Ethics and governance in the European Financial centers

Reuters has reported that Senator Levin, the author of U.S. legislation attacking offshore tax havens said he welcomed changes in bank secrecy laws just announced by several nations, but added he will press ahead with his bill.

"The promised new limits on offshore secrecy will not only likely take years to implement, but even after taking effect, will not eliminate all offshore tax abuses", he said.

In a speech yesterday Luc Frieden said he met Angel Gurria, to discuss the blacklist of tax havens. Luc Frieden stated that Angel Gurria confirmed that Luxembourg is not a tax haven according the OECD criteria. But Luc Frieden said at the same time in his speech that
- Luxembourg decided to conclude bilateral conventions of non-doubled tax in accordance with the model of convention of OECD. This would mean that is was not the case before.
- Secrecy does not protect from the infringements with the law : which law ? Luxembourg law that does not admit the penal liability of legal persons for example ?
- Within sight of the decision to adopt OECD standards, Luxembourg requires that this exchange, according to rules OECD, become the only principle which will be applied to the level of the European Union : This would mean that Luxembourg did not accept before OECD standards.

How can Luxembourg not be a tax haven while not respecting OECD standards?

The four OECD criteria to determine wether a jurisdiction is a tax haven or not are:
- insignificant or non-existent tax levels,
- absence of transparency in tax matters,
- absence of fiscal data exchange with other countries and
- attractiveness for straw companies with fictitious activities.

The three last criteria are met in Luxembourg.

What is remarkable is that it seems impossible for the Luxembourg leaders to see reality from the interior of their community. A such goldfish in its bottle, they see the outside world only by the walls of the bottle. That would take an considerable effort to think to look at the bottle of outside.

As I already wrote the experience of the Luxembourg jurisdiction with the OECD unfortunately inclines with mistrust vis-a-vis these declarations:

For example, Luxembourg cooperates in the framework of the Anti-Bribery Convention that was adopted in 2001 in the Luxembourg legislation: but it is reluctant to implement international Recs. For example penal liability of legal persons required since a couple of years and today still neither enacted nor enforced.

Definitely reluctant, because the jurisdiction :
- is able to transpose any European text pro-business very quickly, and recently
- was able to change its constitution in a couple of months with a unanimous vote : The Grand Duke announced his refusal to sign a legal text on 2 December 2008. The project of revision of the constitution was filed in on 3 December 2008. The first vote took place on 11 december 2008. The second vote took place on 12 March 2009.

Moves by a number of financial centres over recent weeks in favour of transparency and exchange of information on tax matters have given a welcome boost to efforts to counter international tax evasion, OECD Secretary-General Angel Gurría said yesterday.

While many jurisdictions still maintain arrangements that prevent them from assisting foreign authorities in tax investigations, recent actions and statements consistent with the OECD standards in this area on the part of some show that real progress is being achieved.


After Liechenstein, Andorra and Belgium, the three juristiction that met last Sunday - Switzerland, Austria and Luxembourg - offered concessions today, but insisted their bank secrecy principle remained intact.

Banking secrecy is legitimate for their citizens. It should not be opposable to foreign tax administrations.


The experience of the Luxembourg jurisdiction with the OECD unfortunately inclines with mistrust vis-a-vis these declarations:

Luxembourg cooperates in the framework of the Anti-Bribery Convention : but it is reluctant to implement international Recs. For example penal liability of legal persons required since a couple of years and today still neither enacted nor enforced.

Definitely reluctant, because the jurisdiction was able to change its constitution in a couple of months with a unanimous vote : The Grand Duke announced his refusal to sign a legal text on 2 December 2008. The project of revision of the constitution was filed in on 3 December 2008. The first vote took place on 11 december 2008. The second vote took place on 12 March 2009.


All these jurisdiction should not have a blank cheque : to be removed from the list they have to prove that what they are saying are no delaying tactics to avoid the registering on the blacklist. To encourage them, the OECD should build a grey list of these jurisdictions on the right track to be certain that the commitment will be actual.