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The Exchange of Tax Information Portal is an initiative of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The Global Forum conducts peer reviews of its member jurisdictions' ability to co-operate with other tax administrations in accordance with the internationally agreed standard. The standard provides for exchange of information on request where it is foreseeably relevant to the administration and enforcement of the domestic tax laws of the requesting jurisdiction. Effective exchange of information requires that jurisdictions ensure information is available, that it can be obtained by the tax authorities and that there are mechanisms in place allowing for the exchange of that information. The Global Forum's peer review process examines both the legal and regulatory aspects of exchange (Phase 1 reviews) and the exchange of information in practice (Phase 2). The EOI Portal will track the development of these peer reviews, including changes that jurisdictions make in response to the Global Forum's recommendations.

Peer Review: Luxembourg Phase 2 Review

This report for Luxembourg has been published on 31 Jul 2013. You can buy this report, or browse it online below.

Skip directly to the Executive Summary. You may also want to view the tables of determinations and ratings.


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Determinations and Recommendations

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is not in place.   Luxembourg allows for the issuance of bearer securities by SAs, SEs and S.e.c.as without having mechanisms allowing for the identification of such securities holders in 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 Factors Recommendations
Non-Compliant.     
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
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)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Limitations in access to information provided for by Luxembourg’s 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 Factors Recommendations
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 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. 
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)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
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. 
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
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 Factors Recommendations
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)
Determination Factors Recommendations
The element is in place.   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 Factors Recommendations
Largely Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
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)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
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. 
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
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 time frame 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 information requested within 90 days of receipt of the request, or if it has been unable to do so, by providing a status update.