A protocol amending the double taxation avoidance agreement between the UK and Luxembourg to facilitate the exchange of information for tax purposes between the two governments was signed in London on July 2.
The Protocol was signed by UK Financial Secretary to the Treasury, Stephen Timms and Luxembourg’s Budget Minister, Luc Frieden and follows the Luxembourg government’s announcement on March 13 that it would implement the Organization of Economic Cooperation and Development’s (OECD) standards on information sharing.
The new Protocol updates the exchange of information article of the existing double tax convention to bring it into line with current OECD standards.
HM Revenue and Customs announced that the text of the Protocol will be presented to Parliament for approval “shortly.”
The Protocol will enter into force once both countries have completed their legislative procedures and will take effect for tax years beginning on or after January 1 of the calendar year following its entry into force.
Under paragraph 1 of the Protocol, the competent authorities of the Contracting States shall exchange such information as is “foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Convention.”
Paragraph 2 stipulates that any information received under paragraph 1 by a Contracting State “shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above.”
Paragraph 2 concludes: “Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.”
A comprehensive report in our Intelligence Report series, examining in depth the situation of offshore transparency and secrecy in a number of the most prominent jurisdictions, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report2.asp
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