trinidad and Tobago, Tunisia, the United Arab Emirates and Uzbekistan that negotiations be held. Sometimes these proposals have not received a response. Discussions between Australia and Luxembourg on the most appropriate instrument for EOI are still ongoing.
417. Luxembourg has indicated that its principal economic partners are within the European Union: 80% of its trade is with member countries of the EU, and approximately 60% of that trade takes place with its three neighbours (Belgium, France and Germany). All its EU partners are, since 1January 2013, covered by an international agreement providing for EOI to the standard. Luxembourg has made a considerable amount of effort and progress, since March 2009, when it gave its formal commitment to implement international standards of transparency and exchange of information, to update and develop its treaty network, leading to a network of 51 EOI relationships to the standard. The commentaries received from Luxembourgs EU partners show that Luxembourg has concluded agreements with all those EU jurisdictions that have expressed an interest in negotiating with Luxembourg an agreement that respects the international transparency standard. Luxembourg therefore has a treaty network covering all its relevant partners.
Phase1 Determination The element is in place. Factors underlying the recommendations Luxembourg cannot exchange information in accordance with the international standards under its EOI agreements with several partners. Recommendations Luxembourg should continue to develop its EOI mechanisms network to the standard, regardless of their form.
C.3. Confidentiality
The jurisdictions mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received.
Information received: disclosure, use, and safeguards (ToRC.3.1)

418. Governments would not engage in information exchange without the assurance that the information provided would only be used for the purposes permitted under the exchange mechanism and that its confidentiality would be preserved. Information exchange instruments must therefore contain confidentiality provisions that spell out specifically to whom the information can be disclosed and the purposes for which the information can be used. In addition to the protections afforded by the confidentiality provisions of information exchange instruments, countries generally impose strict confidentiality requirements on information collected for tax purposes. 419. All treaties recently signed by Luxembourg contain a confidentiality provision in line with Article26 (2) of the OECD Model Convention. Any information received under paragraph1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrate bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. 420. Luxembourg domestic law also contains provisions guaranteeing the confidential nature of information exchanged, namely an obligation of professional secrecy on the part of officials as well as experts involved in a tax enforcement procedure, a tax procedure under criminal law, or a communication from a tax authority in another procedure (cf. LGI section22). Violations are punishable by a fine or imprisonment of up to six months (cf. LGI section412). 421. The confidentiality measures are very strict in Luxembourg. Only the three employees from the CLO have access to the database where all EOI

requests received are registered. Paper files are stored in a secured area with limited access. 422. In addition, all employees of the Luxembourg administrations are bound by professional secrecy rules and regular external audits are performed to monitor the respect of the rules by the employees. No sanctions for breach of confidentiality have been applied in the Luxembourg administration. 423. During the on-site visit, Luxembourgs authorities explained that, in practice, when a request is received and the information has to be requested from the taxpayer or a third party, an injunction letter is sent, which must detail: (1) that the information is sought for the purpose of answering an EOI request; (2)a short description of the case (including the legal entities, the years and taxes concerned and the reasons why the partner jurisdiction requests the information); (3)the requesting jurisdiction; (4)the legal basis under which the request is made; (5)whether the taxpayer is the subject of an audit or investigation; and (6) information on the right to appeal. However, as a matter of practice, Luxembourg never provides the incoming request received to the person from whom the information is requested. Since the end of the review period, Luxembourg has informed the assessment team that it has changed its practice and now injunction letters do not provide information on the taxes concerned and whether the taxpayer is the subject of an audit or an investigation. 424. When the requesting jurisdiction wants the request to be kept confidential, the Luxembourg authorities have confirmed that they always, beforehand, inform the treaty partner that the information provided is likely to be disclosed to any person concerned by the request. It is only with the consent of the treaty partner that in such instances the injunction letter is sent. Otherwise, the Luxembourg authorities will not collect the requested information. 425. The amount of information that the Luxembourg competent authority discloses to the information holder in such injunction letters may cause concern with respect to ensuring the confidentiality of EOI requests. Although this information may form part of the minimum information that needs to be disclosed in order to enable the person receiving the injunction letter to locate and produce the information sought, it is important to note that the amount of information that needs to be provided may vary depending on the circumstances of each case. The information disclosed in the injunction letter may not be necessary in all cases in order to produce the information sought. The systematic disclosure of such information, which is not otherwise public information, is therefore not in accordance with the principle that the information contained in an EOI request should be kept confidential. Luxembourg authorities are encouraged to ensure that the confidentiality of information contained in EOI requests is adequately protected.
All other information exchanged (ToRC.3.2)

426. The confidentiality provisions in Luxembourgs agreements and Luxembourgs domestic legislation do not draw a distinction between information received in response to requests and information forming part of the requests themselves. As such, these provisions apply equally to all requests, background documents to such requests, and any other communications between the requesting and requested jurisdictions.
Phase1 Determination The element is in place. Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed. Factors underlying recommendations The unnecessary disclosure of information, in injunction letters, which is not otherwise public information, is not in accordance with the principle that the information contained in an EOI request should be kept confidential. Recommendations Luxembourg authorities are encouraged to ensure that the confidentiality of information contained in EOI requests is adequately protected.
C.4. Rights and safeguards of taxpayers and third parties

The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties.
Exceptions to requirement to provide information (ToRC.4.1)

427. The international standard allows requested parties not to supply information in response to a request in certain identified situations. Among other reasons, an information request can be declined if the requested information would disclose confidential communications protected by attorney-client privilege. Attorney-client privilege is a feature of the legal systems of many countries. 428. However, communications between a client and an attorney or other admitted legal representative are generally deemed confidential only to the extent that the attorney or admitted legal representative is acting in that

capacity. When the definition of attorney privilege in domestic legislation of the requested jurisdiction is broader, this does not constitute valid grounds for refusing a request for information exchange. Consequently, when a lawyer is acting as nominee shareholder, trustee, settlor, company director or under a power of attorney to represent a company in its business affairs, an EOI request flowing from and related to such activities cannot be refused on grounds of attorney privilege. 429. The double taxation conventions concluded by Luxembourg contain a provision equivalent to the exemption in article26 (3) of the OECD model tax convention allowing the state to refuse to exchange certain types of information, including that which would disclose a trade, business, industrial, commercial or professional secret or trade process. 430. Comments received from Luxembourgs treaty partners show that there have been no instances where Luxembourgs practices in EOI have not respected the rights and safeguards of taxpayers and third parties. 431. However, as noted in SectionB.1 above, the matter of a request for information (a client list) being covered by commercial secrecy was reported by one peer as a basis on which Luxembourg had refused to exchange the information. Luxembourg did not provide any explanation for this conclusion, for example whether it had requested the information from the company and had received a refusal on grounds that were supported in Luxembourg law. The international standard envisages exchange of information to the widest possible extent and if there are claims that information is covered by the narrow range of secrecy provisions permitted by the standard a full explanation of the applicable legal basis should be provided in such cases. A recommendation in relation to this matter has been included for element B.1. 432. In addition, one peer reported that it has requested banking information from Luxembourg in a number of cases in which Luxembourg has refused to provide, on the basis that data used to support the requests had originally been obtained in violation of Luxembourgs law and the requested information could therefore not be exchanged. In the cases in question, information which concerned taxpayers in the requesting jurisdiction had been taken from a bank in Luxembourg and provided to a foreign tax authority which spontaneously passed it to the requesting jurisdiction under the terms EU Mutual Assistance Directive. Luxembourgs tax authorities consider that the refusal to exchange information in these cases is justified by a combination of the provisions of Article26 paragraph3(b) of the DTC between Luxembourg and the requesting jurisdiction and Luxembourgs domestic law. Article26(3) provides: 3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a State the obligation:
b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other State. 433. Further, Article505 of the Luxembourg Penal Code provides that any person who handles assets that were obtained by way of a crime is subject to criminal sanctions. Similarly, benefiting from the product of a crime is considered as handling stolen assets. Luxembourg considers that even if the data was spontaneously received, it is legitimate to decline to answer the request as it would put Luxembourg in the position of cooperating in a violation of its own law. 434. The requesting jurisdiction disagrees with Luxembourgs position and considers that its refusal to provide information which is foreseeably relevant to an ongoing tax investigation in that jurisdiction is not in conformity with the DTC between Luxembourg and the requesting jurisdiction. Further, the information on which the requests were based was lawfully obtained by it, having been provided spontaneously under the EU Mutual Assistance Directive. In addition, the requesting jurisdictions Supreme Court has confirmed that information obtained under the Directive is lawfully obtained under its laws. 435. The interpretation and application of Luxembourgs laws relating to handling of stolen assets as a justification to decline to exchange information under an international treaty is unclear, has never been tested and has not been adequately explained. Accordingly Luxembourg is recommended to provide the information or a clear and valid legal basis for its practice of not providing information in these cases.
Phase1 Determination The element is in place. Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed. Factors underlying recommendations Luxembourg has refused to provide banking information in response to valid requests in a number of cases on the basis that data used to support the requests had originally been obtained in violation of its laws without providing a clear legal basis for its refusal. Recommendations Luxembourg should respond to all valid requests for banking information or provide a clear and valid legal basis, in line with the standard, for its practice of not providing such information
C.5. Timeliness of responses to requests for information

The jurisdiction should provide information under its network of agreements in a timely manner.
Responses within 90 days (ToRC.5.1)

436. In order for EOI to be effective, the information needs to be provided in a timeframe which allows tax authorities to apply it to the relevant cases. If a response is provided but only after a significant lapse of time the information may no longer be of use to the requesting authorities. This is particularly important in the context of international co-operation as cases in this area must be of sufficient importance to warrant making a request. 437. Since the end of 2010, Luxembourg has made considerable efforts to reorganise the treatment of EOI requests and to accelerate the process by creating an EOI division within the ACD (DIVECHR) that centralises and manages the reception and treatment or transmission of requests. This division is staffed with three persons exclusively devoted to EOI. In addition, three persons from the AED and two persons from the ADA are in charge of EOI requests within their respective service. 438. A new database Access has been put in place to track the requests by monitoring the deadlines and providing automatic reminders to local offices. With the new system, the Luxembourg authorities are now able to generate statistics on the response timeframe to monitor their progress. Databases available to the different tax authorities are also being improved to enhance the availability and collection of information by the CLO (for instance, legal entities will have a unique identification number for all administration services, and the CLO will have direct access to information on wages and non-resident directors fees, starting in 2015). 439. For the period under review (2009 to 2011), Luxembourg received 832 incoming EOI requests (242 requests in 2009, 234 requests in 2010 and 356 requests in 2011), from more than 30 treaty partners, the most significant being Belgium, France, Germany, Italy, the Netherlands, Russia, Spain and Sweden. Of the 832 requests received by Luxembourg, 660 were processed under the old procedure and 172 under the new procedure (for requests based on new agreements concluded after March 2009). 440. For these years, the percentage of requests where Luxembourg answered within 90 days, 180 days, one year or more than one year, were:
2009 nr. Total number of requests received (a+b+c+d+e) Full response*: <90 days <180 days (cumulative) <1 year (cumulative) 1 year+ %
2010 nr. %
2011 nr. %
Total Average nr. % 100 28% 48% 66% 29% 6%
242 100% 234 100% 356 100% 832 (a) 44 18% 63 27% 125 35% 232 (b) 49 20% 116 49.5% 233 65% 398 (c) 68 28% 181 77.5% 296 83% 545 (d) 172 71% 53 22.5% 15 2 1% 4% 240 47 45 13%
Requests still pending at date of review (e)
* Luxembourg counts each written request from an EOI partner as one EOI request even where more than one person is the subject of an inquiry and/or more than one piece of information is requested. ** The time periods in this table are counted from the date of receipt of the requests and to the date on which the complete final response was issued. It should be noted that Luxembourg considers as complete, requests which they declined to provide a response irrespective of the reasons.
441. Luxembourgs response timeframe has improved with the introduction of the new procedure. In 2009, only 18% of the requests were answered in less than 90 days and only 2% within a period of between 90 days and 180 days. In 2011, Luxembourg answered EOI requests within 90 days in 45% of the cases, in 30% of the cases the answer was provided within 90 to 180 days, in 18% of the cases the answer was provided within 180 days to a year and the answer was provided after a period of more than a year in 4% of the cases. The average response timeframe for requests received under the old procedure is 124 days whilst the average response timeframe for requests received under the new procedure is 99 days. 442. A number of peers have commented on the timeframe within which Luxembourg answers incoming EOI requests. Luxembourg has explained that before the end of 2010, there was only one person working on EOI in addition to his/her other tasks and no EOI division existed. This system was not very efficient in correctly processing, monitoring and managing incoming requests. One peer also reported a very long response timeframe in a specific case. Luxembourg stated that it was due to inappropriate measures and insufficient staff for processing EOI requests before 2010. However, Luxembourg has also stated that with its new organisation, this should not happen in the future. 443. To improve the response timeframe for incoming requests, a new procedure for collecting information was implemented with the law of 31March 2010, which simplifies and accelerates the process of collection of information, including a new process for appeal, where the procedural deadlines have been reduced and the cases in relation to EOI prioritised in order to

accelerate the whole legal process. With the reorganisation of its EOI division and the implementation of the new process for answering incoming requests, the average response timeframe improved in 2011. Improved results are also expected in the future thanks to this new organisation. 444. In addition, Luxembourg has transposed the new EU Council Directive on Administrative Cooperation that came into effect on 1January 2013 into its domestic law, which should also help to accelerate the treatment of incoming requests since the new Directive requires that the information must be exchanged within six months of the receipt of the request for complex cases, except when the requested party already has this information available. In the latter cases, answers must be provided within two months. 445. While progress has been made for the last year under review, some peers expressed concerns with delays in receiving responses. Luxembourg should monitor its timeframe for answering requests to ensure that it always replies in a timely manner. Peers have also reported that they do not receive an update when the information cannot be provided within 90 days. Luxembourg does not have a system to update requesting jurisdictions on the process when the answer cannot be provided within 90 days. It is therefore recommended that Luxembourg establish a process to advise its partners on the progress of their requests where responses cannot otherwise be provided within 90 days.
Organisational process and resources (ToRC.5.2)

Organisational process 446. In Luxembourg, all incoming EOI requests are received by the CLO irrespective of their forms (CCN network,44 e-mail, fax or letter). When received, the request is first registered in the new system Access and a paper file is created. An acknowledgment of receipt is sent to the requesting partner only if requested. The EOI request is then checked to make sure it is complete. The CLO verifies the legal basis of the request, whether it was sent by the competent authority of the treaty partner, the fact that the requesting party has pursued all means available within its own territory to obtain the information, the types of taxes and the years covered by the request, the reciprocity condition45 and whether confidentiality is requested. It also verifies whether the elements specifically mentioned in the protocol are included,
44. 45. CCN is a secured network mainly devoted to exchange of information in tax matters between EU member states. Between European Union member states exchanging information under the EU Council Directive on Administrative co-operation, the reciprocity condition does not exist.
such as the identification of the person concerned; its address, if available; the name of the person in possession of the information, if known and the tax purpose for which the information is sought. 447. Requests received in French, German or English are processed without translation while requests received in another language will be automatically sent back to the requesting jurisdiction who will be asked to provide a translation in one of these three languages. 448. The CLO will inform the treaty partner if the request is found to be incomplete and will ask for further information within one to two weeks of reception. In general, requests are rarely rejected at this first stage; the CLO will try to obtain additional information to treat the request. Luxembourg mentioned that a certain number of requests received needed additional information because they were unclear and could not be processed without further explanations, which created delays. For the period under review (2009-11), approximately 13% of requests received needed additional information in order to be processed by Luxembourg. In such cases, Luxembourg requests additional information from the requesting jurisdiction while trying to process the part of the request where the information sought is clear in the meantime. Additional information requested relates to factual details, such as the objectives of the request and taxes concerned) or whether the jurisdiction has pursued all means available in its own territory or in a third jurisdiction where the person who is the subject of the request is resident is the third jurisdiction. 449. If the information requested is directly available to CLO, the information is generally sent to the treaty partner within two to three weeks, and two months at the latest. If the information is not available to the CLO, which is usually the case, the CLO transfers the request to the local tax office or to the competent tax administration (AED, ADA) electronically. No specific deadline is provided as it is understood that EOI is a priority and hence, the requests are generally processed within one to two weeks. Reminders, if needed, will be informal and made by phone calls. Luxembourg mentioned that, in practice, there have been no instances where the local tax office or another tax administration has not answered within two weeks. If the CLO only receives a partial answer, this answer will be transmitted to the treaty partner while the collection process is put in place to collect the missing information. 450. If the information is not available with the local tax office or with another tax administration (AED, ADA), the collection process will be done either by the local tax office for requests based on agreements that were concluded before March 2009 (the old procedure) or by the CLO if the request is based on an agreement concluded since March 2009 (the new procedure).

451. Under the old procedure, the CLO transfers the request to the local tax office within a few days of its reception and the local tax office has three months to provide the answer. When transferring the request to the local tax office, the CLO can add information to help the local tax agent to understand the request and to collect the information. If the local tax office has not provided an answer within the allocated timeframe, the CLO will follow up with an informal phone call one or two weeks before the expiration of the deadline. The Access database that has been put in place to track the requests by monitoring the deadlines also provides automatic reminders to local offices. Luxembourgs tax authorities have confirmed that the relationship with the local tax offices is very good and they generally provide the information in the allocated timeframe. 452. Under the new procedure, before requesting the information from the person concerned or from the third party, Luxembourg must ensure that the requesting jurisdiction agrees with the fact that the confidentiality of information may not be guaranteed. Luxembourgs authorities generally do so by asking the requesting jurisdiction to relax the confidentiality requirement from the EOI request. The CLO will then prepare the injunction letter which will also be done within a few days of reception. Injunction letters grant a 30-day deadline to provide the information. The date the request is sent to the local tax office or the date the injunction letter is sent to the person concerned or the third party is registered in Access and automatic reminders are generated in 30-days if the answer has not been received. 453. Once the requested information is received by the CLO, the CLO checks the information to make sure it is complete before sending it to the competent authority that will perform an additional check before sending the answer to the treaty partner. In general, the answer is sent to the treaty partner within one week of reception of the information by the CLO.
Resources
454. Three persons are devoted to EOI within the CLO. Although the size of the team seems sufficient to perform its functions, this situation is recent as only one person was in charge of EOI at the CLO before 2011. Nevertheless, statistics provided by Luxembourg for the period under review show improvements in the timeframe to answer EOI requests received since the CLO was reorganised. In 2009, only 18% of the requests were answered in less than 90 days and only a further 2% in less than 180 days. In contrast, in 2011, Luxembourg answered EOI requests within 90 days in 45% of the cases, and in a further 30% of the cases the answer was provided in 180 days. Reorganisation and hiring of staff has produced the expected effect. In addition to the CLO, since the AED and ADA are competent in the field for which
they are responsible under the new procedure, the AED has designated three persons to handle EOI requests while the ADA has designated two persons. 455. Staff involved in the EOI in Luxembourg come from the tax administration of Luxembourg and as such, possesses a good knowledge of taxation and of Luxembourg tax laws. The training is mainly done on the job, but they also have access to a manual that explains the EOI legal framework and procedure in Luxembourg and they participate in international meetings and conferences (OECD WP10, Fiscalis, Global Forum Competent Authority meetings). The CLO works closely with the local tax offices and provides specific training to their agents in relation to EOI. 456. Luxembourg has dedicated appropriate organisational processes and resources to its EOI system to ensure timely responses and the competent authority staff maintains high professional standards and expertise in relation to EOI.
Unreasonable, disproportionate or unduly restriction conditions for EOI (ToRC.5.3)

457. Exchange of information should not be subject to unreasonable, disproportionate or unduly restrictive conditions. A number of restrictions have been identified in Sections B and C. Other than the issues identified above, there are no further conditions which may restrict the exchange of information.
Phase1 Determination The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase2 review. Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed. Factors underlying the recommendations While progress has been made for the last year under review, some peers expressed concerns with delays in receiving certain responses. Recommendations Luxembourg should monitor its timeframe for answering requests to ensure that it always replies in a timely manner.

Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed. Factors underlying the recommendations In instances where it cannot provide an answer within 90 days, Luxembourg does not provide, routinely, a status update to its treaty partners. Recommendations Luxembourg should ensure that its authorities respond to EOI requests in a timely manner, by providing the information requested within 90 days of receipt of the request, or if it has been unable to do so, by providing a status update.
SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS 119
Summary of Determinations and Factors UnderlyingRecommendations
Determination
Factors underlying recommendations
Recommendations
Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1) The element is not in place Luxembourg allows for the issuance of bearer securities by SAs, SEs and S.e.c.as without having mechanisms allowing for the identification of such securities holders in any circumstances. This possibility is also opened to investment companies taking the form of an SA or a S.e.c.a. Ownership information relating to foreign partners of SICARs which take the form of an S.e.c.s is not available in Luxembourg in all circumstances. Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2) The element is in place Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed Luxembourg should ensure the availability of information relating to SAs, SEs and S.e.c.as bearer securities holders in any circumstances.
Luxembourg should ensure that ownership information relating to SICARs which take the form of an S.e.c.s is available in all circumstances.
120 SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS

Determination The element is in place
Recommendations
Banking information should be available for all account-holders. (ToR A.3) Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1) The element is in place but some elements of the legal implementation of the element needs improvements Limitations in access to information provided for by Luxembourgs domestic legislation are currently overridden in respect of only 45 of the 75 signed agreements. Only these new rules allow for access to information held by financial institutions, insurance companies, and SPFs. In one case, Luxembourg refused to provide requested information on grounds of commercial secrecy and it did not adequately explain the basis on which it was unable to exercise its information gathering powers. Luxembourg has the legal framework and compulsory powers in place to access information under its updated and new agreements but has failed to use the powers in practice in a number of cases, including access to banking information. It has also failed to use its powers to obtain information from certain entities (i.e.SOPARFIs). Luxembourg should ensure access to information held by financial institutions, insurance companies, and SPFs for all its relevant partners.
Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed
In cases where Luxembourg does not use its information gathering powers in response to an EOI request it should fully explain the basis on which it was unable to do so.
Luxembourg should exercise its powers to compel production of information and apply sanctions as appropriate. The exercise of these powers and application of sanctions should be carefully monitored.
Determination
Recommendations
The rights and safeguards (e.g.notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2) The element is in place Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed The practices and procedures used to collect information in Luxembourg have not always been clear to its treaty partners and may not always have been followed in practice. Luxembourg should ensure that in all cases its processes and procedures to collect information are clearly communicated to all of its treaty partners and that these processes are followed in all cases.
Exchange of information mechanisms should allow for effective exchange of information. (ToR C.1) The element is in place but some elements of the legal implementation of the element needs improvements Of the 45 agreements concluded by Luxembourg, since its commitment to the standard in March 2009, 3 establish restrictions which are inconsistent with the standard. As a result of domestic law limitations with respect to access to information, only 43 of the 75 signed EOI mechanisms allow for exchange of information in accordance with the international standard. Of these 43 agreements 23 are in force. Luxembourg should ensure, in line with its commitment to the standard, that each of its EOI mechanisms strictly respects the standard of transparency Luxembourg should ensure that all the treaties signed could allow for an exchange of information in accordance with the international standard.

Factors underlying recommendations Luxembourg has interpreted the foreseeably relevant standard in an unduly restrictive way resulting in information not being exchanged in some cases. Furthermore, in some cases Luxembourg has sought unnecessary confirmations from the requesting jurisdiction. Luxembourg interprets its obligations under its EOI agreements as not obliging it to exchange banking information with regard to requests that relate to a tax period that is after the effective date of the agreement where the information precedes that date, even in instances where the information is otherwise available.
Determination Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed
Recommendations Luxembourg should review its interpretation of the foreseeable relevance concept to conform with the standard.
Luxembourg should access and exchange banking information with regard to requests that are relevant to a tax period that is after the effective date of the agreement where the information precedes the effective date of the agreement.
The jurisdictions network of information exchange mechanisms should cover all relevant partners. (ToR C.2) The element is in place Luxembourg cannot exchange information in accordance with the international standards under its EOI agreements with several partners. Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed Luxembourg should continue to develop its EOI mechanisms network to the standard, regardless of their form.
Determination
Recommendations
The jurisdictions mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3) The element is in place Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed The unnecessary disclosure of information, in injunction letters, which is not otherwise public information, is not in accordance with the principle that the information contained in an EOI request should be kept confidential. Luxembourg authorities are encouraged to ensure that the confidentiality of information contained in EOI requests is adequately protected.
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4) The element is in place Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed Luxembourg has refused to provide banking information in response to valid requests in a number of cases on the basis that data used to support the requests had originally been obtained in violation of its laws without providing a clear legal basis for its refusal. Luxembourg should respond to all valid requests for banking information or provide a clear and valid legal basis, in line with the standard, for its practice of not providing such information

Determination
Recommendations
The jurisdiction should provide information under its network of agreements in a timely manner. (ToRC.5) The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase2 review. Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed While progress has been made for the last year under review, some peers expressed concerns with delays in receiving certain responses. In instances where it cannot provide an answer within 90 days, Luxembourg does not provide, routinely, a status update to its treaty partners. Luxembourg should monitor its timeframe for answering requests to ensure that it always replies in a timely manner. Luxembourg should ensure that its authorities respond to EOI requests in a timely manner, by providing the information requested within 90 days of receipt of the request, or if it has been unable to do so, by providing a status update.
ANNEXES 125
Annex 1:Jurisdictions Response to the Review Report46

This annex is left blank because Luxembourg has chosen not to provide comments.
46.
This Annex presents the jurisdictions response to the review report and shall not be deemed to represent the Global Forums view.
126 ANNEXES
Annex 2:List of all Exchange-of-Information Mechanisms inForce
Multilateral agreements Luxembourg is party to:

Council Directive 2011/16/EU of 15February 2011 on Administrative Cooperation in the Field of Taxation and repealing Directive 77/799/EEC which entered in force on 1January 2013. The current EU members, covered by this Council Directive, are: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.
Bilateral agreements
No. 1 2 3 4 5 6 Jurisdiction Albania Armenia Austria Azerbaijan Bahrain Barbados Type of arrangement DTC DTC DTC DTC Protocol EU Directive 2011/16/EU DTC DTC DTC Date of signature 14.01.2009 23.06.2009 18.10.1962 07.07.2009 15.02.2011 16.06.2006 06.05.2009 01.12.2009 Date of entry intoforce --09.04.2010 07.02.1964 01.09.2010 01.01.2013 02.07.2009 10.11.2010 08.08.2011
ANNEXES 127
No.
Jurisdiction
Type of arrangement DTC DTC Protocol DTC Protocol EU Directive 2011/16/EU DTC DTC EU Directive 2011/16/EU DTC DTC Protocol DTC DTC DTC Protocol EU Directive 2011/16/EU DTC DTC Protocol EU Directive 2011/16/EU DTC EU Directive 2011/16/EU DTC DTC Protocol EU Directive 2011/16/EU DTC DTC Protocol EU Directive 2011/16/EU DTC DTC
Date of signature 17.09.1970 11.12.2002 16.07.2009 15.02.2011 08.11.1978 27.01.1992 15.02.2011 10.09.1999 08.05.2012 12.03.1994 18.03.1991 05.03.2013 15.02.2011 17.11.1980 04.06.2009 15.02.2011 23.05.2006 15.02.2011 01.03.1982 01.07.2009 15.02.2011 24.11.2006 03.06.2009 15.02.2011 15.05.2012 15.10.2007
Date of entry intoforce 30.12.1972 11.12.2002 --01.01.2013 23.07.1980 15.03.1994 01.01.2013 10.10.2000 --28.07.1995 30.12.1992 --01.01.2013 22.03.1982 09.04.2010 01.01.2013 23.01.2007 01.01.2013 27.03.1983 12.04.2010 01.01.2013 27.12.2007 29.10.2010 01.01.2013 --14.12.2009
Belgium
8 9 10 11 12
Brazil Bulgaria Canada China Czech republic
13
Denmark
14
Estonia
15
Finland
16 17 18
France FYROM Georgia
128 ANNEXES
Type of arrangement DTC DTC Protocol DTC EU Directive 2011/16/EU Multilateral Convention DTC EU Directive 2011/16/EU DTC DTC Protocol DTC EU Directive 2011/16/EU DTC DTC DTC EU Directive 2011/16/EU DTC DTC Protocol DTC DTC DTC DTC Protocol EU Directive 2011/16/EU DTC DTC Protocol DTC DTC DTC Protocol DTC DTC EU Directive 2011/16/EU DTC Date of entry intoforce 06.06.1960 23.12.2010 --01.01.2013
No.
Jurisdiction
Date of signature 23.08.1958 11.12.2009 23.04.2012 15.02.2011 Signed
19
Germany
20 Greece 21 Hong-Kong, China
22.11.1991 15.02.2011 02.11.2007 11.11.2010 15.01.1990 15.02.2011 02.06.2008 14.01.1993 14.01.1972 15.02.2011 04.10.1999 28.08.2009 08.04.2013 13.12.2004 03.06.1981 21.06.2012 15.02.2011 05.03.1992 25.01.2010 17.04.2013 26.06.2008 03.005.2012 11.12.2007 14.06.2004 15.02.2011 04.11.2012
26.08.1995 01.01.2013 20.01.2009 17.08.2011 21.04.1991 01.01.2013 09.07.2009 10.03.1994 25.02.1975 01.01.2013 19.09.2001 28.04.2010 --22.05.2006 04.02.1983 --01.01.2013 27.12.1992 30.12.2011 --------14.04.2006 01.01.2013 ---
22 Hungary 23 India 24 Indonesia
25 Ireland 26 Iceland 27 Isle of Man 28 Israel 29 Italy
30 Japan 31 Jersey
32 Kazakhstan 33 Kuwait 34 Latvia 35 Laos
ANNEXES 129
No.
Jurisdiction
Type of arrangement DTC DTC EU Directive 2011/16/EU DTC DTC DTC Protocol EU Directive 2011/16/EU DTC DTC DTC Protocol DTC DTC DTC DTC DTC Protocol EU Directive 2011/16/EU DTC DTC Protocol DTC DTC DTC Protocol EU Directive 2011/16/EU DTC DTC Protocol EU Directive 2011/16/EU DTC DTC DTC Protocol EU Directive 2011/16/EU DTC DTC Protocol
Date of signature 16.08.2009 22.11.2004 15.02.2011 21.11.2002 29.04.1994 30.11.2011 15.02.2011 15.02.1995 07.02.2001 07.10.2009 11.07.2007 27.07.2009 19.12.1980 08.05.1968 29.05.2009 15.02.2011 06.05.1983 07.07.2009 07.10.2010 14.06.1995 07.06.2012 15.02.2011 25.05.1999 07.09.2010 15.02.2011 03.07.2009 14.12.1993 04.10.2011 15.02.2011 28.06.1993 21.11.2011
Date of entry intoforce 17.12.2010 14.04.2006 01.01.2013 02.07.2004 14.02.1996 --01.01.2013 12.09.1996 27.12.2001 20.11.2011 04.12.2009 03.05.2010 16.02.1984 20.10.1969 01.07.2010 01.01.2013 27.01.1985 12.04.2010 01.11.2011 31.07.1996 --01.01.2013 30.12.2000 18.05.2012 01.01.2013 09.04.2010 08.12.1995 --01.01.2013 07.05.1997 ---
36 Liechtenstein 37 Lithuania
38 Malaysia 39 Malta 40 Mauritius 41 42 Mexico Moldavia
43 Monaco 44 Morocco 45 The Netherlands
46 Norway 47 Panama
48 Poland
49 Portugal 50 Qatar 51 Romania
52
Russia
130 ANNEXES
Type of arrangement DTC DTC Protocol DTC DTC DTC EU Directive 2011/16/EU DTC EU Directive 2011/16/EU DTC DTC DTC Protocol DTC DTC Protocol EU Directive 2011/16/EU DTC DTC DTC Protocol EU Directive 2011/16/EU DTC DTC Protocol DTC Protocol DTC DTC DTC DTC DTC DTC DTC Protocol DTC DTC Date of entry intoforce 29.12.2006 05.08.2011 --24.05.1996 30.12.1992 01.01.2013 08.12.2002 01.01.2013 08.09.2000 26.12.1986 --19.05.1987 16.07.2010 01.01.2013 --15.03.1998 11.09.2011 01.01.2013 09.02.1994 19.11.2010 ------22.07.1998 20.11.2003 18.10.1999 18.01.2005 ----19.06.2009
No.
Jurisdiction
Date of signature 27.03.2006 18.09.2009 04.06.2012 06.03.1993 18.03.1991 15.02.2011 02.04.2001 15.02.2011 23.11.1998 07.11.1984 29.05.2012 03.06.1986 10.11.2009 15.02.2011 31.01.2013 14.10.1996 07.09.2010 15.02.2011 21.01.1993 25.08.2009 11.07.2012 19.12.2011 09.06.2011 06.05.1996 07.05.2001 27.03.1996 09.06.2003 30.09.2009 06.09.1997 20.11.2005
53 San Marino 54 Seychelles 55 Singapore 56 Slovak Republic
57 Slovenia 58 South-Africa 59 South-Korea
60 Spain 61 Sri Lanka
62 Sweden
63 Switzerland 64 Chinese Taipei 65 Tajikistan 66 Thailand 67 Trinidad and Tobago 68 Tunisia 69 Turkey 70 71 Ukraine United Arab Emirates
ANNEXES 131
No. 72
Jurisdiction United Kingdom
Type of arrangement DTC DTC Protocol EU Directive 2011/16/EU DTC DTC Protocol DTC DTC
Date of signature 24.05.1967 02.07.2009 15.02.2011 03.04.1996 20.05.2009 02.07.1997 04.03.1996
Date of entry intoforce 03.07.1968 15.04.2010 01.01.2013 20.12.2000 --01.09.2000 19.05.1998
73 74 75
United States Uzbekistan Viet Nam
132 ANNEXES
Annex3:List of all agreements signed, allowing for the exchange of banking information, to the standard and in force, including jurisdictions covered by the EU Council Directive on Administrative Cooperation in the Field of Taxation (2011/16/EU)
Bilateral Agreements Allowing exchange of banking information Agreements (with paragraph5 but Agreements to the some agreements not to the standard signed to the standard) standard and in force X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Albania Armenia Austria Azerbaijan Bahrain Barbados Belgium Brazil Bulgaria Canada China Czech Republic Denmark Estonia Finland France FYROM Georgia Germany Greece Hong-Kong Hungary India
ANNEXES 133
Bilateral Agreements Allowing exchange of banking information Agreements (with paragraph5 but Agreements to the some agreements not to the standard signed to the standard) standard and in force X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X
24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57
Indonesia Ireland Iceland Israel Isle of Man Italy Japan Kazakhstan Jersey Kuwait Latvia Laos Liechtenstein Lithuania Malaysia Malta Mauritius Mexico Moldavia Monaco Morocco The Netherlands Norway Panama Poland Portugal Qatar Romania Russia San Marino Seychelles Singapore Slovak Republic Slovenia
134 ANNEXES
Bilateral Agreements Allowing exchange of banking information Agreements (with paragraph5 but Agreements to the some agreements not to the standard signed to the standard) standard and in force 58 South Africa X 59 South Korea X X X 60 Spain X X X X 61 Sri Lanka X X X 62 Sweden X X X X 63 Switzerland X X X 64 Chinese Taipei X X X 65 Tajikistan X X X 66 Thailand X 67 Trinidad and Tobago X 68 Tunisia X 69 Turkey X X X X 70 Ukraine X 71 United Arab Emirates X 72 United Kingdom X X X X 73 United States X X X 74 Uzkekistan X 75 Viet Nam X Total 75 45 43 23
Jurisdictions covered by the EU Council Directive on Administrative Cooperation without a bilateral without a bilateral without a agreement agreement to bilateral allowing for the standard agreement EOI for banking (no bilateral to the without a information (no agreement, no standard bilateral bilateral agreement para 5 or subject and in agreement or no para 5) to conditions) force X X X X X X X X X X X
1 2 3 4 5 6
Austria Belgium Bulgaria Cyprus Czech Republic Denmark
ANNEXES 135
Jurisdictions covered by the EU Council Directive on Administrative Cooperation without a bilateral without a bilateral without a agreement agreement to bilateral allowing for the standard agreement EOI for banking (no bilateral to the without a information (no agreement, no standard bilateral bilateral agreement para 5 or subject and in agreement or no para 5) to conditions) force X X X
7 Estonia 8 Finland 9 France 10 Germany 11 Greece 12 Hungary 13 Ireland 14 Italy 15 Latvia 16 Lithuania 17 Malta 18 The Netherlands 19 Poland 20 Portugal 21 Romania 22 Slovak Republic 23 Slovenia 24 Spain 25 Sweden 26 United Kingdom Total
X X X X X
X X X X X
X X X X X X X X X X X
X X
X X
10
11
17
Total of the two tables (agreements and Directive)
76
55
54
40
136 ANNEXES
Annex 4:List of Laws, Regulations and OtherMaterialReceived
Commercial legislation
Law of 1915 on commercial companies and partnerships Law of 21April 1928 on foundations Law of 31July 1929 on the fiscal regime of socit de participation financires Law of 31May 1999 on professionals providing registered office Law of 19December 2002 concerning the commerce and company register as well as annual accountings of enterprises Law of 27July 2003 on trusts and fiduciary contracts Law of 11May 2007 concerning the creation of familial assets management companies Law of 20April 2009 on electronic submission by the commerce and company register Law of 10December 2010 on new international accounting norms for enterprises Grand ducal regulation of 23January 2003 concerning the commerce and company register as well as annual accountings of enterprises Grand ducal regulation of 22April 2009 concerning the commerce and company register as well as annual accountings of enterprises CSSF regulation 12-02 of 14December 2012
ANNEXES 137
Fiscal legislation
General tax law of 22May 1931 Law of 27November 1933 concerning the recovery of direct taxes and excise duties on alcohols and social insurance contributions Adaptation fiscal law of 16October 1934 Wealth tax law of 16October 1934 Commercial tax law of 1December 1936 Law of 17April 1964 modified, concerning the reorganisation of the direct taxes administration
Anti money laundering legislation

Law of 12November 2004 concerning the fight against anti money laundering and combating the financing of terrorism Grand-ducal regulation of 1February 2010 detailing some provisions of Law of 12November 2004 concerning the fight against anti money laundering and combating the financing of terrorism Law of 27October 2010 reinforcing the legal framework in the field of fight against anti money laundering and financing of terrorism
Financial legislation
Law of 6December 1991 concerning the supervision of insurance companies Law of 5April 1993 concerning the financial sector Law of 15June 2004 on capital risk investment companies Law of 11January 2008 on transparency requirements for issuers of securities
Treaties ratification
Law of 31March 2010 concerning the approval of double tax conventions and introducing the applicable procedure in the field of exchange of information on request
138 ANNEXES
Administrative co-operation
Law of 15March 1979 concerning the mutual assistance in the field of direct taxes Law of 27April 2006 transposing the EU 2004/56/CE Directive concerning the mutual assistance between competent authorities of the member states in the field of direct taxes Law of 19December 2008 concerning cooperation between administrations and justice Law of 19December 2008 on inter-administrative and judicial co-operation Grand ducal regulation of 15March 1979 concerning the international mutual assistance in the field of direct taxes
Others
Law of 1December 1978 concerning administrative tax claims Decision of 8June 1950 of the Supreme court of justice Decision of 18June 2007 of the Administrative court of appeal of Luxembourg Decision N 30164 of 27March 2012 of the Administrative Tribunal Decision N 28742 of 12December 2011 of the Administrative Court Decision N 28728 of 25January 2012 of the Administrative Court Decision N 29655C of 9February 2012 of the Appeal Court Decision N 30630 of 3March 2012 of the Appeal Court Decision N 30664C of 12July 2012 of the Appeal Court
ANNEXES 139
Annex 5:People Interviewed During the On-Site Visit

Representatives from the Ministry of Finance including: Representatives of the tax treaty negotiation team
Representatives from the Tax Departments Direct Tax Administration Indirect Tax Administration Customs and Excise Duties Administration Exchange of Information Unit
Representatives of the Financial Sector Supervisory Commission Commission de Surveillance du Secteur Financier (CSSF) Representatives of the Registration office Representatives of the Financial Intelligence Unit Representatives of the Ministry of Justice Representatives of the Supervisory Authority for professionals including: A representative of the Luxembourg Bar A representative of the notaries A representative of the Chartered Accountants A representative of the statutory auditors

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GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE OF INFORMATION FOR TAX PURPOSES

Peer Review Report Phase 2 Implementation of the Standard in Practice

PEER REVIEW REPORT PHASE 2 LUXEMBOURG OECD 2013

PEER REVIEW REPORT PHASE 2 LUXEMBOURG OECD 2013

ABOUT THE GLOBAL FORUM 5

About the Global Forum

PEER REVIEW REPORT PHASE 2 LUXEMBOURG OECD 2013

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Information and methodology used for the peer review of Luxembourg

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General information on the legal and fiscal system Legal system

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COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 19

Compliance with the Standards

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20 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

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A.1. Ownership and identity information

Companies (ToR10 A.1.1)

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22 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

Publicity and registration formalities

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Register of registered shares

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Obligation to publicise major holdings in the company

Law of 11January 2008 on transparency requirements for issuers of securities.

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Professionals providing registered offices

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Financial holding companies (SOPARFI)

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Family wealth management companies (SPF)

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