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Luxembourg Improves Tax Transparency

by Ulrika Lomas,, Brussels

07 January 2013

The Luxembourg government has published a retrospective overview of the key decisions to improve tax transparency and cooperation in tax matters taken by the governing council in 2012.

The Luxembourg government highlights the fact that in 2012 the governing council backed the bill transposing Directive 2011/16/EU dating from February 15, 2011, into national law. The bill pertains to administrative cooperation in tax matters and repeals the existing Directive 77/799/CEE.

Defending the bill at the time, the Luxembourg government underscored that the existing directive governing mutual assistance between the competent authorities of European Union member states in the area of direct taxation is considered to be no longer appropriate to efficiently combat tax evasion and tax fraud within the context of increasing globalization. The new directive builds on the achievements of the existing directive, providing for clearer and more precise rules on administrative assistance among EU member states, the government explained.

The new legislation substantially extends the field of application of administrative assistance, introduces a rule for communications between central liaison bureaus, sets reporting deadlines, introduces other forms of administrative cooperation, and provides for the use of standard forms, formats and channels of communication.

The application of administrative assistance is no longer limited to direct taxation, but extends to all types of taxes and duties, with the exception of value-added tax (VAT), customs duties, excise duties, and social contributions.

Paragraph 10 of the Directive states that: "It is recognized that the mandatory automatic exchange of information without preconditions is the most effective means of enhancing the correct assessment of taxes in cross-border situations and of fighting fraud. To that end, a step-by-step approach should therefore be followed starting with the automatic exchange of available information on five categories and reviewing the relevant provisions after a report by the Commission."

However, paragraph 20 clarifies that a member state "should not refuse to transmit information because it has no domestic interest or because the information is held by a bank, other financial institution, nominee or person acting in an agency or fiduciary capacity or because it relates to ownership interests in a person."

Finally, the governing council gave the green light to the treaty relating to the implementation of the fiscal compact aimed at greater fiscal discipline in Europe.

TAGS: tax | offshore confidentiality | law | banking | Luxembourg | offshore | legislation | offshore banking | banking secrecy | mutual assistance agreement | European Union (EU) | Europe

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