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Savings directive and Luxembourg

The Fundation Robert Schuman has recently reported that he European Commission addressed a reasoned opinion to Luxembourg asking it to modify parts of its legislation in terms of savings taxation. The Commission believes that Luxembourg legislation is not compatible with parts of the "Savings" directive adopted in 2003 and for which the Commission has put forward an extension. This directive notably says that paying agents (banks, financial institutions etc ...) either report interest income received by taxpayers resident in other EU Member States or levy a withholding tax on the interest income received. However, Luxembourg also gives an exemption from withholding tax to interest payments made to beneficial owners who benefit from the so-called "non-domiciled resident" status in their country of residence. This allows Britons, Irish and Maltese citizens to avoid all taxation on the capital they invest in Luxembourg

That is not a surprise.

13:00 Posted in Luxembourg | Permalink | Comments (0)


Luxembourg not so happy of Obama's success when reading between lines

Prime Minister Juncker from Luxembourg has today sent a letter to President Obama for congratulation :

Luxembourg, 5th November 2008
Dear Senator,

It is with great joy that I learnt early this morning that you have been elected to serve as the next President of the United States of America. Let me express to you my heartfelt congratulations in the name of the Luxembourg Govemment and on my own behalf.

Luxembourg and the United States are bound by a longstanding, deep friendship that is based on shared values and historical experience as weIl as immigration and trade links. Like many people aIl over the world at this critical time in the history of humankind, the people of Luxembourg are looking towards the United States for leadership and cooperation when it cornes to facing challenges such as climate change, sustainable development, the fight against poverty and disease, the reform of the global financial system, the establishment of a socially and environmentally conscious worldwide trading regime, or the promotion of peace in those areas of our world that are afflicted by the scourges of war and terrorism.

All of these challenges can only be effectively addressed if the European Union and the United States work closely together. I am convinced that your historical election will give a substantial boost to the transatlantic relationship and I am looking forward to working with you and meeting you soon.

Yours sincerely,

Jean-Claude JUNCKER
Prime Minister

Source : www.gouvernement.lu

When he states that the people of Luxembourg are looking towards the United States for leadership and cooperation, there is one area that is not quoted for such for leadership and cooperation : the fight against tax havens.

Many politicians in Luxembourg should be aware that the paradigm shift that is accentuated by President Obama's victory. Obama is one of the senators that have introduced a bill, with the unwieldy title of "Incorporation Transparency and Law Enforcement Assistance Act" (summary here.) Its declared intention is "to protect the United States from U.S. corporations being misused to commit terrorism, money laundering, tax evasion, or other misconduct."

President Obama said earlier this year "And it’s time to shed some sunlight not only on companies that abuse the tax code, but also on the secretive offshore tax havens that shelter them. We’ll create a list of countries where tax evaders hide their income and cost America untold billions of dollars every year. We’ll lead the international community to new standards of information sharing. And we’ll penalize companies and individuals who use those havens and illegally evade their tax obligations. (...) "To ensure that we are fiscally responsible, we’ll gain revenue by shutting down corporate loopholes and tax havens."

I do not think that he is gonna support the Luxembourg business doctrine as expressed by Lucien Thiel (former chairman of the Luxembourg bankers’ association) :
- It is not our duty to control if the taxpayer was honest,
- Luxembourg is not compelled to communicate its clients’ data.

17:09 Posted in Luxembourg | Permalink | Comments (0)


More business, more risks, more refusal

Didier Mouget, PwC Luxembourg Territory Senior Partner, was invited by Paperjam TV to comment PwC results, the crisis and the consequences of the current fight against tax havens.

He explained that the crisis in an opportunity for auditors to make more money and continue the growth because the provide they provide confidence. I do not agree with that because auditors, especially in a small jurisdiction like Luxembourg, are not independant enough from their clients who pay for the audit and ignore business ethics. That is the reason why those who state that audits of banks should be directly conducted by the regulators on a real time basis and external auditors of banks must not act as consultants to the banks or the directors are probably right as auditors seem incorrigible.

What he says about the current fight against tax havens is worth analysing as well.

In his opinion Luxembourg is not a tax haven because it has rules, which is not the case in some exotic jurisdictions with no rules or poor rules.

Unfortunately like many professionals in Luxembourg, he disregards dysfunctions of the center including those that are a direct threat for chartered accountants and registered auditors because of accounting actors that are controlled neither by the OEC (institute of chartered accountants) nor the IRE (institute of registered auditors ) and that create risky companies.

Above all he explains that if some tax havens are closed - Luxembourg not being one of them - it would be more business for Luxembourg. This is what I said.

But, it would be as well more reputational risks as there is no will to correct dysfunctions or issues that are condoned.

And I find it strange that a small country that find the money for its promotion with LuxembourgForFinance for exemple, should be unable to invest in the means required to correct dysfunctions.

06:55 Posted in Luxembourg | Permalink | Comments (0)