Luxembourg 2011

88 Pages·2011·1.205 MB·English

by  OECD

Global Forum on Transparency and Exchange of Information GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
for Tax Purposes
OF INFORMATION FOR TAX PURPOSES
PEER REVIEWS, PHASE 1: LUXEMBOURG
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
Peer Review Report
of information is carried out by over 100 jurisdictions which participate in the work of the
Global Forum on an equal footing.
Phase 1
The Global Forum is charged with in-depth monitoring and peer review of the
implementation of the standards of transparency and exchange of information for tax
Legal and Regulatory Framework
purposes. These standards are primarily refl ected 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, which has been incorporated in the UN Model Tax Convention.
LUXEMBOURG
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 fi duciaries, Pe
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regardless of the existence of a domestic tax interest or the application of a dual r R
criminality standard. ev
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All members of the Global Forum, as well as jurisdictions identifi ed by the Global Forum R
as relevant to its work, are being reviewed. This process is undertaken in two phases. ep
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Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for r
the exchange of information, while Phase 2 reviews look at the practical implementation of t Ph
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that framework. Some Global Forum members are undergoing combined – Phase 1 plus se
Phase 2 – reviews. The ultimate goal is to help jurisdictions to effectively implement the 1 L
international standards of transparency and exchange of information for tax purposes. eg
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All review reports are published once approved by the Global Forum and they thus l a
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represent agreed Global Forum reports. d R
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For more information on the Global Forum for Transparency and Exchange of gu
Information for Tax Purposes and for copies of the published review reports, please visit lato
www.oecd.org/tax/transparency and www.eoi-tax.org. ry
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Please cite this publication as: o
rk
OECD (2011), Global Forum on Transparency and Exchange of Information for Tax Purposes L
Peer Reviews: Luxembourg 2011: Phase 1: Legal and Regulatory Framework, Global Forum on UX
Transparency and Exchange of Information for Tax Purposes: Peer Reviews, OECD Publishing. EM
http://dx.doi.org/10.1787/9789264117884-en BO
U
This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical R
G
databases. Visit www.oecd-ilibrary.org, and do not hesitate to contact us for more information.
ISBN 978-92-64-11787-7 -:HSTCQE=VV\]\\:
23 2011 43 1 P
www.oecd.org/publishing

Global Forum
on Transparency
and Exchange
of Information for Tax
Purposes Peer Reviews:
Luxembourg 2011
PHASE 1
August 2011
(reflecting the legal and regulatory framework
as at May 2011)
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.
Please cite this publication as:
OECD (2011), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer
Reviews: Luxembourg 2011: Phase 1: Legal and Regulatory Framework, Global Forum on
Transparency and Exchange of Information for Tax Purposes: Peer Reviews, OECD
Publishing.
http://dx.doi.org/10.1787/9789264117884-en
ISBN 978-92-64-11787-7 (print)
ISBN 978-92-64-11788-4 (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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Revised version, September 2011.
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3
TABLE OFCONTENTS –
Table of Contents
About the Global Forum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Information and methodology used for the peer review of Luxembourg . . . . . . .11
Overview of Luxembourg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Recent developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Compliance with the Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
A. Availability of information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
A.1.Ownership and identity information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
A.2.Accounting records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
A.3.Banking information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
B. Access to Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
B.1. Competent Authority’s ability to obtain and provide information. . . . . . . . 50
B.2.Notification requirements and rights and safeguards. . . . . . . . . . . . . . . . . . 57
C. Exchanging Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
C.1.Exchange of information mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
C.2.Exchange of information mechanisms with all relevant partners . . . . . . . . 66
C.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
C.4.Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . . 70
C.5.Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . . 71
PEER REVIEW REPORT – PHASE1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
4
– TABLE OFCONTENTS
Summary of Determinations andFactorsUnderlyingRecommendations. . . . 73
Annex1: Jurisdiction’s Response to the Review Report . . . . . . . . . . . . . . . . . . 77
Annex2: List of all Exchange-of-Information Mechanisms inForce. . . . . . . . 78
Annex3: List of all Laws, Regulations andOtherRelevantMaterial . . . . . . . 82
PEER REVIEW REPORT – PHASE1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
5
ABOUT THE GLOBAL FORUM –
About the Global Forum
The Global Forum on Transparency and Exchange of Information for Tax
Purposes is the multilateral framework within which work in the area of tax
transparency and exchange of information is carried out by over 100 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 Article26 of the OECDModel Tax Convention on
Income and on Capital and its commentary as updated in 2004, which has been
incorporated in the UNModel 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 undertaken in two phases. Phase 1 reviews assess the quality of jurisdic-
tions’ legal and regulatory framework for the exchange of information, while
Phase2 reviews look at the practical implementation of that framework.Some
Global Forum members are undergoing combined – Phase 1 plus 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 monitor-
ing 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.
PEER REVIEW REPORT – PHASE1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011

7
EXECUTIVE SUMMARY –
Executive summary
1. This report summarises the legal and regulatory framework for
transparency and exchange of information for tax purposes in Luxembourg.
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 exchange of information mechanisms that
incorporate the full and generally consistent version of article 26 of the
OECD Model Tax Convention. Luxembourg’s network of bilateral informa-
tion exchange mechanisms now comprises 68 agreements1, 28 of which2
contain article26 in full or equivalent provisions and 25 of which are to the
standard. Of the agreements concluded since 2009, 21 have already been
ratified and 17 are in force.The law ratifying the last seven agreements was
tabled in the Chamber of Deputies on 2 March 2011.
3. In three cases – Austria, Panama and Switzerland – the obligations
stipulated in the recently negotiated protocols are more restrictive than
those established by the international standard. Luxembourg has neverthe-
less undertaken steps to ensure that all the mechanisms concluded with its
partners will lead to an effective exchange of information in accordance with
1. To which must be added the exchange of information with Cyprus pursuant to the
EUMutual Assistance Directive 77/799/EEC
2. Armenia, Austria, Bahrain, Barbados, Belgium, Denmark, Finland, France,
Germany, Hong Kong (China), Iceland, Japan, Liechtenstein, Mexico, Monaco,
Netherlands, Norway, Panama, Portugal, Qatar, San Marino, Spain, Sweden,
Switzerland, Turkey, United Kingdom and United States. India is covered by a
most-favoured-nation clause, to which Luxembourg gave effect through the law
of 31 March 2010.
PEER REVIEW REPORT – PHASE1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
8
– EXECUTIVE SUMMARY
the standard. Luxembourg needs to pursue the updating of its network of tax
treaties so that all its partners can access the information held by financial
institutions.So, it has proposed to all its treaty partners to update the treaties
still not meeting the standard.
4. In order to conform to the international transparency standard,
Luxembourg recently introduced legislation, and in particular a new law
governing access to banking information or information protected by secrecy
rules.This legislation implements Luxembourg’s international commitments
into domestic law. Certain aspects of this legislation will require further
investigations during the course of the phase2 review.
5. Banking information is, in particular, available thanks to the anti-
money laundering (AML) legislation.The rules according to which informa-
tion relating to numbered accounts must be kept derive from a grand ducal
regulation adopted on 1February 2010.The legal framework surrounding the
holding of such accounts could also be clarified and will be subject to further
investigation during the course of the phase2 review.
6. Luxembourg law generally guarantees the availability of information
on companies and partnerships.All companies and partnerships must register
with the Register of Commerce and Companies (Registre du commerce et des
sociétés, “RCS”) within a month of their creation. The law usually requires
the provision of information to the RCS relating to the shareholders and part-
ners of these companies and partnerships as well as updates to this informa-
tion.However sociétés anonymes (SAs, or public limited companies), sociétés
en commandite par actions (Se.c.as, or partnerships limited by shares), and
sociétés européennes (SE, European companies) are themselves required to
keep information on the holders of registered shares, through a register of
shares.
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 avail-
ability of information on holder of bearer shares in all circumstances. The
fact that investment companies (in particular SICAV and SICAF3) are author-
ised to issue shares in bearer form constitutes, in this context, a loophole in
the legal and regulatory framework in Luxembourg. Therefore, element A1
is assessed as not being in place.
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.
3. SICAV: open-end investment company; SICAF: close-end investment company.
PEER REVIEW REPORT – PHASE1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011