Luxembourg Supports New Savings Tax Directive
Luxembourg’s Prime Minister Xavier Bettel said the conclusions adopted at the recent European Council meeting on the revised Savings Tax Directive have enabled “a green light from the Grand Duchy of Luxembourg.”
He expressed his satisfaction that all 28 European Union (EU) member states reached an agreement at the latest European Council meeting in Brussels, and said Luxembourg wants to have “a transparent banking center.”
Bettel underlined the importance of the European Commission’s assurance that it will continue negotiating with European third countries to establish equivalent measures, with the aim of reaching a conclusion by the end of the year.
The EU 28 formally adopted the revised Savings Tax Directive on March 24, 2014. The Directive aims to clamp down on cross-border tax evasion through the automatic exchange of information (AEI). The scope of the Directive is extended to investment funds, pensions, and innovative financial instruments, closing existing loopholes.
Luxembourg and Austria had made their support for the new deal conditional on accelerated negotiations with third countries, such as Switzerland, to create a level playing field.
Taking note of the European Council’s agreement to extend the scope of the Directive, the Luxembourg Bankers’ Association (ABBL) stated:
“We welcome the current efforts to establish the automatic exchange of information as a global standard. The approved amendments to the Savings Directive merely represent an intermediary step in this on-going process.”
“Luxembourg banks have been actively preparing for the introduction of the automatic exchange of information at least since 2009, when Luxembourg agreed to introduce the exchange of information on demand in its double taxation treaties.”
It continued: “In the interest of the EU wealth management industry, the ABBL would like to reiterate its call for a level playing field regarding the implementation of the AEI. We therefore urge the European Commission to continue its efforts and to move forward swiftly in order to ensure that concerned non-EU countries continue to apply measures equivalent to those in the EU. In this context, we welcome Prime Minister Bettel’s announcement that Luxembourg received guarantees that the EU Commission’s negotiations with these countries would be concluded by the end of the year.”
“We also call on authorities to ensure that a single, consistent, and coherent framework for the automatic exchange of information is put in place. EU and Organisation for Economic Co-operation and Development (OECD) approaches must be aligned in order to avoid a costly and burdensome proliferation of different AEI standards and deadlines of entry into force. We join our colleagues of the European Banking Federation by insisting on streamlined AEI standards, whose costs and administrative burdens are bearable for the financial industry and that are manageable from a day-to-day operational point of view.”