Ethics and governance in the European Financial centers

Two years ago Luxembourg was required to abolish the H29 legislation.
The European Commission had decided that the preferential tax regime in favour of Luxembourg’s Exempt, Milliardaire and Financial Holdings of 1929 violated EC Treaty state aid rules (Article 87). The scheme was granted under a Luxembourg law from 1929, predating the EC Treaty, and therefore constituting existing aid. The Commission had concluded that the scheme grants unjustified tax advantages to providers of certain financial services who set up holding structures in Luxembourg. It distorts competition and trade by altering the level playing field between financial undertakings and induces them to create dedicated structures in Luxembourg to reduce their current tax liabilities.
Competition Commissioner Neelie Kroes said that the “decision to eliminate a scheme providing sizable tax advantages to Luxembourg’s financial holdings will help to restore a level playing field in the EU’s financial services industry”.
The consequence was that the OECD granted Luxembourg for the evolution in the legislation.

Nevertheless if a chartered accounting firm in Luxembourg writes on its website that “Following an investigation of the regime by the EU Commission started in 1999, the Ecofin council recommended in June 2003 that harmful tax measures such as 1929 Exempt Holding companies come to an end by 2010” it adds that “Alternative solutions are already available to investors or families in order to enjoy similar tax benefits”
In other words, the firm admits that the background of harmful tax practices has not changed as investors may “enjoy similar tax benefits”.

Both The European Commission and the OECD are considered as idiots.


What is amazing as well is that a misleading wording is used for the presentation of one of the partners of the firm : the professional is said to be a "certified public auditor in Luxembourg" , with no capitals. Such title does not seem to exist. The problem is that the title can make believe that the professional is a registered auditor at the IRE, the Institute of registered auditors, which is not the case. The acronym CPA actually means “Certified Public Accountant”. Being presented as a “certified public auditor in Luxembourg" may be a way to gain credibility.

When looking the Corporate Registration, the professional is involved in the set up of companies linked to jurisdictions like the Seychelles, the BVI, Jersey and other similar jurisdiction, with a noticeable turnover of administrators and of statutory auditors including, legal persons located the exotic jurisdictions that are controlled neither by the IRE (Institute of Registered Auditors) nor the OEC (Institute of Chartered Accountants).



If I were a responsible leader in Luxembourg I would keep in mind what Senator Levin said:

“If the United States were to enact legislation to curb tax haven abuses, it would not be acting alone. For the first time, we are seeing a worldwide rejection of offshore business as usual. Tax authorities in Germany, Australia, the United Kingdom, France, and other countries are lining up to work in concert to shut down tax havens that have, for too long, carried on an economic war against honest taxpayers. The United States ought to be batting cleanup in that lineup.”

"For the first time, we are seeing a worldwide rejection of offshore business as usual" : This is what I called already almost two years ago the paradigm shift.