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06/27/2009

Direct taxation: The European Commission refers Luxembourg to the European Court of Justice over its incorrect application of the Savings Tax Directive

The European Commission has decided to refer Luxembourg to the European Court of Justice over its incorrect application of certain provisions of the Savings Tax Directive as regards interest payments made to beneficial owners who benefit from so-called "non-domiciled resident" status in their country of residence.

Luxembourg refuses to apply the Directive to beneficial owners who benefit from the so-called "non-domiciled resident" status in their country of residence. Consequently, Luxembourg paying agents do not levy withholding tax on interest payments to such beneficial owners.

The Commission considers that Luxembourg's legislation, in its current state, is not compatible with articles 2, 3, 10 and 11 of the Directive that are fully applicable as they are not in the scope of the transitional period that apply for Chapter II (article 8 and 9) as defined in article 10 of the Directive.

Given that the above Luxembourg tax rules were not amended following the reasoned opinion sent by the Commission in November 2008 (IP/08/1815 ), the Commission has decided to refer the case to the European Court of Justice.

 

There are three observations:

Luxembourg is unable to abide by every applicable commitment of the Directive. I am afraid that Jacques Santer was not telling the truth when he recently stated that “le Luxembourg applique également les directives européennes” (free translation “Luxembourg also implements the European directives”). Knowing that Jacques Santer is Chairman of the Board of Directors of the Luxembourg Institute for Global Financial Integrity (LIGFI) , this is not of good omen for the credibility of the mission to promote the principles of integrity, which are fairness, transparency, responsibility and accountability.

The European Commission should refer Luxembourg to the European Court of Justice over its incorrect application of certain provisions of the UCITS directive as it is established that the minimum high level principles of the UCITS Directive have been transposed in very diverging ways by Member States, which means that some EU investors in UCITS funds are better protected than others. The Madoff affair did not occur by chance in Luxembourg as I demonstrated.

The European Commission is more credible than the OECD, for jurisdictions that do not respect their commitments: the criminal liability for legal persons is not enforced in Luxembourg despite an injunction last year, and the statement that the OECD's Working Group on Bribery “reserves the right, in the event of continued failure to implement the Convention, to take further steps” seems to be a charade all the more than Angel Gurria’s statement that “Luxembourg has joined the international drive to combat tax havens and is moving swiftly towards substantial implementation of the OECD standard” does not comply with the reality as observed by the European Commission.

 

 

 

 

09:46 Posted in Luxembourg | Permalink | Comments (0)

06/21/2009

Aid agencies made case against banking secrecy


Swissinfo has reported that Aid organisations from countries currently defending banking secrecy laws said their governments need to change course in the interest of helping developing nations.
With a meeting in Berlin among the Organisation for Economic Co-operation and Development (OECD) unfolding later this month, aid organisations from Switzerland, Luxembourg and Austria united last Tuesday to argue the benefits behind an automatic exchange of banking data.
They said that wealthier nations should provide immediate administrative assistance to developing countries in tax matters by creating a type of most-favoured-nation status for them.
Peter Niggli, director of Alliance Sud, said any concessions made on granting administrative assistance in tax cases between the United States and the European Union should extend to all countries.
Developing countries should also step up their fight against tax evasion, the agencies said, while multinational corporations should provide a country-by-country breakdown of their balance sheets.

The Cercle de Coopération, the Luxembourg representative, underlined that the OECD definition of tax havens is not limited to jurisdictions with no or low taxes.

 

 

 

 


Read Press documentation (in French)

07:13 Posted in General | Permalink | Comments (0)

06/11/2009

A telling censorship of Luxembourg professionals on issues relating to the depositary's liability

Today and tomorrow is taking place in Luxembourg the 11th Annual Fund Compliance Conference on the topic : The Responsibility of The Depositary Bank A Detailed Regulatory and Business Practice Overview

In the Ad, it is said that the European Commission will highlight the Commission Approach with regards to “Depositary Responsibilities”.

The conference will give a detailed regulatory and business practice overview of “The Responsibility of The Depositary Bank” and will provide a lively debate on how to build on shared and mutually reinforcing responsibilities The Role, Responsibility and Liability of The Depositary Function and its Delegation.

Indeed, there are differences in approaching depositary duties across Europe and consequences from the financial crisis have pledged for a strengthening of the functioning of the financial markets.

A panel session will give the views from Fund Board Members on their role and responsibility vis à vis a substantive oversight of the fund that includes the supervision of the depositary duties.

Finally the conference will assess whether UCITS IV generation is addressing adequately depositary duties and how the various scenarios of the Management Company Passport will impact the functioning of the depositary duties.

It is very amazing that the conference on a sensitive topic for Luxembourg is like boycotted by the Luxembourg financial community. It is a consent that the legal and regulatory framework on the depositary is in question in Luxembourg.

Such behaviour is worrying for investors.

 

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A Google search shows that there is only one article about the conference for site:lu:

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The 11th Annual Fund Compliance Conference on the topic : The Responsibility of The Depositary Bank A Detailed Regulatory and Business Practice Overview is not promoted by the ALFI, the official representative body for the Luxembourg investment fund industry. Strange.

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The 11th Annual Fund Compliance Conference on the topic : The Responsibility of The Depositary Bank A Detailed Regulatory and Business Practice Overview is not promoted by Luxembourg For Finance, the agency for the development of the financial sector. Strange.

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The 11th Annual Fund Compliance Conference on the topic : The Responsibility of The Depositary Bank A Detailed Regulatory and Business Practice Overview  is not promoted by the ABBL, the Luxembourg Bankers' Association. Strange.

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21:55 Posted in Luxembourg | Permalink | Comments (0)