Tax: Luxembourg’s finance minister has gone to Dublin and Paris to explain the Grand Duchy’s decision to drop banking secrecy, and to lobby for greater harmonisation of inter-governmental information sharing.
The finance minister, Luc Frieden, has begun an international campaign to present the Grand Duchy’s major policy change, made last week, to ditch banking secrecy.
Frieden (photo, left) met with Angel Gurría (photo, right), secretary general of rich world economic club OECD, in Paris on Monday to “briefly present the Luxembourg government’s decision to introduce, starting on January 1, 2015, the automatic exchange of information for the interest payments made to physical persons resident in an EU country other than Luxembourg,” the Grand Duchy’s finance ministry said in a statement.
“The minister insisted that it is essential that the same standards should be adopted by all financial centres and that the automatic exchange of information should become a global standard adopted at the G20 [group of the world’s largest economies] level or even better at a worldwide level,” the finance ministry said.
He also called for increased cooperation on cross-border corporate taxation. “International agreements on tax matters should not lead companies to completely escape any taxation by the fact that they transfer their profits to zero tax rate jurisdictions,” Frieden said in Paris. However, “in the efforts to ensure effective taxation it is essential to find a balance with the criteria respecting the international aspect of [multinational companies’] business activities to avoid any risk of a return to protectionism and the risk of fragmentation of the internal market.”
On Friday and Saturday, Frieden was in Dublin for informal meetings of the European council of finance ministers, where he said Luxembourg’s personal tax data sharing would be based on Brussels’ 10-year-old cross-border tax system, the EU Savings Directive.
“The minister stressed that Luxembourg fully adheres to the objectives of fighting against tax evasion and fraud and as an international financial centre, it is essential to reflect international standards to ensure the long-term competitiveness of our financial centre in Europe and beyond,” the finance ministry said in a seperate statement issued Sunday morning.
“Indeed the loss of competitiveness of European financial markets compared to their competitors in the world would lead to a rarefication of liquidity and a higher cost of the investment of which Europe will need to restore growth,” the finance ministry said.
Frieden is still negotiating the implementation of FATCA, the US tax evasion law, and many in the investment fund sector believe a deal between Luxembourg and Washington will be reached this autumn.