Family Wealth Management In Luxembourg: We Are Not Done Yet, Despite The Changes To The Information Exchange

With the announced end of banking secrecy for non-residents, the time has come to make use of favourable repatriation schemes, such as the voluntary disclosure regime in Italy. Despite increasing pressure for fiscal transparency and exchange of information, beneficial owners still have a choice: move the capital out (of Luxembourg), or move the owner in.

EXCHANGE OF INFORMATION – A GLOBAL STANDARD AND A LUXEMBOURG REALITY

Over the last few years, the financial landscape in Luxembourg has drastically changed with regard to fiscal transparency and compliance with international standards. The government unambiguously committed to adopt, transpose or implement new legislation, which will ensure that Luxembourg is ranked as a white list country:

The law of March 31, 2010 introduced the exchange of information upon request in line with OECD standards. Since 2010, Luxembourg has approved the entry into and/or updated 37 double taxation treaties that provide for exchange of information on request, following Article 26 of the OECD Model Tax Convention. On 26 March 2014, the Luxembourg Parliament adopted the Council Directive1 on administrative co-operation in the field of taxation introducing the concept of automatic exchange of information for certain information, and providing for an exchange of information procedure applicable under the double tax treaties. Luxembourg has signed a FATCA IGA2 on March 28, 2014 with the US, leading to automatic exchange of relevant data as defined in the IGA. Together with Council Directive 2011/16/EU, which contains a "Most Favourite Nation's Clause" in its Article 19, Luxembourg cannot refuse to provide the same data to other EU Member States that it actually provides to the U.S. under the FATCA agreement. This will ultimately bring about an implicit extension of the scope of EU exchange of information regime. The Luxembourg authorities have approved the extension of the EU Savings Directive3 to cover other types of income and move to automatic exchange of information instead of the transitory (anonymous) withholding tax of currently 35%. In summary, Luxembourg has undergone a paradigm shift over the last few years, following previous criticism from the European Commission and the OECD4. The past and current (political) commitments to fully cooperate are proof that the Luxembourg authorities are seriously pushing for a financial industry free of undeclared account or funds.

VOLUNTARY DISCLOSURE – THE ITALIAN WAY

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