GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE

GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
OF INFORMATION FOR TAX PURPOSES

Peer Review Report
Phase 2
Implementation of the Standard
in Practice
-:HSTCQE=WUW[[Z:
ISBN 978-92-64-20266-5
23 2013 30 1 P
Global Forum on Transparency and Exchange of Information
for Tax Purposes
PEER REVIEWS, PHASE 2: LUXEMBOURG
This report contains a Phase 2: Implementation of the Standard in Practice review, as well
as revised version of the Phase 1: Legal and Regulatory Framework review already released
for this jurisdiction.
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 120 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 reected in the 2002 OECD Model Agreement on Exchange
of Information on Tax Matters and its commentary, and in Article 26 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 duciaries, 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 identied by the Global Forum as
relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1
reviews assess the quality of a jurisdictions legal and regulatory framework for the exchange
of information, while Phase 2 reviews look at the practical implementation of that framework.
Some Global Forum members are undergoing combined Phase 1 and Phase 2 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.
LUXEMBOURG
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Consult this publication on line at http://dx.doi.org/10.1787/9789264202672-en.
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Global Forum
on Transparency
and Exchange
of Information for Tax
Purposes Peer Reviews:
Luxembourg 2013
PHASE 2:
IMPLEMENTATION OF THE STANDARD IN PRACTICE
November 2013
(reflecting the legal and regulatory framework
as at May 2013)
This work is published on the responsibility of the Secretary-General of the OECD.
The opinions expressed and arguments employed herein do not necessarily reflect
the official views of the OECD or of the governments of its member countries or
those of the Global Forum on Transparency and Exchange of Information for Tax
Purposes.
This document and any map included herein are without prejudice to the status of
or sovereignty over any territory, to the delimitation of international frontiers and
boundaries and to the name of any territory, city or area.
ISBN 978-92-64-20266-5 (print)
ISBN 978-92-64-20267-2 (PDF)
Series: Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews
ISSN 2219-4681 (print)
ISSN 2219-469X (online)
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OECD (2013), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer
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http://dx.doi.org/10.1787/9789264202672-en
PEER REVIEW REPORT PHASE 2 LUXEMBOURG OECD 2013
TABLE OF CONTENTS 3
Table of Contents
About the Global Forum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Information and methodology used for the peer review of Luxembourg . . . . . . .11
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 partners . . . . . . . 104
C.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
C.4. Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . .110
C.5. Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . .112
Summary of Determinations and Factors Underlying Recommendations. . . .119
4 TABLE OF CONTENTS
Annex 1: Jurisdictions Response to the Review Report . . . . . . . . . . . . . . . . . 125
Annex 2: List of all Exchange-of-Information Mechanisms in Force. . . . . . . 126
Annex 3: 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 Other Material Received. . . . . . . . . 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 120 jurisdic-
tions, 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 Article 26 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 fore-
seeably 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 under-
taken in two phases. Phase 1 reviews assess the quality of a jurisdictions legal
and regulatory framework for the exchange of information, while Phase 2 reviews
look at the practical implementation of that framework. Some Global Forum
members are undergoing combined Phase 1 and Phase 2 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 informa-
tion 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 article 26 of the OECD Model Tax Convention
1
. Luxembourgs
network of bilateral information exchange mechanisms now comprises 75
2

agreements, 45 of which contain article 26 allowing for the exchange of bank-
ing 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 1 January 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. The 2005 revised version.
2. See Annex 3 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 protocols
3
have been
signed since 2011, all of which should be ratified shortly. The two draft laws
ratifying 15
4
of these new agreements or protocols have been enacted by
Parliament on 7 June 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 imple-
ments 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 infor-
mation relating to numbered accounts must be kept derive from a grand ducal
regulation adopted on 1 February 2010. This regulation was complemented
by a new CSSF (Financial Sector Supervisory Commission Commission de
Surveillance du Secteur Financier) regulation adopted on 14 December 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 Phase 1 review.
6. Luxembourg law generally guarantees the availability of information
on companies and partnerships. All companies and partnerships must regis-
ter 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 compa-
nies), 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. 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.
4. 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 SICAF
5
) 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 pro-
vided 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 authori-
ties 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 fore-
seeably 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 enti-
ties 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 informa-
tion, 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 commu-
nicated clearly to treaty partners and may not always have been consistently
followed.
14. Luxembourg has been assigned a rating
6
for each of the 10 essential
elements as well as an overall rating. The ratings for the essential elements
are based on the analysis in the text of the report, taking into account the
Phase 1 determinations and any recommendations made in respect of
Luxembourgs legal and regulatory framework and the effectiveness of its
exchange of information in practice. On this basis, Luxembourg has been
assigned the following ratings: Compliant for elements A.2 and A.3, Largely
Compliant for element C.2, Partially Compliant for elements B.2, C.3 and
C.5, and Non-compliant for elements A.1, B.1, C.1 and C.4. In view of the
ratings for each of the essential elements taken in their entirety, the overall
rating for Luxembourg is Non-Compliant.
15. 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.
6. This report reflects the legal and regulatory framework as at the date indicated
on page 1 of this publication. Any material changes to the circumstances affect-
ing the ratings may be included in Annex 1 to this report.
INTRODUCTION 11
Introduction
Information and methodology used for the peer review of Luxembourg
16. 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 infor-
mation as described in the Global Forums Terms of Reference, and were
prepared using the Global Forums Methodology for Peer Reviews and Non-
Member Reviews. The assessment has been conducted in two stages: Phase 1,
performed in 2011, assessed Luxembourgs legal and regulatory framework for
the exchange of information, while Phase 2, 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 Phase 1 review. This assess-
ment 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.
17. The Terms of Reference break down the standards of transparency
and exchange of information into 10 essential elements and 31 enumer-
ated aspects under three broad categories: (A) availability of information;
(B) access to information; and (C) exchanging information. This review
assesses Luxembourgs legal and regulatory framework and the implementa-
tion and effectiveness of this framework against these elements and each of
the enumerated aspects. In respect of each essential element a determination
is made regarding Luxembourgs legal and regulatory framework that either:
(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
12 INTRODUCTION
improvement where relevant. In addition, to reflect the Phase 2 component,
recommendations are made concerning Luxembourgs practical application of
each of the essential elements and a rating of either: (i) compliant, (ii) largely
compliant, (iii) partially compliant, or (iv) non-compliant is assigned to each
element. An overall rating is also assigned to reflect Luxembourgs overall
level of compliance with the standards.
18. The Phase 1 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 Phase 2 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 effec-
tiveness of Luxembourgs legal and regulatory framework for transparency and
exchange of information and its relevant information exchange mechanisms.
20. The ratings assigned in this report were adopted by the Global Forum
in November 2013 as part of a comparative exercise designed to ensure the
consistency of the results. An expert team of assessors was selected to pro-
pose ratings for a representative subset of 50 jurisdictions. Consequently, the
assessment teams that carried out the Phase 1 and Phase 2 reviews were not
involved in the assignment of ratings. These ratings have been compared with
the ratings assigned to other jurisdictions for each of the essential elements to
ensure a consistent and comprehensive approach. The assignment of ratings
was also conducted at a different time from those reviews, and the circum-
stances may have changed in the meantime. Readers should consult Annex 1
for information on changes that have occurred.
Overview of Luxembourg
21. Landlocked between Germany, Belgium, and France, Luxembourg is
one of the smallest states of Western Europe in terms of area (2600 km) and
population (525 000). With a total GDP of nearly EUR 40 billion and a per
capita GDP of nearly EUR 80 000, it has one of the highest standard of living
amongst the OECD member countries.
22. 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.
INTRODUCTION 13
Other features of the Luxembourg labour market are its low unemployment
rate (6.2%), its high employment rate (with a workforce of 370 000) and its
openness, with 150 000 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.
23. 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
24. 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 execu-
tive 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.
25. 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 held
7
that international law takes precedence over
domestic law, including the Luxembourg Constitution. In domestic law, the
Constitution of 17 October 1868 is at the summit of the pyramid, followed by
laws, grand ducal regulations, ministerial or government-in-council regula-
tions, municipal (communal) regulations, and circulars and memorandums,
by descending order of hierarchy.
26. 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
7. Superior Court of Justice, Decision of 8 June 1950; Superior Court of Justice,
Decision of 14 July 1954; Council of State, Decision of 21 November 1984.
14 INTRODUCTION
by supervisory authorities, such as financial and insurance sectors supervisory
authorities, are binding on the persons subject to this supervision
8
.
27. 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
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 com-
prising 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
28. 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 regard-
ing 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.
29. 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.
8. 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.
INTRODUCTION 15
30. 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
EUR 15 000, and 21% above this amount. They are also subject to the munici-
pal business tax at a rate of 3% multiplied by the municipal rate (200-400%).
31. 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 cor-
poration tax 22%. As indicated above, the financial system alone produces
25% of tax revenues in Luxembourg.
32. 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
article 26 of the OECD Model Tax convention, particularly as it concerns the
EOI held by banks.
33. 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 1 January
2013 and replacing Directive 77/799/EEC concerning mutual assistance in
the field of direct taxation.
34. 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
35. At the end of 2012, the Luxembourg financial sector included 143
banks with balance sheets totalling nearly EUR 757.7 billion; 114 investment
companies, with balance sheets totalling EUR 3.4 billion; 210 other financial
sector professionals with balance sheets totalling EUR 11.6 billion; 3 863
undertakings for collective investment managing assets of EUR 2 329 bil-
lion; 281 venture capital/private equity companies (SICAR); 32 securitisation
organisms, and 15 pension funds.
36. The financial sector is regulated by the Financial Sector Act of
5 April 1993 and various specific laws regarding each category of profes-
sionals concerned. The Financial Sector Supervisory Commission (CSSF),
16 INTRODUCTION
which operates under the authority of the Minister of Finance, is the com-
petent authority for the prudential supervision of credit institutions, other
financial sector professionals, undertakings for collective investment, pension
funds taking the form of SEPCAV
9
and ASSEP
10
, approved securitisation
organisms, SICARs, paying institutions, postal financial services proposed
by the mail and telecommunications company, financial instruments markets,
including its operators, and auditors. The CSSF also vets the license applica-
tions of banks and other financial sector professionals prior to approval by
the Minister of Finance.
37. The insurance sector is governed by the Insurance Sector Act of
6 December 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
EUR 157.9 billion.
38. Notaries (limited in number to 36), bailiffs, attorneys (nearly 2 000),
auditors (nearly 440), accountants (nearly 1 400) and real estate agents
(nearly 1 000) 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.
39. 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 1 February
2010, of a grand ducal regulation and adoption, on 27 October 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 develop-
ments under section A.1.3).
9. Open-end Pension Savings Company.
10. Pension Savings Association.
INTRODUCTION 17
Recent developments
40. A new CSSF regulation was adopted on 14 December 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.
41. 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.
42. Since the Phase 1 review, Luxembourg has signed 18 agreements
containing EOI provisions consistent with the standard. Two draft laws
ratifying 15 of these new agreements and protocols have been enacted by
Parliament on 7 June 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 29 May 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
43. Effective EOI requires the availability of reliable information. In
particular, it requires information on the identity of owners and other stake-
holders 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.
44. Luxembourg has a legal and regulatory framework according to
which information on the identity of shareholders of companies and partner-
ships must generally be available.
45. All companies and partnerships are required to register themselves
with the Register of Commerce and Companies (RCS) in the month fol-
lowing their incorporation (cf. Law of 19 December 2002). The articles of
incorporation must be provided for registration and are published either
totally or in the form of extracts. Cooperative companies (socits coopra-
tives) 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 regis-
tration and to update that information thereafter in the RCS. Public limited
companies (socits anonymes, SAs), European companies (SEs) and partner-
ships 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.
46. 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 guar-
antee that information on their holders will be available in all circumstances.
47. 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 regis-
tered 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 article 26 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.
48. Luxembourg foundations are always created for a philanthropic, usu-
ally 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.
49. 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.
50. Pursuant to AML legislation, Luxembourg banks and financial insti-
tutions 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 1 February 2010. On
14 December 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 char-
tered 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 avail-
ability of ownership information kept by these professionals.
51. Luxembourgs legal and regulatory framework, as well as the
practices of Luxembourgs authorities generally ensure the availability of own-
ership 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 informa-
tion 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 (ToR 11 A.1.1)
52. Company law is organised in Luxembourg by the law of 10 August
1915, as amended. Pursuant to that law, five types of companies can be cre-
ated in Luxembourg:
The socit anonyme (SA), or public limited company, articles 23
ff of the law of 10 August 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 EUR 30 986.69) must be fully sub-
scribed. There were around 51 000 SAs registered in Luxembourg on
30 September 2012.
The Socit Europenne (SE) or European Company is a com-
pany 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 com-
panies are regulated by Council regulation (EC) No 2157/2001 of
8 October 2001 on the Statute for a European company (SE), which
11. Terms of Reference to Monitor and Review Progress towards Transparency and
Exchange of Information.
was transposed into Luxembourg law by the law of 25 August 2006.
Pursuant to Article 10 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 EUR 120 000. A total of 24 SEs were registered in
Luxembourg on 30 September 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, articles 102 ff of the law of 10 August 1915, is
formed between one or several partners who are jointly and sever-
ally 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 1 200 S.e.c.as registered in Luxembourg
on 30 September 2012.
The Socit responsabilit limite (S..r.l) or limited liability
company, articles 179 ff of the law of 10 August 1915, is formed by
one or more members, to a maximum of 40, whose liability is lim-
ited 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 EUR 12 394.68) must be fully subscribed. There were
around 52 000 S..r.ls in Luxembourg on 30 September 2012.
The Socit cooprative or cooperative company, articles 113 ff
of the law of 10 August 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 30 September 2012.
Publicity and registration formalities
53. By article 27 of the law of 10 August 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
Article 184 of the law, to S..r.ls. The deed constituting a cooperative com-
pany, to be valid, must state the name of the company, its headquarters, its
business purpose, and a specific naming of all members (article 115).
54. The procedures for registering companies in Luxembourg are stipu-
lated by the law of 19 December 2002. Article 1 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. article 23 of the grand ducal regulation of 23 January 2003).
55. Pursuant to article 6 of the law of 19 December 2002, any commer-
cial 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.
56. Registration in the RCS, pursuant to article 15 of the law of
19 December 2002, and provision of the statutes to the RCS, pursuant to arti-
cle 9 (1) of the law of 10 August 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 (article 9 (3)
of the law).
57. Article 11 of the law of 10 August 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. Article 11 bis 2 requires that any deeds amend-
ing provisions that by law must be deposited and published be deposited with
the RCS and published in the Memorial C.
58. The instruments of SA, SE and S.e.c.a do not necessarily contain
information on their shareholders. This information is not required for reg-
istration 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 condi-
tions as those for deposit of the original deed.
59. Article 11 bis (2) 3 of the law of 10 August 1915 provides that all
changes relating to S..r.ls shareholders must also be disclosed and pub-
lished. These changes must be reported to registration authorities in the
month following the changes (article 9 of the law). According to the law of
19 December 2002 (article 1, paragraph 3) these changes are recorded in the
RCS, published in the Memorial C and kept by registration authorities in the
folder of the company concerned.
60. 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 incor-
poration. This includes ascertaining and verifying the identity of shareholders
(when this information is mentioned in the statutes) and beneficial owners
of the company (see Section A.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 obliga-
tions 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).
61. 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 registra-
tion 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.
62. Cooperative companies (socits cooperatives) are the only com-
panies 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.
63. 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 correc-
tion, in most of the cases because of editorial errors on the registration form.
64. Once the registration request is accepted, the statutes are published
in the Memorial C, which is publicly accessible on the internet. The direct tax
administration (ACD) has direct and complete access to the database of the RCS.
65. The RCS must be informed of any amendments made to the stat-
utes of a company within one month. When the statutes are modified by a
notary
12
, 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 regis-
tered 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).
66. 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 state-
ments, 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).
67. 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.
68. Currently, to apply sanctions for non compliance with registra-
tion 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.
12. Which is mandatory for all companies except cooperative companies since a
notarial deed can only be modified by another notarial deed, except for coopera-
tive companies that do not need to be created by notary.
Register of registered shares
69. 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 (articles 39 and 40 of the law of 10 August 1915). If regis-
tered shares are converted into bearer shares, the date of the conversion must
be recorded in the register.
70. Pursuant to article 185 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 (article 190). 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.
71. Cooperative societies must also maintain a register mentioning the
identity of their members (name, profession and address) (article 118 of the
law). An updated list must be filed every six months with the RCS (arti-
cle 133), and may be consulted by the public (article 135).
72. 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
73. Companies are required to register with the (ACD, pursuant to
paragraph 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 a companys statutes have
been published in Memorial C, the local taxation office registers the company
and sends it an opening declaration.
74. 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
Memorial C, it is requested by ACD only to the extent that there are remain-
ing uncertainties as regards its accuracy.
75. 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 (article 61 of the
VAT law). The registration form requires that the information include the
company name, its legal form, the date of publication in Memorial C, the type
of activity or the names and addresses of shareholders and members.
76. As persons subject to corporate income tax, companies are required
to submit an annual return to the ACD by 31 May of each year (articles 116
and 162 of the Income Tax Act) in the manner provided for by the grand
ducal regulation of 13 March 1970 and on the form established by the admin-
istration (article 7 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 dis-
close such information which is necessary for the application of some fiscal
provisions, in particular the exemption of withholding tax on dividends from
Luxembourg sources (article 166 of the income tax law) and the taxation of
the benefits granted to their shareholders as hidden distributions of benefits
(article 164 of the law). In addition, the tax return indicates that, amongst
others, the information that must be submitted upon the filing of this decla-
ration includes the attendance list and the minutes of the general meeting of
shareholders.
77. 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 Memorial C. 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 identifica-
tion 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.
78. 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,
1 224 legal entities received fines for late filing or missing information for a
total of EUR 837 617, 1 457 in 2010 for a total of EUR 1 122 495 and 2 227
in 2011 for a total of EUR 1 655 908.The ACD authorities may also perform
on-site visits to verify the information and apply sanctions through the State
Prosecutor.
79. 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.
80. The VAT authorities (AED) can proceed to automatic VAT registra-
tion 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.
81. 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 13 847.
82. 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 Memorial C. 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
83. Pursuant to EU regulations (Directive 2004/109/EC of 15 December
2004), on 11 January 2008 Luxembourg adopted a law on transparency of
information on the issuers of securities
13
. 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.
13. Law of 11 January 2008 on transparency requirements for issuers of securities.
84. Pursuant to articles 8 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.
85. 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
86. The law of 31 May 1999 establishes specific rules governing pro-
fessionals providing registered offices to companies. Article 1 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.
87. Under article 2 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.
88. As service providers, agents providing registered offices are also
subject to the rules contained in Luxembourgs AML legislation. In par-
ticular, 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 (article 2 of the law of
12 November 2004). Pursuant to article 3 of that law, these service providers
must identify their clients and retain information on the identity of their cli-
ents 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 enti-
ties 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 finan-
cial 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
89. Foreign companies that have their principal establishment in
Luxembourg (effective seat of management) are subject to the same for-
malities as companies established under Luxembourg law (cf. article 158 of
the law of 10 August 1915).
90. 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.
91. Consequently, information on these companies is available under the
same conditions as those described above for Luxembourg companies.
92. There were 1 335 foreign companies registered with the RCS as of
30 September 2012. Luxembourgs authorities have confirmed that the infor-
mation 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 identi-
fied by Luxembourgs treaty partners.
Investment companies, financial holding companies (SOPARFIS) and
family wealth management companies (SPFs)
Investment companies (SICAV, SICAF, and SICAR)
93. A SICAV, according to the law of 17 December 2010, is an open-
ended (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 EUR 31 000 but a threshold of EUR 1 250 000 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 2 000 SICAVs registered on 30 September 2012.
94. SICAFs are also governed by the law of 17 December 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 EUR 31 000 but a threshold of EUR 1 250 000 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 com-
panies apply to a SICAF in the absence of any contrary requirements in the
law. There were 4 SICAFs registered on 30 September 2012.
95. A SICAR (investment company in risk capital) is, according to the
law of 15 June 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:
EUR 125 000). The minimum capital is EUR 1 000 000 and must be reached
in the 12 months following the approval granted to the investment company.
Unless otherwise provided by the Law of 15 June 2004, SICARs are subject
to the rules that apply to companies after which they are modelled. There
were 274 SICARs registered in Luxembourg on 30 September 2012.
96. The rules regarding the establishment of companies under the
company law of 10 August 1915 apply to SICAVs, SICAFs and SICARs.
Accord ingly, investment companies must be registered in the RCS and pro-
vide 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 15 June 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.
97. A draft bill requiring SICARs taking the form of an S.e.c.s., to dis-
close 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.
98. For tax purposes, SICAFs and SICAVs are not subject to corporate
income tax (art. 173 of the law of 17 December 2010) but to an annual sub-
scription 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.
99. 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.
100. SICAVs, SICAFs and SICARs must take the form of limited com-
panies 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.
101. 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)
102. 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 10 August 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.
103. As previously mentioned in paragraph 41 to 47, 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.
104. 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 (arti-
cle 166 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.
105. SOPARFIs must register with the ACD and file an annual tax
return with this administration.
106. 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 enti-
ties 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 pertain-
ing 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)
107. The Luxembourg law of 11 May 2007 allows the creation of family
wealth management companies (socits de gestion de patrimoine famil-
ial, 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
(article 1 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 provi-
sions of the law of 11 May 2007.
2 720 SPFs were registered on 1st January 2012.
108. 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.
109. 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 EUR 100 and a maximum of EUR 125 000. 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 (article 6 (2) of
the law of 11 May 2007 concerning the creation of an SPF).
110. SPFs, like SICAVs, SICAFs, SICARs and SOPARFIs have to be cre-
ated under one of the legal forms available for legal entities in Luxembourg.
Availability of ownership information is ensured under the conditions appli-
cable 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.
111. 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 infor-
mation 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
112. The anti-money laundering rules are set out in the law of
12 November 2004 as most recently amended by the law of 27 October 2010.
14

For the bodies and persons to whom the law applies, these rules include
obligations regarding the identification of customers and verification of their
identities.
113. Pursuant to article 2 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 secu-
ritisation companies);
Notaries;
Tax advisors, accountants, accounting professionals and statutory
auditors; and
Attorneys, when acting as trust and company service providers
15
,
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, domi-
ciliation, 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.
114. The identification obligations deriving from article 3 of the law apply
when:
14. The current AML/CFT legislation mainly derives from Directive 2005/60/
EC of the European Parliament and of the Council of 26 October 2005 on
the Prevention of the use of the Financial System for the Purpose of Money
Laundering and Terrorist Financing.
15. According to article 1 of the law of 12 November 2004, these services include
forming companies, serving as director or in a similar capacity, providing a reg-
istered office or a business address, serving as a trustee, acting as a nominee
(proxy) shareholder for another person.
A customer wishes to enter into business relationships;
A customer wishes to conduct a transaction in which the amount
reaches or exceeds EUR 5 000, 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 identifica-
tion data concerning a customer already identified.
115. Pursuant to article 3 of the law, the identification and verification
of the customer are to be done on the basis of documents, data or infor-
mation from reliable and independent sources. CSSF Regulation 12-02 of
14 December 2012 provides for specific measures to be taken in order to
verify this information. In addition, it requires professionals to take com-
plementary measures of verification in accordance with the assessment of
the AML/CFT risk profile of the customer. The CSSF Regulation 12-02 of
14 December 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 iden-
tification 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.
116. Moreover, the organisations and persons targeted by AML legislation
must identify any beneficial owner of the customer as defined in article 1 of
the law of 12 November 2004 and take reasonable steps to verify the custom-
ers identity.
16
Following the assessment conducted by the FATF as it results
16. Directive 2005/60/EC of the European Parliament and of the Council of
26 October 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
from the report adopted in 2010, Luxembourg has adopted the grand ducal
regulation of 1 February 2010 which provides in article 1(2) more detailed
obligations to identify and verify the identity of beneficial owners. For all
customers, the obligation to identify the beneficial owner requires determin-
ing 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 14 December 2012 specifies professionals
obligations with regard to beneficial ownership, e.g. by requiring profes-
sionals 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.
117. The entities and professionals covered by the law of 12 November
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 (article 3.6 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).
118. 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 obli-
gations are respected (AML obligations were strengthened by the law of
27 October 2010 amending the law of 2004).
119. 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
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
person(s) who ultimately owns or controls a legal entity through direct or indi-
rect 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.
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
sample basis and specific controls were made on sensitive documents and
notarial deeds, such as those relating to the creation of a legal entity, acquisi-
tion 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.
120. 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 avail-
able within notaries offices in all circumstances.
121. Lawyers are also subject to the same AML obligations when acting
as trust and company service providers, when assisting their clients in pre-
paring 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.
122. The nearly 2 000 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.
123. A first round of audits was launched in 2011 and audits were per-
formed 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, aware-
ness 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 sanc-
tion 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.
124. Sanctions that can be applied range from a warning, to disciplinary
sanctions through the disciplinary council such as fines, temporary suspen-
sion 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.
125. There are 1 400 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, verifica-
tion 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.
126. Since the new audit process is recent, no official results are available,
although the preliminary results show good compliance of chartered account-
ants with the AML obligations and no major breaches have been identified
so far.
127. 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 iden-
tification process.
128. 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 sanc-
tions were applied, and those were mainly warnings for non-serious breaches.
129. 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
130. Anti-money laundering legislation establishes an obligation regard-
ing identification of customers for a whole series of service providers. Thus,
article 1 of the law of 12 November 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 fur-
thermore subject to due diligence obligations with respect to the customer.
131. 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 article 26 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.
132. In practice, given that the professionals acting as nominees (lawyers,
accountants, notaries and service providers) are subject to the AML obliga-
tions, 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 nomi-
nees that would have acted in such capacity in Luxembourg and consider any
potential gap to be very limited.
Conclusion
133. 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 up-
to-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 issu-
ing 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 infor-
mation that includes the name of the country in which they have their
principal registration.
All these companies are required to register with the tax administra-
tion 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 obli-
gations which can limit, for tax administrations, the availability of
their information.
134. Approximately 20% of EOI requests received are in relation to own-
ership 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 (ToR A.1.2)
135. Shares of SAs, SEs, and S.e.c.as may be issued in bearer form (arti-
cles 37.4 and 103 of the law of 10 August 1915). The holders of these shares
are not identified in the register of shareholders that these companies must
keep.
136. 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 decla-
ration that companies are to file with the Luxembourg tax authorities,
in particular the lists of attendance at general meetings of sharehold-
ers. 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.
137. However, although there are parallel mechanisms that ensure the avail-
ability of this information in specific situations, there is no overall obligation to
identify the holders of bearer shares under all circumstances in Luxembourg.
138. 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 immobi-
lised 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 immobi-
lised 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 (ToR A.1.3)
139. Under the Luxembourg legislation (law of 10 August 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), articles 14 and 15 of the law of 10 August
1915, is one formed by at least two partners who are jointly and sev-
erally 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 30 September 2012 there were 442
S.e.n.cs registered in Luxembourg.
The Socit en Commandite Simple (S.e.c.s, limited partnership),
article 16 of the law of 10 August 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 part-
ners (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 30 September 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), articles 1832 et seq. of the Civil Code, which is partnership the
purpose of which can only be civil (not commercial). This partner-
ship 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 30 September
2012, 3 889 such partnerships were registered in Luxembourg.
Publicity and registration formalities
140. Article 5 of the law of 10 August 1915 provides that the deeds estab-
lishing S.e.n.cs and S.e.c.ss are to be published (in Memorial C) 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 silent partners in S.e.c.ss. Deeds establishing part-
nerships under civil law are entirely published and must contain, amongst
others, the personal particulars of all partners (article 8 of the law). Pursuant
to article 9 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.
141. Article 1 of the law of 19 December 2002 provides for the registra-
tion of S.e.n.cs and S.e.c.ss as well as partnerships under civil law in the RCS.
Article 6 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 (article 15 of the law of
19 December 2002. This last information must also be provided by partner-
ships under civil law for registration (article 10 of the law).
142. As all partnerships deeds are published, all changes concerning these
deeds must, pursuant to article 11 bis 2 of the Law of 10 August 1915, be pub-
lished and provided, on this occasion, to registration authorities.
143. 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
144. 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
145. 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.
146. 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 Memorial C, additional information is requested by ACD only in case of
uncertainty.
147. 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 (article 61
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.
148. 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 (articles 116 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 (article 7 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.
149. 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
150. 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 prepara-
tion or conduct of transactions concerning the establishment, management
or direction of companies (article 2 of the law of 12 November 2004). By
article 3 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
151. Information that Luxembourg partnerships must provide upon reg-
istration 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.
152. For the period under review, approximately 1% of the requests received
related to information on partnerships. Incorporation and registration require-
ments 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 (ToR A.1.4)
153. Luxembourg is signatory to the Hague Convention of 1 July 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 27 July 2003 on trusts and fiduciary contracts).
Fiducies under Luxembourg law
154. Pursuant to article 5 of the law of 27 July 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 trans-
fer of ownership of the assets placed in fiducie. Article 6, 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 sepa-
rately from its own property.
155. Article 4 of the same law specifies only a credit institution, an invest-
ment 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.
156. Luxembourg law requires the registration
17
of fiducie contracts
whenever they concern real estate, aircraft, ships or boats registered in
Luxembourg (article 12.1). 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 (article 11 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.
17. 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.
157. Luxembourg taxation rules provide that income from Luxembourg
sources received via a fiducie is taxable in the hands of the settlor (pursuant
to article 11 of the tax adaptation law). The resulting tax obligations depend
on the nature of the settlor (natural or legal person). Then as well, section 164
of the LGI provides that any person holding an asset in the capacity of fiduci-
ary 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
158. The obligations described under section A.1.1 for companies apply as
well to fiducies. Attorneys, notaries, tax advisors, credit institutions and finan-
cial 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 (article 2 of the law of 12 November 2004). By article 3
of that law and the grand ducal regulation of 1 February 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.
159. As previously mentioned, it is impossible by law for a non-profes-
sional 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
160. 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 27 July 2003 merely ratifies the Hague
Convention without creating a legal framework covering trusts created under
foreign law.
161. 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.
162. 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 reg-
istered in Luxembourg (article 12.1). 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 (article 11 of the law).
163. The law of 27 July 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
19 July 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.
164. Luxembourg taxation rules provide that income from Luxembourg
sources received via a trust is taxable in the hands of the settlor (pursuant to
article 11 of the tax adaptation law). The resulting tax obligations depend on
the nature of the settlor (natural or legal person). As well, section 164 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
165. 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.
166. Trustees of foreign trusts may be professionals to which AML obli-
gations 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 lim-
ited, 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
167. Luxembourg law provides mechanisms ensuring that:
the tax authorities have available information on trusts and fidu-
cies 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.
168. These multiple requirements, taken together, ensure the availability
of information on the settlors and beneficiaries of fiducies and trusts admin-
istered 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 trus-
tees and considering information which must be made available to the tax
authorities when requested, information on trusts and fiducies is available in
Luxembourg.
Foundations (ToR A.1.5)
169. In Luxembourg, foundations are non-profit entities established for
purely philanthropic purposes.
170. Pursuant to article 27 of the law on associations and foundations of
21 April 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 30 September 2012 there were 201foundations registered in
Luxembourg.
171. A foundation may possess, in ownership or otherwise, only the
properties needed to fulfil its purposes. All bequests to a foundation must,
pursuant to article 36 of the law, be authorised by the authorities responsible
for supervising foundations (Ministry of Justice). For the duration of its exist-
ence, 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 (article 40). 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 (article 41).
172. Article 30 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.
173. The deed creating the foundation must be notarised, and is thus
subject to AML obligations, including identification of the founder. The ben-
eficiaries, of which there may be only a class of persons, are known through
the purpose for which the foundation is created.
174. Any deed creating a foundation must be reported to the Minister of
Justice for approval (article 28 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 regis-
tered with the RCS. All the foundations statutes must be submitted with the
application for registration (article 32 of the law).
175. 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.
176. 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 foun-
dation 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
177. Given the philanthropic nature of Luxembourg foundations, the obli-
gations 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 found-
ers, directors and beneficiaries of foundations.
178. Luxembourgs authorities have mentioned that they have not faced any
difficulty in relation to the availability of information on foundations. In addi-
tion, 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
(ToR A.1.6)
Penalties for failure to legally document the establishment of bodies,
to register them, or to keep information
179. Failure to register with the RCS within the time limit prescribed by
the law of 10 August 1915 entails liability for a fine of EUR 25 to 250 (arti-
cle 10). A fine of EUR 500 to 25 000 applies to those who fail to include the
information required by law in the instruments, draft constituent instruments,
or notices published in Memorial C or deposited with the RCS (article 163 (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 EUR 500 to 25 000 if they fail to perform
the publicity formalities (article 163 (8) of the law). In addition, any persons
having omitted to ask for registrations required under the law of 19 December
2002 (article 21 (5) of the law) are liable to a fine from EUR 251 to 5 000.
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 modi-
fications 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.
180. In the case of foundations, the law of 21 April 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 (article 43 of the law).
181. 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% pen-
alty amounted to EUR 38 356 in 2009, EUR 12 594 in 2010 and EUR 932 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 EUR 1 239.47 ( 202 of the LGI)
may be applied. For 2009, 1 224 legal entities received fines for late filing
or missing information amounting to a total of EUR 837 617, 1 457 in 2010
totalling EUR 1 122 495 and 2 227 in 2011 totalling a total of EUR 1 655 908.
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.
182. 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, article 203 of the law of 10 August 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 informa-
tion, this information being already disclosed and updated in the RCS. The
Luxembourg authorities have indicated that they are willing to use this sanc-
tion in cases in which a company would fail to maintain its share register.
Disclosure of major interests
183. In the case of failure to respect the provisions of the transparency
law, article 25 of the law of 11 January 2008 provides for the application of
administrative fines of EUR 125 to 125 000 while article 26 provides for
criminal sanctions of the same amount. Article 28 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 article 25 of the law of 11 January 2008 for an amount of EUR 10 000.
184. Moreover, according to the same Article, where the voting rights
of the company incorporated in Luxembourg have been exercised notwith-
standing 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
185. Failure to respect AML obligations is punished with a criminal pen-
alty ranging from EUR 1 250 to EUR 1 250 000, depending on the severity
of the violation (article 9 of the Law of 12 November 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
186. 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 infrac-
tion. 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
Phase 1 Determination
The element is not in place.
Factors underlying
recommendations 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.
Luxemburg should ensure
the availability of information
relating to SAs, SEs and S.e.c.a
bearer securities holders in all
circumstances.
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.
Luxembourg should ensure that
ownership information relating
to SICARs which take the form
of an S.e.c.s is available in all
circumstances
Phase 2 Rating
Non-Compliant.
A.2. Accounting records
Jurisdictions should ensure that reliable accounting records are kept for all
relevant entities and arrangements.
General requirements (ToR A.2.1)
Obligations flowing from accounting legislation
187. 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 rel-
evant 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.
188. Pursuant to articles 8 to 21 of the Commercial Code, as well as
articles 24 et seqq of the law of 19 December 2002, all companies and part-
nerships (SA, SE, S.e.c.a, S..r.l, S.e.n.c, and S.e.c.s) must keep accounting
records (article 8 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.
189. The accounts must cover all operations, assets and obligations of any
kind, debts, obligations and commitments of any kind (article 10 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 (article 11).
All transactions are recorded promptly, reliably and fully, in chronological
order (article 11).
190. All enterprises must conduct a complete annual inventory of assets
and entitlements of any kind, and their debts, obligations and commitments
of any kind (article 16 of the code). These accounts must be filed annu-
ally with the RCS in the month following their approval, and no later than
seven months after the close of the calendar year (article 75 ff of the law of
19 December 2002). These annual accounts must provide a fair picture of the
net worth, the financial situation and the earnings of the enterprise (article 26
of the law).
191. 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 EUR 100 000 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).
192. Fiduciaries, who must be professionals, are subject as such to the
same obligations as those described above. In addition, the law of 27 July
2003 on trusts and fiduciary contracts provides specifically that fiduciar-
ies must keep separate accounts of fiduciary properties. Lastly, professional
trustees are required to observe general accounting obligations applicable to
all professionals established in Luxembourg.
193. 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 (article 34 of the law of 21 April 1928 on founda-
tions). These accounts must be published in Memorial C. They must contain
data to demonstrate that the foundation is operating in accordance with its
objectives, for purposes of supervision.
194. 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 adminis-
trators that have failed to make these documents public, are sanctioned with
a fine from EUR 500 to 25 000 (art. 163 2 of the company law of 10 August
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 EUR 5 000 to 125 000 or one of
these two sanctions only (art 166 2 of the company law of 10 August 1915).
Obligations flowing from tax legislation
195. Section 160 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.
196. In addition to the provisions of the commercial code and the law of
19 December 2002, the LGI imposes supplementary obligations with respect
to record-keeping (section 162 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 docu-
ments be numbered consecutively.
197. All legal persons must file with the ACD an annual tax return by
the end of May following the taxation period (article 116 LIR) on the tax
forms established by the administration (article 7 of the grand ducal regula-
tion). 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). Article 8 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.
198. Only SICAVs, SICAFs, and SPFs are excused from filing earnings
declarations with the ACD; they are required to declare and pay the subscrip-
tion tax to the AED. As entities subject to commercial laws, these companies
are however not exempted from record keeping requirements
In practice
199. 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.
200. Banks and other financial institutions are subject to the same require-
ments 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.
201. 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.
202. Luxembourgs authorities have confirmed that in practice, account-
ing 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 rel-
evant 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 provi-
sion of information has sometimes been delayed.
Conclusion
203. Given both the accounting and the tax legislation, Luxembourg
ensures the availability of accounting data from which it is possible to accu-
rately review all transactions, to assess the financial position of all entities,
and to prepare financial statements.
Underlying documentation (ToR A.2.2)
204. Luxembourg accounting legislation requires that all book entries be
backed by supporting documentation, which is to be kept in chronological
order (article 14 of the commercial code). These documents may be kept in
the form of copies, which must be true copies of the original documents.
205. 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-com-
munity flows of goods and services, including invoices issued and received,
goods delivery notes, or the contracts under which purchases and sales have
been conducted.
206. These various requirements ensure that when Luxembourg enter-
prises are required to keep accounting data, those data are backed by the
necessary documentation on the transactions performed.
207. 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 documen-
tation 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 (ToR A.2.3)
208. 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 (article 16 of the commercial code).
209. 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.
210. The documents kept in the RCS may be destroyed when 20 years
have elapsed after the entity concerned has been deleted.
211. 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 calen-
dar year that follows the close of the fiscal year (section 162 of the LGI). All
documents required by law to be kept for VAT purposes must be retained for
10 years.
212. Given the legal requirements in relation to record keeping and reten-
tion 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.
The element is in place.
Phase 2 Rating
Compliant.
A.3. Banking information
Banking information should be available for all account-holders.
Record-keeping requirements (ToR A.3.1)
213. In Luxembourg, the obligation to keep banking information flows
from the simultaneous application of several laws and regulations:
the financial sector law of 5 April 1993, article 37.1 of which provides
that credit institutions and investment companies must keep a record
of all services they have provided and all transactions they have con-
ducted, 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 13 July 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);
article 3 of the law of 12 November 2004 on the fight against money-
laundering requires identification and verification of the identity of
customers who seek to establish an ongoing business relationship
with financial institutions;
grand ducal regulation of 1 February 2010 prohibits accounts opened
under fictitious names and provides rules for keeping information on
numbered accounts;
lastly, CSSF Regulation 12-02 of 14 December 2012, which provides
further details on the scope of the record-keeping requirements.
214. By article 3 of the AML law, the situations in which bodies and per-
sons 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 EUR 15 000, 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 identifica-
tion data concerning an already identified customer.
215. 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.
216. Article 3.6 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.
217. The Financial Sector Supervisory Commission (CSSF) is the
supervisory authority for banks and other financial institutions (other finan-
cial sector professionals, undertakings for collective investment, pension
funds taking the form of SEPCAV
18
and ASSEP
19
, 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 16 September
2009 on credit rating agencies, as amended.
218. 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 informa-
tion such as the number and quality of STRs. Random/ad hoc AML audits
can also be conducted.
18. Open-end Pension Savings Company.
19. Pension Savings Association.
219. An audit will be conducted through (1) interviews with the man-
agement 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 benefi-
cial 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
220. 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.
221. Recent Luxembourg legislation grand ducal regulation of 1 February
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.
222. Article 5 of the regulation provides that the holding of numbered
accounts is allowed to credit and financial institutions, but in strict com-
pliance 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 circular
20
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 12 November 2004 and this circular (see paragraph 30 of this circular).
20. Whose value is different from a law or a grand ducal regulation.
223. Questioned on the breadth of the obligations under this new regula-
tion, 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.
224. 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.
225. To clarify the preceding, a new CSSF regulation was adopted on
14 December 2012 that clarifies the rules applicable to the opening of num-
bered accounts and specifies that these rules are applicable to numbered
accounts opened before the 2010 grand ducal regulation. Article 38(2)
provides that AML/CFT policy of the professional must include all its pro-
fessional obligations, in particular []
Procedures to be followed when numbered accounts are opened
in accordance with article 5 paragraph 2 of the grand ducal regu-
lation [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.
226. 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 owner-
ship information is available in these files. The internal procedure of the bank
with respect to the opening of numbered accounts is also reviewed.
227. The results of the audits performed by the CSSF on numbered
accounts have shown that in practice, information on identity and owner-
ship 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
228. If an institution covered by the financial sector law is in breach of
the obligations under the law of 12 November 2004, the CSSF may impose
sanctions ranging from a notification to a warning, followed by a fine of
EUR 250 to 250 000, 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 section 9 of the Act of 12 November
2004 (sanctions from EUR 1 250 to 1 250 000).
229. 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 posi-
tion 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.
230. 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 admin-
istrative fines. More than one measures/sanction can be applied at once and
sanctions can be made public. The sanctions are decided upon by an enforce-
ment 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 seri-
ous 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.
231. In 2009, 10 audits were performed by the CSSF, without administra-
tive 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 EUR 51 250.
232. Thus, given the legal provisions and the practices of the Luxembourg
authorities, Luxembourgs legal and regulatory framework ensures that bank-
ing 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 Section B.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.
Phase 2 Rating
Compliant.
COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 65
B. Access to Information
Overview
233. A variety of information may be needed in respect of the administra-
tion 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 regu-
latory 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.
234. 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 gather-
ing 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 conven-
tions that have been concluded since March 2009 and are covered
by the Law of 31 March 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, spe-
cific 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.
235. 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 31 March 2010 pro-
vides for administrative fines up to EUR 250 000 in case of refusal to provide
the requested information.
236. In the context of treaties signed since 2009 the rules governing profes-
sional secrecy, and in particular banking secrecy, are to be applied within the
strict limits established by the commentaries to article 26 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.
237. Over the last three years (2009-11), Luxembourg has received more
than 800 EOI requests from treaty partners and has used its powers to col-
lect the information under both the old and the new procedures. Of the 832
requests received by Luxembourg, 660 were processed under the old proce-
dure 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 informa-
tion 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.
238. 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 account-
ing 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 informa-
tion, 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.
239. 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.
240. 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 enti-
ties 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
241. In Luxembourg, the Ministry of Finance is the competent author-
ity 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 reor-
ganised in 2009 and is staffed with three persons exclusively working on EOI
since the end of 2010.
242. 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.
243. The three administrations work in collaboration under the central
control of the ACD, based on the law of 19 December 2008 on inter-adminis-
trative and judicial co-operation.
244. 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 respec-
tive phone numbers and other contact details of the competent authorities
in Luxembourg. Updated information is also regularly transmitted to treaty
partner jurisdictions.
245. 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 31 March 2010
for EOI based on an agreement concluded or updated since March
2009, under which requests are dealt with directly by the CLO (see
Section C.5 for more details).
246. The AED and ADA are only allowed to exchange information under
the new procedure provided by the Law of 31 March 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.
247. Luxembourg has a total of 75
21
bilateral agreements providing for
EOI. Of these 75 agreements, 45 allow for the exchange of banking infor-
mation 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.
2011/16/EU.
248. When an incoming request relates to more than one year: a year cov-
ered by an agreement concluded before 2009 and not updated, and another
year covered by the updated version of the agreement (after 2009), recent case
law
22
has confirmed that the request should be dealt with using the informa-
tion 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 31 March 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)
249. 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 informa-
tion, it is these provisions that are applicable for responding to requests for
information.
250. The Luxembourg administration has broad powers of access to infor-
mation 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.
251. 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
19 December 2008 to organise such exchanges.
22. Administrative Court N 28742 of 12 December 2011, Administrative Court N
28728 of 25 January 2012, Administrative Court N 30630 of 3 March 2012 and
Appeal Court N 29655C of 9 February 2012.
252. 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 author-
ity 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 31 March 2010
253. The absence of provisions in Luxembourgs domestic tax legislation,
prior to 2010, that would allow the tax administrations to access informa-
tion 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 informa-
tion. These new provisions were introduced into Luxembourg legislation by
the law of 31 March 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.
254. The law of 31 March 2010 ratifying the first 20 treaties concluded
since March 2009 provides (article 2) that for the application of EOI as stipu-
lated 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 informa-
tion requested. This new procedure applies to the 20
23
treaties, plus the treaty
with India (through application of a most-favoured-nation clause). Six other
agreements
24
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 7 June 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.
255. The new procedure provides for an initial screening of the incoming
request received by the Luxembourg competent authority.
23. Armenia, Austria, Bahrain, Belgium, Denmark, Finland, France, Germany,
Iceland, Liechtenstein, Mexico, Monaco, Netherlands, Norway, Qatar, Spain,
Switzerland, Turkey, United Kingdom and United States.
24. Barbados, Hong-Kong (China), Japan, Portugal, San Marino and Sweden.
256. 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 sub-
ject 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.
257. When it is established that the request can be favourably received,
article 3 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.
258. This new procedure applies in principle to all requests for informa-
tion made under a treaty concluded or updated after March 2009 and that has
entered into force.
259. 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.
260. Similarly, it has been indicated that the ACD will also be able to con-
sult 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 (ToR B.1.1)
261. Access to banking information takes place through the procedure
stipulated by the law of 31 March 2010.
262. 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 1 January 2013.
263. In light of the wording of article 3 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 pos-
sibility. 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 Section B.2 below).
264. 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 (article 3 of the law of 31 March
2010).
265. 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 pro-
visions of the procedure implemented by the law of 31 March 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.
266. 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.
267. 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.
268. With the introduction of the new procedure to collect information,
informal meetings have been organised with banks to explain the new pro-
cess 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.
269. 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
31 March 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.
270. 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 EUR 250 000 can be applied, although
this has not happened yet. Penalties are cumulative (with a maximum of
EUR 250 000) and ultimately, the case can be transmitted to the State
Prosecutor for criminal sanctions.
271. 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 pro-
vide 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 Section C.1 below.
272. 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 Section C.4.
273. Concerning the exercise of its powers to obtain information, one peer
reported that it received in several instances bank statements where infor-
mation 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 ren-
dered 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 with-
out having seen the information.
274. In conclusion, with the entry into force of the agreements provid-
ing for exchange of banking information and with the law of 31 March 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 infor-
mation if necessary, is not consistent with the standard.
Ownership and identity information (ToR B.1.1) and accounting
records (ToR B.1.2)
275. 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 infor-
mation gathering mechanisms to provide the information to the requesting
jurisdiction. All types of information concerning ownership and all account-
ing data can be obtained by this route unless secrecy provisions would apply
(see below section B.1.5).
276. For the treaties ratified by the law of 31 March 2010, Luxembourg
authorities will use the procedure provided for by this law.
Information gathering in practice
277. 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 informa-
tion 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
278. When an EOI request pertaining to ownership or accounting records
is received, the CLO first checks whether the information is available inter-
nally 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 mem-
bers of certain legal entities. The ACD also has access to accounting records
through the RCS or with tax returns.
279. 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.
280. 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
281. 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, con-
sumption taxes on alcohol, and the vehicle tax are available from the ADA.
Ownership information and accounting records directly available to
tax administrations
282. When an EOI request dealing with ownership information or account-
ing 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 rel-
evant 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.
283. 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.
284. If the information is not available internally, the process for obtaining
information will depend on whether the request is made under an agree-
ment 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)
285. 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.
286. The local tax officer designated to handle the request will be respon-
sible 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.
287. The local tax officer will send an injunction letter first to the tax-
payer 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.
288. 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 tax-
payer. In practice, letters are preferred.
289. 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 31 March 2010 (new
process).
290. 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 incom-
ing requests were processed under this procedure over the years 2009-11.
291. The CLO will send an injunction letter to the taxpayer, based on the
proportionality principle as explained above unless the person is a non-res-
ident of Luxembourg or the requesting jurisdiction asks for the information
to be kept confidential (see Section B.2 below). As provided by the law of
31 March 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.
292. If the person concerned fails to answer in due time or after the agreed
extension, fines (up to EUR 250 000) 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.
293. 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 proce-
dure. However, some partners pointed to difficulties in obtaining information
in certain circumstances.
294. 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 informa-
tion 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.
295. 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 maxi-
mum amount of information available in response to a request is provided.
296. 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.
297. 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 explana-
tion of the applicable legal basis should be provided in such cases.
298. 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 exer-
cise 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
(ToR B.1.3)
299. 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.
300. 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.
301. 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
(ToR B.1.4)
Law of 31 March 2010
302. In the context of the new procedure for access to information, arti-
cle 5 of the law of 31 March 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 EUR 250 000 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 authori-
ties have clarified that in practice, the fine can be cumulated over days until
the information is provided (up to a maximum of EUR 250 000), which
means that the impact can be significant.
303. The Luxembourg tax authorities have also confirmed that, beyond
this fine, there are no other means to compel communication of the docu-
ments sought by the requesting jurisdiction. The Luxembourg authorities
have no power to seize documents, in particular banking documents, in con-
nection with the international exchange of banking information.
304. Luxembourgs authorities have indicated that no official guidelines
exist for the application of sanctions and that it has no experience in apply-
ing 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.
305. 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 pro-
cedure 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 require-
ments are adequate.
306. However, in the cases reported by a peer where the information on
the banking statements was partly unreadable, which prevented the request-
ing 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.
307. 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 infor-
mation 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 infor-
mation, if necessary. It is recommended that Luxembourg use its enforcement
powers, as required, in all cases when the holder provides only partial infor-
mation or refuses to provide the information.
Provisions applicable to old treaties or treaties that were not updated
308. Access to information is regulated by the LGI. Section 202 of that
law provides that the ACD may enforce its communication orders by fines
not exceeding EUR 1 239.47, by execution at taxpayers cost, and by docu-
ments seizure.
309. 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 com-
pliance. In situations in which such a summons is fruitless, the tax authorities
may seize documents to obtain the information.
310. 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 (ToR B.1.5)
Secrecy obligations of financial institutions and insurers
311. Article 41 of the law of 5 April 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 article 458 of the Criminal Code, by
imprisonment of 80 days to six months and a fine of EUR 500 to 5 000. The
secrecy obligation ceases when the disclosure of the information is authorised
by virtue of a legislative provision, including those predating the law cited
(article 41).
312. Section 111-1 of the law of 6 December 1991 on the insurance sector
imposes the same obligations of confidentiality for persons working in the
insurance sector.
313. Lastly, article 178 bis 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.
314. To overcome the inaccessibility of banking information in the con-
text of the international EOI, a specific instrument for access to information
was included in the law of 31 March 2010 ratifying the treaties concluded
by Luxembourg containing provisions similar to article 26(5) of the OECD
Model Convention.
315. The Council of State confirmed this point in its opinion of
2 February 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 [].
316. 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.
25
317. For the treaties that have not yet been brought up to standard by
Luxembourg, restrictions on access to information held by financial institu-
tions 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
318. The professional secrecy of lawyers is covered by article 35 of the
law of 10 August 1991 on the legal profession. Lawyers are subject to profes-
sional 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 article 458 of the Criminal Code.
319. Section 176 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.
320. Section 177 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.
25. Pursuant to the most favoured nation clause.
321. 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
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
322. Luxembourgs domestic legislation does not allow access to informa-
tion held by SPFs under the treaties that have not yet been updated.
Conclusion
323. While the law of 31 March 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.
324. 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.
The element is place but certain aspects of the legal implementation of
the element need improvements
Factors underlying
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.
Luxembourg should ensure access
to information held by financial
institutions, insurance companies, and
SPFs for all its relevant partners.
Phase 2 Rating
Non-Compliant.
Factors underlying the
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.
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 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).
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 (ToR B.2.1)
325. 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.
326. For the new procedure instituted by the law of 31 March 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.
327. However, when the information needs to be collected, the procedure
is as follows:
328. 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 infor-
mation (for banking information, this injunction letter is sent directly to the
bank).
329. 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.
330. 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.
331. 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.
332. In addition, requests for banking information had been systemati-
cally 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 noti-
fied. 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.
333. Luxembourg should ensure that in all cases its process and proce-
dures to collect information are clearly communicated to all of its treaty
partners and these processes are followed in all cases.
334. With regard to appeals, the law of 31 March 2010 provides (last
sentence of article 4) that the notification of the decision to the holder of
the requested information constitutes notification to any other person con-
cerned. 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 (arti-
cle 6 of the law).
335. 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.
336. 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.
337. 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 article 6(1) of the law of 31 March 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.
338. The decision of the Administrative Tribunal can be appealed to the
Administrative Court pursuant to article 6(2) of the law of 31 March 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.
339. 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.
340. 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 incom-
ing requests received, Luxembourg expects this percentage to decrease in the
future, in conjunction with the process becoming better known.
The element is place
Phase 2 Rating
Partially Compliant.
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
341. 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 conven-
tions (DTCs) and tax information exchange agreements (TIEAs) once they
become part of Luxembourgs domestic law. This section of the report exam-
ines whether Luxembourg has a network of information exchange agreements
that would allow it to achieve effective EOI in practice.
342. Luxembourg today has a network of bilateral information exchange
mechanisms covering 75
26
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.
343. 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 article 26, supplemented by an
exchange of letters. Three of the information exchange arrangements negoti-
ated by Luxembourg with Austria, Panama and Switzerland include in
their exchange of letters restrictions that are not consistent with the interna-
tional standard. Those agreements require communication of the name and
address of the person covered by the request and the person in possession of
2011/16/EU.
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 agree-
ment 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 7 June 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 1 January 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.
344. Luxembourg was quick to ratify the first 20 treaties signed
27
, 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 31 March 2010, which instituted a
new access to information procedure covering banking information. The
other seven
28
signed agreements that contain this possibility have been rati-
fied in 2011. In general, once signed, the agreements are ratified rapidly in
Luxembourg. Moreover, 18 agreements signed by Luxembourg and in con-
formity 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 7 June
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.
345. 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 con-
clude agreements meeting the standard with all its treaty partners.
346. In this context, it is also noted that since 1 January 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.
347. Apart from a few old treaties, all the agreements concluded by
Luxembourg and in particular the 41 treaties most recently signed, con-
tained provisions on the confidentiality of the information received. Those
27. To which should be added the treaty with India, in application of a most favoured
nation clause.
28. 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.
348. 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.
349. Some peers have noted that status updates are not provided notwith-
standing 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.
350. Nevertheless, some peers have reported that in certain cases they
were unable to receive banking information from Luxembourg when it per-
tained 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.
351. In addition, in relation to the failure to supply a client list in the case
outlined in Section B.1 a claim by Luxembourg that the information was not
foreseeably relevant was not in accordance with the standard.
352. Luxembourg has also stated that it does not exchange banking infor-
mation 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 interna-
tional 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.
353. 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.
354. Luxembourg has signed a total of 75
29
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 1 January
2013. As a result, Luxembourg has an EOI relationship to the standard with 54
jurisdictions and can already exchange information with 40 of them.
355. 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 jurisdictions
30
.
356. Luxembourg has also started to negotiate new agreements for EOI
with 24 jurisdictions, including 5 TIEAs, and 12 of these agreements are
already initialled.
31
29. See Annex 3 for the agreements signed, allowing for the exchange of banking infor-
mation, 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.
30. See Annex 3 for the agreements allowing for the exchange of banking infor-
mation, including the jurisdictions covered by the EU Council Directive on
Administrative Cooperation in the Field of Taxation 2011/16/EU.
31. 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.
357. For the three years under review (2009 to 2011), Luxembourg
received more than 800 EOI requests from more than 30 different jurisdic-
tions. 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.
358. 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.
359. 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 1 January 2013 and is currently
implementing measures to meet the requirements of the Directive, which
provides, amongst other, for automatic EOI.
360. 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 7 October 2010 on Administrative Cooperation and Combating
Fraud in the Field of Value Added Tax.
Foreseeably relevant standard (ToR C.1.1)
361. 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 fore-
seeable relevance which is included in Article 26(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 carry-
ing 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 Articles 1 and 2.
362. Of the 75 agreements signed by Luxembourg, the 45 agreements
32

concluded or updated since 2009 refer to paragraph 1 of article 26 and the
notion of foreseeable relevance as stipulated by the international standard.
363. 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, nor-
mally 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 paragraph 5 of article 5 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.
364. Luxembourgs authorities confirmed that these provisions were
interpreted in light of the commentaries on paragraph 1 of article 26 of the
model tax convention and on paragraph 5 of article 5 of the model informa-
tion exchange agreement published by the OECD.
365. It is, however, noted that the provisions of the exchanges of letters
concluded by Luxembourg deviate from the wording of article 5 (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 1 January 2013,
Luxembourg can exchange information to the standard with Austria on the
basis of the EU Council Directive on Administrative Cooperation 2011/16/EU.
2011/16/EU.
366. 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.
367. 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 article 26 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.
368. 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 regard-
ing 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 illus-
trate 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 incom-
ing 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 rel-
evant 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 natu-
ral 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 jurisdic-
tion irrespective of the residence status of the account holder.
369. 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 foresee-
able relevance concept to conform to the standard.
370. 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 jurisdic-
tion when the initial request relates directly to a bank account in Luxembourg
is not in accordance with the standard.
371. 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 posi-
tion to confirm the transfer of the client list and consequently to determine
whether tax avoidance had taken place or not.
372. 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 exam-
ined in Sections B.1 and C.4.
373. In addition, there are some recent Court decisions
33
in Luxembourg
in relation to the interpretation of the foreseeably relevance criterion regard-
ing exchange of information. These reflect a very strict interpretation of the
standard in Luxembourg.
374. In summary, the interpretation of the foreseeably relevant standard
in Luxembourg is unduly restrictive and prevents it from engaging in effec-
tive 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 (ToR C.1.2)
375. 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.
376. 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
convention
34
. Of the 30 treaties not already updated to meet the standard, 21
specifically mention that the EOI is not restricted by article 1 of the conven-
tion.Exchange of all types of information (ToR C.1.3)
377. 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 authorita-
tive 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.
33. Decision number 30644C of 12 July 2012 (on appeal from the decision number
29869 of 6 February 2012), decision number 30251C of 24 May 2012 (on appeal
from the decision number 29592 of 9 December 2011), decision number 30658 of
7 June 2012 and decision 30164 of 27 March 2012.
2011/16/EU.
378. Article 26 (5) of the OECD Model Convention provides that a con-
tracting 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.
379. The 45 agreements concluded by Luxembourg since its commitment
to the standard contain provisions equivalent to paragraph 5 of article 26 of
the OECD Model Convention.
380. 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, India
35
,
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.
381. While the current agreements in force withAustria, Switzerland and
Panama contain a provision equivalent to paragraph 5 of article 26 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 bank-
ing information is now possible with 12
36
additional jurisdictions (including
Austria).
382. 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 (ToR C.1.4)
383. 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
35. With respect to India, by application of the most-favoured-nation clause.
36. Austria, Bulgaria, Cyprus, Czech Republic, Estonia, Greece, Hungary, Ireland,
Latvia, Lithuania, Slovak Republic, Slovenia. See Annex 3 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.
to use their information gathering measures even though invoked solely to
obtain and provide information to the requesting jurisdiction.
384. All the information exchange mechanisms concluded since March
2009 contain, without exception, an express provision (equivalent to arti-
cle 26 (4) of the OECD Model Tax Convention) according to which the
requested party will submit the information requested regardless of whether
it has a domestic tax interest in obtaining that information.
385. The agreements that have not been updated since March 2009 con-
tain 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 (ToR C.1.5)
386. 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.
387. None of the information exchange mechanisms concluded by
Luxembourg since March 2009 contains the principle of dual incrimina-
tion 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
(ToR C.1.6)
388. 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 infor-
mation requested for tax administration purposes (also referred to as civil
tax matters).
389. 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 (ToR C.1.7)
390. 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.
391. 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.
392. 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.
393. 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 (ToR C.1.8)
394. 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.
395. In Luxembourg all tax treaties, whether double taxation conventions,
protocols amending existing conventions, or information exchange agree-
ments, must be ratified by the Parliament.
396. Luxembourgs network of bilateral agreements covers to date a total
of 75
37
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
2011/16/EU.
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.
397. 18 agreements
38
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.
398. 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 7 June 2013 and the laws are expected to
be published by the end of June 2013.
399. 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.
400. 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.
401. 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 (ToR C.1.9)
402. 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.
403. In the case of Luxembourg, the crucial point is to ensure access to
banking information in a situation in which domestic tax legislation provides
38. 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.
for banking secrecy and does not authorise access to such information for the
purposes of international information exchange.
404. In addition to ratifying its agreements by means of the law of
31 March 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.
405. Luxembourg has also given express effect to the agreement con-
cluded with India, through the law of 31 March 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 7 June 2013 and the laws are
expected to be published by the end of June 2013.
406. 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 informa-
tion 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 rel-
evant for a taxable period beginning after the effective date of the agreement.
This is not consistent with the international standard.
407. Luxembourgs unwillingness to provide banking information preced-
ing 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.
The element is in place, but certain aspects of the legal implementation
of the element need improvement.
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.
Luxembourg should ensure, in line
with its commitment to the standard,
that each of its EOI mechanisms
strictly respects the standard of
transparency
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 that
all the treaties signed could allow
for an exchange of information in
accordance with the international
standard.
Phase 2 Rating
Non-Compliant.
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 should review its
interpretation of the foreseeable
relevance concept to conform with the
standard.
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 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.
408. 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.
409. Since March 2009, when it gave its formal commitment to imple-
ment 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 article 26 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 propos-
als. Since its commitment to the standard, all the exchange-of-information
agreements concluded by Luxembourg contain a full version of article 26 of
the OECD Model Convention.
410. 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.
411. Currently, Luxembourg has a network of 75 agreements
39
. 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 1 January 2013. As a
result, Luxembourg has an EOI relationship to the standard with 54 jurisdic-
tions and can already exchange information with 40 of them.
2011/16/EU.
412. The two draft laws ratifying 15 agreements
40
(including the revised
agreement with Switzerland that is in line with the standard), have been
enacted by Parliament on 7 June 2013 and the laws are expected to be pub-
lished 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.
413. Luxembourgs policy with respect to conventions favours the conclu-
sion of double taxation treaties containing provisions for EOI. Thus, since
2009, Luxembourg has sought to negotiate protocols amending the conven-
tions 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 conven-
tions 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 con-
clude tax information exchange agreements.
414. Luxembourg has started to negotiate new agreements for EOI with
24 jurisdictions, including 5 TIEAs. 12 agreements are already initialled
41
.
415. The Luxembourg treaty network covers to date:
22 OECD members;
42
All of Luxembourgs EU partners;
43
12 of the G20 members;
44
40. Canada, FYROM, Italy, Kazakhstan, Laos, Malta, Poland, Romania, Russia,
Seychelles, South Korea, Sri Lanka, Switzerland, Tajikistan and Chinese Taipei.
41. 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).
42. 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.
43. Austria; Belgium; Denmark; Finland; France; Germany; Italy; Malta; the
Netherlands; Poland; Portugal; Romania; Spain; Sweden; the United Kingdom.
44. With either an agreement to the standard or with the EU Directive on
Administrative Cooperation.
63 of the Global Forum member jurisdictions; and
its 3 neighbour countries (Belgium, France and Germany).
416. 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.
417. In addition to these signed agreements, Luxembourg has reported that:
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.
418. 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 1 January
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 stand-
ard. 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.
Luxembourg cannot exchange
information in accordance with the
international standards under its EOI
agreements with several partners.
Luxembourg should continue to
develop its EOI mechanisms network
to the standard, regardless of their
form.
Phase 2 Rating
Largely Compliant.
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 (ToR C.3.1)
419. 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 confi-
dentiality requirements on information collected for tax purposes.
420. All treaties recently signed by Luxembourg contain a confidentiality
provision in line with Article 26 (2) of the OECD Model Convention.
Any information received under paragraph 1 by a Contracting
State shall be treated as secret in the same manner as informa-
tion 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 determina-
tion of appeals in relation to the taxes referred to in paragraph 1,
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.
421. 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 com-
munication from a tax authority in another procedure (cf. LGI section 22).
Violations are punishable by a fine or imprisonment of up to six months (cf.
LGI section 412).
422. 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.
423. 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.
424. 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.
425. When the requesting jurisdiction wants the request to be kept con-
fidential, 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.
426. The amount of information that the Luxembourg competent authority
discloses to the information holder in such injunction letters may cause con-
cern 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 infor-
mation 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 (ToR C.3.2)
427. The confidentiality provisions in Luxembourgs agreements and
Luxembourgs domestic legislation do not draw a distinction between infor-
mation 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.
Phase 2 Rating
Factors underlying
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.
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 (ToR C.4.1)
428. 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 attor-
ney-client privilege. Attorney-client privilege is a feature of the legal systems
of many countries.
429. 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.
430. The double taxation conventions concluded by Luxembourg contain
a provision equivalent to the exemption in article 26 (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.
431. 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.
432. However, as noted in Section B.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 conclu-
sion, 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.
433. In addition, one peer reported that it has requested banking infor-
mation 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, infor-
mation 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 combi-
nation of the provisions of Article 26 paragraph 3(b) of the DTC between
Luxembourg and the requesting jurisdiction and Luxembourgs domestic law.
Article 26(3) provides:
3. In no case shall the provisions of paragraphs 1 and 2 be con-
strued 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.
434. Further, Article 505 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 spon-
taneously 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.
435. 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 infor-
mation 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 infor-
mation obtained under the Directive is lawfully obtained under its laws.
436. 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.
Phase 2 Rating
Non-Compliant.
Factors underlying
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
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 (ToR C.5.1)
437. 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 informa-
tion 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.
438. 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 divi-
sion 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.
439. 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 admin-
istration services, and the CLO will have direct access to information on
wages and non-resident directors fees, starting in 2015).
440. 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).
441. For these years, the percentage of requests where Luxembourg
answered within 90 days, 180 days, one year or more than one year, were:
2009 2010 2011 Total Average
nr. % nr. % nr. % nr. %
Total number of requests received
(a+b+c+d+e)
242 100%234 100% 356 100% 832 100
Full response*: <90 days (a) 44 18% 63 27% 125 35% 232 28%
<180 days (cumulative) (b) 49 20% 116 49.5%233 65% 398 48%
<1 year (cumulative) (c) 68 28% 181 77.5% 296 83% 545 66%
1 year+ (d) 172 71% 53 22.5% 15 4% 240 29%
Requests still pending at date of review (e) 2 1% - - 45 13% 47 6%
* 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.
442. Luxembourgs response timeframe has improved with the introduc-
tion 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.
443. 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 incom-
ing 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.
444. To improve the response timeframe for incoming requests, a new pro-
cedure for collecting information was implemented with the law of 31 March
2010, which simplifies and accelerates the process of collection of informa-
tion, 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.
445. In addition, Luxembourg has transposed the new EU Council
Directive on Administrative Cooperation that came into effect on 1 January
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.
446. 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 (ToR C.5.2)
Organisational process
447. In Luxembourg, all incoming EOI requests are received by the CLO
irrespective of their forms (CCN network,
45
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 request-
ing 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 condition
46
and whether confidentiality is requested. It also veri-
fies whether the elements specifically mentioned in the protocol are included,
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.
448. 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.
449. 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 infor-
mation 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
45. CCN is a secured network mainly devoted to exchange of information in tax
matters between EU member states.
46. Between European Union member states exchanging information under the EU
Council Directive on Administrative co-operation, the reciprocity condition does
not exist.
where the person who is the subject of the request is resident is the third
jurisdiction.
450. If the information requested is directly available to CLO, the infor-
mation 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.
451. 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 con-
cluded 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).
452. 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 pro-
vided 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 dead-
line. 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.
453. 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 infor-
mation 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 gen-
erated in 30-days if the answer has not been received.
454. 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 part-
ner within one week of reception of the information by the CLO.
Resources
455. 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 addi-
tion 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.
456. Staff involved in the EOI in Luxembourg come from the tax admin-
istration 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.
457. 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 rela-
tion to EOI.
Unreasonable, disproportionate or unduly restriction conditions for
EOI (ToR C.5.3)
458. 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.
This element involves issues of practice that are assessed in the Phase 2
review. Accordingly no Phase 1 determination has been made.
Phase 2 Rating
While progress has been made for the
last year under review, some peers
expressed concerns with delays in
receiving certain responses.
Luxembourg should monitor its
timeframe for answering requests
to ensure that it always replies in a
timely manner.
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 ensure that its
authorities respond to EOI requests in a
timely manner, by providing the informa-
tion 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
Underlying Recommendations
Determination
Factors underlying
Jurisdictions should ensure that ownership and identity information for all relevant entities
and arrangements is available to their competent authorities. (ToR A.1)
Phase 1 determination:
The element is not in
place
Luxembourg allows for the issu-
ance 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.
Luxembourg should ensure
the availability of information
relating to SAs, SEs and
S.e.c.as bearer securities
holders in any circumstances.
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.
that ownership information
relating to SICARs which
take the form of an S.e.c.s is
available in all circumstances.
Phase 2 rating:
Non-Compliant
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities
and arrangements. (ToR A.2)
The element is in place
Phase 2 rating:
Compliant
Banking information should be available for all account-holders. (ToR A.3)
120 SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS
Determination
Factors underlying
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.
access to information held by
financial institutions, insurance
companies, and SPFs for all
its relevant partners.
Phase 2 rating:
Non-Compliant 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.
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 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 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
Factors underlying
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)
Phase 2 rating:
Partially Compliant
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.
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.
Luxembourg should ensure, in
line with its commitment to the
standard, that each of its EOI
mechanisms strictly respects
the standard of transparency
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.
that all the treaties signed
could allow for an exchange of
information in accordance with
the international standard.
Determination
Factors underlying
Phase 2 rating:
Non-Compliant
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 should review
its interpretation of the
foreseeable relevance concept
to conform with the standard.
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 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)
Luxembourg cannot exchange
information in accordance with
the international standards
under its EOI agreements with
several partners.
Luxembourg should continue
to develop its EOI mechanisms
network to the standard,
regardless of their form.
Phase 2 rating:
Largely Compliant
Determination
Factors underlying
The jurisdictions mechanisms for exchange of information should have adequate provisions
to ensure the confidentiality of information received. (ToR C.3)
Phase 2 rating:
Partially Compliant
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)
Phase 2 rating:
Non-Compliant
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
Factors underlying
The jurisdiction should provide information under its network of agreements in a timely
manner. (ToR C.5)
This element involves
issues of practice
that are assessed in
the Phase 2 review.
Accordingly no
Phase 1 determination
has been made.
Phase 2 rating:
Partially Compliant
While progress has been
made for the last year under
review, some peers expressed
concerns with delays in
receiving certain responses.
Luxembourg should monitor
its timeframe for answering
requests to ensure that it
always replies in a timely
manner.
In instances where it cannot
provide an answer within 90
days, Luxembourg does not
provide, routinely, a status
update to its treaty partners.
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 Report
47
Luxembourg would like to express its appreciation for the work done in
evaluating and rating Luxembourg.
Luxembourg is committed to effective exchange of information and it
has a long history of exchanging information for tax purposes. Luxembourg
has an extensive network of agreements for exchange of information and has
recently signed the joint Council of Europe/OECD Multilateral Convention
on Mutual Administrative Assistance in Tax Matters and its Protocol.
We reply to hundreds of requests for information every year, indeed
during the period under review for our evaluation Luxembourg received 832
requests and we replied to 785 of those.
Therefore, Luxembourg views its rating as inappropriately severe, in
regard of the highly limited number of its replies considered unsatisfactory
out of the very large number of replies to requests, and in comparison with
ratings attributed to other jurisdictions whose little or no volume of requests
did not present a similar risk of replies viewed as unsatisfactory.
47. 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
in Force
Multilateral agreements
Luxembourg is party to:
Council Directive 2011/16/EU of 15 February 2011 on Administrative
Cooperation in the Field of Taxation and repealing Directive 77/799/EEC which
entered in force on 1 January 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. Jurisdiction
Type of
arrangement Date of signature
Date of entry
into force
1 Albania DTC 14.01.2009 ---
2 Armenia DTC 23.06.2009 09.04.2010
3 Austria
DTC
DTC Protocol
EU Directive
2011/16/EU
18.10.1962
07.07.2009
15.02.2011
07.02.1964
01.09.2010
01.01.2013
4 Azerbaijan DTC 16.06.2006 02.07.2009
5 Bahrain DTC 06.05.2009 10.11.2010
6 Barbados DTC 01.12.2009 08.08.2011
ANNEXES 127
No. Jurisdiction
Type of
Date of entry
into force
7 Belgium
DTC
DTC Protocol
DTC Protocol
EU Directive
2011/16/EU
17.09.1970
11.12.2002
16.07.2009
15.02.2011
30.12.1972
11.12.2002
---
01.01.2013
8 Brazil DTC 08.11.1978 23.07.1980
9 Bulgaria
DTC
EU Directive
2011/16/EU
27.01.1992
15.02.2011
15.03.1994
01.01.2013
10 Canada
DTC
DTC Protocol
10.09.1999
08.05.2012
10.10.2000
---
11 China DTC 12.03.1994 28.07.1995
12 Czech republic
DTC
DTC Protocol
EU Directive
2011/16/EU
18.03.1991
05.03.2013
15.02.2011
30.12.1992
---
01.01.2013
13 Denmark
DTC
DTC Protocol
EU Directive
2011/16/EU
17.11.1980
04.06.2009
15.02.2011
22.03.1982
09.04.2010
01.01.2013
14 Estonia
DTC
EU Directive
2011/16/EU
23.05.2006
15.02.2011
23.01.2007
01.01.2013
15 Finland
DTC
DTC Protocol
EU Directive
2011/16/EU
01.03.1982
01.07.2009
15.02.2011
27.03.1983
12.04.2010
01.01.2013
16 France
DTC
DTC Protocol
EU Directive
2011/16/EU
24.11.2006
03.06.2009
15.02.2011
27.12.2007
29.10.2010
01.01.2013
17 FYROM DTC 15.05.2012 ---
18 Georgia DTC 15.10.2007 14.12.2009
128 ANNEXES
No. Jurisdiction
Type of
Date of entry
into force
19 Germany
DTC
DTC Protocol
DTC
EU Directive
2011/16/EU
Multilateral
Convention
23.08.1958
11.12.2009
23.04.2012
15.02.2011
Signed
06.06.1960
23.12.2010
---
01.01.2013
20 Greece
DTC
EU Directive
2011/16/EU
22.11.1991
15.02.2011
26.08.1995
01.01.2013
21 Hong-Kong, China
DTC
DTC Protocol
02.11.2007
11.11.2010
20.01.2009
17.08.2011
22 Hungary
DTC
EU Directive
2011/16/EU
15.01.1990
15.02.2011
21.04.1991
01.01.2013
23 India DTC 02.06.2008 09.07.2009
24 Indonesia DTC 14.01.1993 10.03.1994
25 Ireland
DTC
EU Directive
2011/16/EU
14.01.1972
15.02.2011
25.02.1975
01.01.2013
26 Iceland
DTC
DTC Protocol
04.10.1999
28.08.2009
19.09.2001
28.04.2010
27 Isle of Man DTC 08.04.2013 ---
28 Israel DTC 13.12.2004 22.05.2006
29 Italy
DTC
DTC Protocol
EU Directive
2011/16/EU
03.06.1981
21.06.2012
15.02.2011
04.02.1983
---
01.01.2013
30 Japan
DTC
DTC Protocol
05.03.1992
25.01.2010
27.12.1992
30.12.2011
31 Jersey DTC 17.04.2013 ---
32 Kazakhstan
DTC
DTC Protocol
26.06.2008
03.005.2012
---
---
33 Kuwait DTC 11.12.2007 ---
34 Latvia
DTC
EU Directive
2011/16/EU
14.06.2004
15.02.2011
14.04.2006
01.01.2013
35 Laos DTC 04.11.2012 ---
ANNEXES 129
No. Jurisdiction
Type of
Date of entry
into force
36 Liechtenstein DTC 16.08.2009 17.12.2010
37 Lithuania
DTC
EU Directive
2011/16/EU
22.11.2004
15.02.2011
14.04.2006
01.01.2013
38 Malaysia DTC 21.11.2002 02.07.2004
39 Malta
DTC
DTC Protocol
EU Directive
2011/16/EU
29.04.1994
30.11.2011
15.02.2011
14.02.1996
---
01.01.2013
40 Mauritius DTC 15.02.1995 12.09.1996
41 Mexico
DTC
DTC Protocol
07.02.2001
07.10.2009
27.12.2001
20.11.2011
42 Moldavia DTC 11.07.2007 04.12.2009
43 Monaco DTC 27.07.2009 03.05.2010
44 Morocco DTC 19.12.1980 16.02.1984
45 The Netherlands
DTC
DTC Protocol
EU Directive
2011/16/EU
08.05.1968
29.05.2009
15.02.2011
20.10.1969
01.07.2010
01.01.2013
46 Norway
DTC
DTC Protocol
06.05.1983
07.07.2009
27.01.1985
12.04.2010
47 Panama DTC 07.10.2010 01.11.2011
48 Poland
DTC
DTC Protocol
EU Directive
2011/16/EU
14.06.1995
07.06.2012
15.02.2011
31.07.1996
---
01.01.2013
49 Portugal
DTC
DTC Protocol
EU Directive
2011/16/EU
25.05.1999
07.09.2010
15.02.2011
30.12.2000
18.05.2012
01.01.2013
50 Qatar DTC 03.07.2009 09.04.2010
51 Romania
DTC
DTC Protocol
EU Directive
2011/16/EU
14.12.1993
04.10.2011
15.02.2011
08.12.1995
---
01.01.2013
52 Russia
DTC
DTC Protocol
28.06.1993
21.11.2011
07.05.1997
---
130 ANNEXES
No. Jurisdiction
Type of
Date of entry
into force
53 San Marino
DTC
DTC Protocol
27.03.2006
18.09.2009
29.12.2006
05.08.2011
54 Seychelles DTC 04.06.2012 ---
55 Singapore DTC 06.03.1993 24.05.1996
56 Slovak Republic
DTC
EU Directive
2011/16/EU
18.03.1991
15.02.2011
30.12.1992
01.01.2013
57 Slovenia
DTC
EU Directive
2011/16/EU
02.04.2001
15.02.2011
08.12.2002
01.01.2013
58 South-Africa DTC 23.11.1998 08.09.2000
59 South-Korea
DTC
DTC Protocol
07.11.1984
29.05.2012
26.12.1986
---
60 Spain
DTC
DTC Protocol
EU Directive
2011/16/EU
03.06.1986
10.11.2009
15.02.2011
19.05.1987
16.07.2010
01.01.2013
61 Sri Lanka DTC 31.01.2013 ---
62 Sweden
DTC
DTC Protocol
EU Directive
2011/16/EU
14.10.1996
07.09.2010
15.02.2011
15.03.1998
11.09.2011
01.01.2013
63 Switzerland
DTC
DTC Protocol
DTC Protocol
21.01.1993
25.08.2009
11.07.2012
09.02.1994
19.11.2010
---
64 Chinese Taipei DTC 19.12.2011 ---
65 Tajikistan DTC 09.06.2011 ---
66 Thailand DTC 06.05.1996 22.07.1998
67 Trinidad and Tobago DTC 07.05.2001 20.11.2003
68 Tunisia DTC 27.03.1996 18.10.1999
69 Turkey
DTC
DTC Protocol
09.06.2003
30.09.2009
18.01.2005
---
70 Ukraine DTC 06.09.1997 ---
71 United Arab Emirates DTC 20.11.2005 19.06.2009
ANNEXES 131
No. Jurisdiction
Type of
Date of entry
into force
72 United Kingdom
DTC
DTC Protocol
EU Directive
2011/16/EU
24.05.1967
02.07.2009
15.02.2011
03.07.1968
15.04.2010
01.01.2013
73 United States
DTC
DTC Protocol
03.04.1996
20.05.2009
20.12.2000
---
74 Uzbekistan DTC 02.07.1997 01.09.2000
75 Viet Nam DTC 04.03.1996 19.05.1998
132 ANNEXES
Annex 3: 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
signed
Allowing exchange of
banking information
(with paragraph 5 but
some agreements not
to the standard)
Agreements
to the
standard
Agreements
to the
standard
and in force
1 Albania X
2 Armenia X X X X
3 Austria X X
4 Azerbaijan X
5 Bahrain X X X X
6 Barbados X X X X
7 Belgium X X X
8 Brazil X
9 Bulgaria X
10 Canada X X X
11 China X
12 Czech Republic X X X
13 Denmark X X X X
14 Estonia X
15 Finland X X X X
16 France X X X X
17 FYROM X X X
18 Georgia X
19 Germany X X X X
20 Greece X
21 Hong-Kong X X X X
22 Hungary X
23 India X X X X
ANNEXES 133
signed
banking information
some agreements not
to the standard)
Agreements
to the
standard
Agreements
to the
standard
and in force
24 Indonesia X
25 Ireland X
26 Iceland X X X X
27 Israel X
28 Isle of Man X X X
29 Italy X X X
30 Japan X X X X
31 Kazakhstan X X X
32 Jersey X X X
33 Kuwait X
34 Latvia X
35 Laos X X X
36 Liechtenstein X X X X
37 Lithuania X
38 Malaysia X
39 Malta X X X
40 Mauritius X
41 Mexico X X X X
42 Moldavia X
43 Monaco X X X X
44 Morocco X
45 The Netherlands X X X X
46 Norway X X X X
47 Panama X X
48 Poland X X X
49 Portugal X X X X
50 Qatar X X X X
51 Romania X X X
52 Russia X X X
53 San Marino X X X X
54 Seychelles X X X
55 Singapore X
56 Slovak Republic X
57 Slovenia X
134 ANNEXES
signed
banking information
some agreements not
to the standard)
Agreements
to the
standard
Agreements
to the
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
agreement
without a bilateral
agreement
allowing for
EOI for banking
information (no
bilateral agreement
or no para 5)
without a bilateral
agreement to
the standard
(no bilateral
agreement, no
para 5 or subject
to conditions)
without a
bilateral
agreement
to the
standard
and in
force
1 Austria X X
2 Belgium X
3 Bulgaria X X X
4 Cyprus X X X X
5 Czech Republic X
6 Denmark
ANNEXES 135
Jurisdictions covered by the EU Council Directive on Administrative Cooperation
without a
bilateral
agreement
without a bilateral
agreement
allowing for
EOI for banking
information (no
bilateral agreement
or no para 5)
without a bilateral
agreement to
the standard
(no bilateral
agreement, no
para 5 or subject
to conditions)
without a
bilateral
agreement
to the
standard
and in
force
7 Estonia X X X
8 Finland
9 France
10 Germany
11 Greece X X X
12 Hungary X X X
13 Ireland X X X
14 Italy X
15 Latvia X X X
16 Lithuania X X X
17 Malta X
18 The Netherlands
19 Poland X
20 Portugal
21 Romania X
22 Slovak Republic X X X
23 Slovenia X X X
24 Spain
25 Sweden
26 United Kingdom
Total 1 10 11 17
Total of the two tables
(agreements and
Directive)
76 55 54 40
136 ANNEXES
Annex 4: List of Laws, Regulations and
Other Material Received
Commercial legislation
Law of 1915 on commercial companies and partnerships
Law of 21 April 1928 on foundations
Law of 31 July 1929 on the fiscal regime of socit de participation
financires
Law of 31 May 1999 on professionals providing registered office
Law of 19 December 2002 concerning the commerce and company reg-
ister as well as annual accountings of enterprises
Law of 27 July 2003 on trusts and fiduciary contracts
Law of 11 May 2007 concerning the creation of familial assets manage-
ment companies
Law of 20 April 2009 on electronic submission by the commerce and
company register
Law of 10 December 2010 on new international accounting norms for
enterprises
Grand ducal regulation of 23 January 2003 concerning the commerce and
company register as well as annual accountings of enterprises
Grand ducal regulation of 22 April 2009 concerning the commerce and
company register as well as annual accountings of enterprises
CSSF regulation 12-02 of 14 December 2012
ANNEXES 137
Fiscal legislation
General tax law of 22 May 1931
Law of 27 November 1933 concerning the recovery of direct taxes and
excise duties on alcohols and social insurance contributions
Adaptation fiscal law of 16 October 1934
Wealth tax law of 16 October 1934
Commercial tax law of 1 December 1936
Law of 17 April 1964 modified, concerning the reorganisation of the
direct taxes administration
Anti money laundering legislation
Law of 12 November 2004 concerning the fight against anti money laun-
dering and combating the financing of terrorism
Grand-ducal regulation of 1

February 2010 detailing some provisions of
Law of 12 November 2004 concerning the fight against anti money
laundering and combating the financing of terrorism
Law of 27 October 2010 reinforcing the legal framework in the field of
fight against anti money laundering and financing of terrorism
Financial legislation
Law of 6 December 1991 concerning the supervision of insurance
companies
Law of 5 April 1993 concerning the financial sector
Law of 15 June 2004 on capital risk investment companies
Law of 11 January 2008 on transparency requirements for issuers of
securities
Treaties ratification
Law of 31 March 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 15 March 1979 concerning the mutual assistance in the field of
direct taxes
Law of 27 April 2006 transposing the EU 2004/56/CE Directive con-
cerning the mutual assistance between competent authorities of the
member states in the field of direct taxes
Law of 19 December 2008 concerning cooperation between administra-
tions and justice
Law of 19 December 2008 on inter-administrative and judicial
co-operation
Grand ducal regulation of 15 March 1979 concerning the international
mutual assistance in the field of direct taxes
Others
Law of 1 December 1978 concerning administrative tax claims
Decision of 8 June 1950 of the Supreme court of justice
Decision of 18 June 2007 of the Administrative court of appeal of
Luxembourg
Decision N 30164 of 27 March 2012 of the Administrative Tribunal
Decision N 28742 of 12 December 2011 of the Administrative Court
Decision N 28728 of 25 January 2012 of the Administrative Court
Decision N 29655C of 9 February 2012 of the Appeal Court
Decision N 30630 of 3 March 2012 of the Appeal Court
Decision N 30664C of 12 July 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
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ISBN 978-92-64-20266-5
23 2013 30 1 P
Global Forum on Transparency and Exchange of Information
for Tax Purposes
PEER REVIEWS, PHASE 2: LUXEMBOURG
This report contains a Phase 2: Implementation of the Standard in Practice review, as well
as revised version of the Phase 1: Legal and Regulatory Framework review already released
for this jurisdiction.
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information is carried out by 120 jurisdictions, which participate in the Global Forum on an
equal footing.
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of the international standards of transparency and exchange of information for tax purposes.
These standards are primarily reected in the 2002 OECD Model Agreement on Exchange
of Information on Tax Matters and its commentary, and in Article 26 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 duciaries, 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 identied by the Global Forum as
relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1
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of information, while Phase 2 reviews look at the practical implementation of that framework.
Some Global Forum members are undergoing combined Phase 1 and Phase 2 reviews.
The Global Forum has also put in place a process for supplementary reports to follow-up
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international standards of transparency and exchange of information for tax purposes.
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www.oecd.org/tax/transparency and www.eoi-tax.org.
LUXEMBOURG
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Consult this publication on line at http://dx.doi.org/10.1787/9789264202672-en.
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