Luxembourg

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Overall Phase 2 Rating is Largely Compliant

Table of Determinations and Ratings of the Supplemental Review

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.   The new provisions to immobilise bearer shares are recent and have not become fully effective.  Luxembourg should ensure that the new provisions on immobilisation of bearer shares are effectively implemented and monitored.  
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.      
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.      
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.   Important legal changes were made in Luxembourg with respect to exchange of information, as well as changes made with respect to Luxembourg’s practice in EOI. These new obligations and procedures are recent and have not been tested in practice in all circumstances.  Luxembourg should monitor the practical implementation of the recently introduced legal obligations and changes made to the practice, which were made to ensure that the requested information is obtained and exchanged in accordance with the standard in all cases. 
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.   Luxembourg has abolished the appeal right by the New Law on EOI. However, 5 cases based on the old procedure are still pending and in some cases, the requesting jurisdictions had not been informed that the decision was appealed, which prevented them from providing additional information.  Luxembourg should ensure that the requesting partners are informed of the progress of the pending cases. 
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.   With regard to the cases of that relate to a tax period that is after the effective date of the agreement where the information precedes that date, even in instances where the information is otherwise available, Luxembourg has changed its practice during the period under review. However, at the beginning of the period under review, some requests were not answered based on the old policy.  Luxembourg should monitor the implementation of the new practice and assist the jurisdictions that had not received the requested information on this basis, if they wish to send a new request. 
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.     Luxembourg should continue to develop its EOI mechanisms network to the standard.  
Phase 2 Rating Factors Recommendations
Compliant.      
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.   Although the Luxembourg authorities have systematically used the new injunction letter since the entry into force of the New Law on EOI, all injunctions letters sent during the period under review were made based on the old practice.  Luxembourg should monitor the implementation of the new practice to ensure that confidentiality is preserved in all cases. 
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.      
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Largely Compliant.   While progress has been made during the period under review, some peers expressed concerns with delays in receiving certain responses.   Luxembourg should monitor its timeframe for answering requests to ensure that it always replies in a timely manner.  

Earlier self-assessment based annual reports entitled Tax Co-operation 2010: Towards a Level Playing Field are also available.