Recent years have been marked by greater efforts to combat cross-border tax fraud and tax evasion. The automatic exchange of information is an essential component of the objective of fiscal transparency, not only across Europe, but also internationally.
Within the European Union, the automatic and mandatory exchange of financial information has been incorporated into the legislative framework via the adoption of Directive 2014/107/EU amending Directive 2011/16/EU with regard to administrative cooperation on fiscal matters.
From an international point of view, the OECD has developed a "Common Reporting Standard" (hereafter "CRS"), which governs that multilateral agreements on automatic exchange are signed between partner jurisdictions (on 30 August 2017 there were 95 juridictions, including Luxembourg), with the aim of implementing a common procedure in terms of tax reporting at a global level.
In order to comply with Directive 2014/107/EU and with the OECD Common Reporting Standard, the European Member States as well as the jurisdictions participating to the CRS legislative framework were required to implement those regulations and apply the new measures since 1 January 2016.
CRS in Luxembourg
On 29 October 2014, Luxembourg has signed a multilateral agreement, which establishes an automatic exchange of tax information between the tax departments of the different partner jurisdictions.
On 18 December 2015, Luxembourg has adopted the law with regard to mandatory automatic exchange of information in the field of taxation, under which Luxembourg's financial institutions is required to identify bank accounts to be communicated on the basis of residency indicia as follows:
an address (for tax purposes, legal or postal) within a CRS jurisdiction;
a telephone number in a CRS jurisdiction (provided there is no Luxembourg telephone number);
a power of attorney or signatory authority granted, on the account, to a person having an address in a CRS jurisdiction;
a standing instruction (other than with respect to a deposit account) to transfer funds to an account maintained by a financial institution in a CRS jurisdiction;
a ”hold mail” instruction or “in care of” address.
CRS at BCEE : Impacts on clients and information exchanged
In this context, Banque et Caisse d’Épargne de l’État, Luxembourg is required to identify the residents of CRS partner jurisdictions, via the collection and reporting of certain information pertaining to the tax resident status of any account holder and/or beneficial owner of certain entities, and to report information concerning them to the competent Luxembourg tax authority, i.e. the Administration des Contributions Directes. The latter shall in turn undertake to transfer, to the competent authorities for the country of residence of the person making a declaration, information with regard to:
identification of the person resident for tax purposes in a CRS jurisdiction (last name, first name, address, date and place of birth, tax identification number);
identification of accounts held (account numbers) and their balances;
financial revenues received (interest, dividends, proceeds from sale, other income).
The first exchange of information took place in 2017 and concerned financial data relating to the financial year 2016.
Banque et Caisse d’Épargne de l’État, Luxembourg must therefore, on behalf of the account holders and beneficial owners of certain entities for which one (or more) indicia may have been detected, obtain a self-certification form resuming their country/ies of residence for tax purposes as well as their tax identification number(s).
In order to do this, Banque et Caisse d’Épargne de l’État, Luxembourg has contacted all clients who enter into the CRS field of application. In the absence of any response (confirmation/objection) from them, Banque et Caisse d’Épargne de l’État, Luxembourg is legally obliged to report their information to any partner jurisdictions for which residence indicia have been found.
In addition, no new business relationship may be established without first obtaining a duly signed self-certification form, showing the country/ies of residence for tax purposes and also the tax identification number(s) of any new client.
If you have any questions relating to the CRS legislative framework, you will find all necessary information on the OECD website: http://www.oecd.org/ctp/exchange-of-tax-information/automatic-exchange-financial-account-information-common-reporting-standard.pdf
For any other questions with regard to the identification of your tax resident status, please contact your tax adviser or the competent tax authority.
Jurisdictions committed on 30 August 2017 to an automatic exchange of information in the context of the CRS
Exchange from 2017: Anguilla, Argentina, Barbados, Belgium, Bermuda, British Virgin Islands, Bulgaria, Cayman Islands, Colombia, Croatia, Curacao, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Greenland, Guernsey, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mauritius, Mexico, Montserrat, Netherlands, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Turks and Caicos Islands, United Kingdom.
Exchange from 2018: Albania, Andorra, Antigua and Barbuda, Aruba, Australia, Austria, Azerbaijan, Bahrain, Belize, Brazil, Canada, Chile, China, Cook Islands, Costa Rica, Ghana, Grenada, Indonesia, Israel, Japan, Kuwait, Lebanon, Malaysia, Marshall Islands, Monaco, New Zealand, Pakistan, Russian Federation, Saint Kitts And Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samos, Saudi Arabia, Singapore, Sint Maarten, Switzerland, Turkey, United Arab Emirates, Uruguay.
Exchange from 2019: Nigeria