FATCA & CRS Reporting In Luxembourg: New Draft Bill Submitted To The Parliament

On 20 February 2020, the Luxembourg government filed with Parliament the draft bill of law n°7527 modifying both the CRS law of 18 December 2015 and the FATCA law of 24 July 2015 (the "Draft Bill").

The proposed measures of the Draft Bill aim at bringing Luxembourg law into line with the evaluation of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The Draft Bill clarifies the Luxembourg Reporting Financial Institutions' obligations as well as the applicable statute of limitations of the Luxembourg Tax Authorities' powers of investigation in order to reinforce legal certainty and finally aligns FATCA and CRS rules in order to create a cohesive approach.

Nil reporting's extension to CRS

While nil reporting is optional under CRS and mandatory under FATCA, the Draft Bill will set an obligation for Luxembourg Reporting Financial Institutions to file a "nil report" in the absence of reportable accounts under CRS.

In the absence of such "nil report", a Luxembourg Reporting Financial Institution will be exposed to a fine of €10,000. Such fine will be applicable under both FATCA and CRS laws.

Clarifications of Luxembourg Reporting Financial Institutions' obligations

Per the Draft Bill, Luxembourg Reporting Financial Institutions will be explicitly required to document actions taken and evidence used in a specific register in order to ensure the fulfilment of their reporting and due diligence obligations. Such register shall be kept for a period of ten years as from the end of the calendar year in which they were required to communicate the information.

In addition, Luxembourg Reporting Financial Institutions will need to adopt internal processes proportional to their nature, size and particularities (IT systems, procedures, policies, etc.) for the purpose of fulfilling their FATCA and CRS obligations.

The Draft Bill further proposes to...