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Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Luxembourg 2011

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The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 90 jurisdictions which participate in the work of the Global Forum on an equal footing. The Global Forum is charged with in-depth monitoring and peer review of the implementation of the standards of transparency and exchange of information for tax purposes.  These standards are primarily reflected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004, which has been incorporated in the UN Model Tax Convention.  The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party. “Fishing expeditions” are not authorised, but all foreseeably relevant information must be provided, including bank information and information held by fiduciaries, regardless of the existence of a domestic tax interest or the application of a dual criminality standard. All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework.  Some Global Forum members are undergoing combined – Phase 1 plus Phase 2 – reviews. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes. All review reports are published once approved by the Global Forum and they thus represent agreed G

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									GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
OF INFORMATION FOR TAX PURPOSES



Peer Review Report
Phase 1
Legal and Regulatory Framework

LUXEMBOURG
      Global Forum
    on Transparency
      and Exchange
 of Information for Tax
Purposes Peer Reviews:
   Luxembourg 2011
                    PHASE 1



                     August 2011
  (reflecting the legal and regulatory framework
                   as at May 2011)
This work is published on the responsibility of the Secretary-General of the OECD.
The opinions expressed and arguments employed herein do not necessarily reflect
the official views of the OECD or of the governments of its member countries or
those of the Global Forum on Transparency and Exchange of Information for Tax
Purposes.


  Please cite this publication as:
  OECD (2011), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer
  Reviews: Luxembourg 2011: Phase 1: Legal and Regulatory Framework, Global Forum on
  Transparency and Exchange of Information for Tax Purposes: Peer Reviews, OECD
  Publishing.
  http://dx.doi.org/10.1787/9789264117884-en



ISBN 978-92-64-11787-7 (print)
ISBN 978-92-64-11788-4 (PDF)



Series: Global Forum on Transparency and Exchange of Information for Tax Purposes: Peer Reviews
ISSN 2219-4681 (print)
ISSN 2219-469X (online)




This document and any map included herein are without prejudice to the status of or sovereignty over any
territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or
area.

Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda.

Revised version, September 2011.
Detail of revisions available at: http://www.oecd.org/dataoecd/22/63/48660501.pdf

© OECD 2011


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                                                                                                 TABLE OF CONTENTS – 3




                                            Table of Contents


About the Global Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
   Information and methodology used for the peer review of Luxembourg . . . . . . .11
   Overview of Luxembourg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
   Recent developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Compliance with the Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

A. Availability of information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
   Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
   A.1. Ownership and identity information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
   A.2. Accounting records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
   A.3. Banking information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
B. Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
   Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
   B.1. Competent Authority’s ability to obtain and provide information . . . . . . . . 50
   B.2. Notification requirements and rights and safeguards. . . . . . . . . . . . . . . . . . 57
C. Exchanging Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
   Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   59
   C.1. Exchange of information mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        60
   C.2. Exchange of information mechanisms with all relevant partners . . . . . . . .                                       66
   C.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       69
   C.4. Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . .                             70
   C.5. Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . .                             71




PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
4 – TABLE OF CONTENTS

Summary of Determinations and Factors Underlying Recommendations. . . . 73

Annex 1: Jurisdiction’s Response to the Review Report . . . . . . . . . . . . . . . . . . 77
Annex 2: List of all Exchange-of-Information Mechanisms in Force. . . . . . . . 78
Annex 3: List of all Laws, Regulations and Other Relevant Material . . . . . . . 82




                PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
                                                                         ABOUT THE GLOBAL FORUM – 5




                            About the Global Forum

          The Global Forum on Transparency and Exchange of Information for Tax
      Purposes is the multilateral framework within which work in the area of tax
      transparency and exchange of information is carried out by over 100 jurisdic-
      tions which participate in the Global Forum on an equal footing.
          The Global Forum is charged with in-depth monitoring and peer review of
      the implementation of the international standards of transparency and exchange
      of information for tax purposes. These standards are primarily reflected in the
      2002 OECD Model Agreement on Exchange of Information on Tax Matters
      and its commentary, and in Article 26 of the OECD Model Tax Convention on
      Income and on Capital and its commentary as updated in 2004, which has been
      incorporated in the UN Model Tax Convention.
          The standards provide for international exchange on request of foreseeably
      relevant information for the administration or enforcement of the domestic tax
      laws of a requesting party. Fishing expeditions are not authorised but all fore-
      seeably relevant information must be provided, including bank information
      and information held by fiduciaries, regardless of the existence of a domestic
      tax interest or the application of a dual criminality standard.
          All members of the Global Forum, as well as jurisdictions identified by
      the Global Forum as relevant to its work, are being reviewed. This process
      is undertaken in two phases. Phase 1 reviews assess the quality of jurisdic-
      tions’ legal and regulatory framework for the exchange of information, while
      Phase 2 reviews look at the practical implementation of that framework. Some
      Global Forum members are undergoing combined – Phase 1 plus Phase 2 –
      reviews. The Global Forum has also put in place a process for supplementary
      reports to follow-up on recommendations, as well as for the ongoing monitor-
      ing of jurisdictions following the conclusion of a review. The ultimate goal is
      to help jurisdictions to effectively implement the international standards of
      transparency and exchange of information for tax purposes.
          All review reports are published once approved by the Global Forum and
      they thus represent agreed Global Forum reports.
          For more information on the work of the Global Forum on Transparency
      and Exchange of Information for Tax Purposes, and for copies of the published
      review reports, please refer to www.oecd.org/tax/transparency.


PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
                                                                              EXECUTIVE SUMMARY – 7




                                 Executive summary

       1.       This report summarises the legal and regulatory framework for
       transparency and exchange of information for tax purposes in Luxembourg.
       The international standard laid down in the terms of reference of the Global
       Forum for monitoring and reviewing progress towards transparency and
       exchange of information, considers the availability of relevant information
       within a given jurisdiction, the ability of the competent authority to access it
       swiftly, and whether the information may be exchanged effectively with its
       partners in information exchange.
       2.       Since its commitment to the international standard of transparency
       and exchange of information, in March 2009, Luxembourg has been very
       active and quick in negotiating exchange of information mechanisms that
       incorporate the full and generally consistent version of article 26 of the
       OECD Model Tax Convention. Luxembourg’s network of bilateral informa-
       tion exchange mechanisms now comprises 68 agreements1, 28 of which2
       contain article 26 in full or equivalent provisions and 25 of which are to the
       standard. Of the agreements concluded since 2009, 21 have already been
       ratified and 17 are in force. The law ratifying the last seven agreements was
       tabled in the Chamber of Deputies on 2 March 2011.
       3.       In three cases – Austria, Panama and Switzerland – the obligations
       stipulated in the recently negotiated protocols are more restrictive than
       those established by the international standard. Luxembourg has neverthe-
       less undertaken steps to ensure that all the mechanisms concluded with its
       partners will lead to an effective exchange of information in accordance with


1.     To which must be added the exchange of information with Cyprus pursuant to the
       EU Mutual Assistance Directive 77/799/EEC
2.     Armenia, Austria, Bahrain, Barbados, Belgium, Denmark, Finland, France,
       Germany, Hong Kong (China), Iceland, Japan, Liechtenstein, Mexico, Monaco,
       Netherlands, Norway, Panama, Portugal, Qatar, San Marino, Spain, Sweden,
       Switzerland, Turkey, United Kingdom and United States. India is covered by a
       most-favoured-nation clause, to which Luxembourg gave effect through the law
       of 31 March 2010.


PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
8 – EXECUTIVE SUMMARY

     the standard. Luxembourg needs to pursue the updating of its network of tax
     treaties so that all its partners can access the information held by financial
     institutions. So, it has proposed to all its treaty partners to update the treaties
     still not meeting the standard.
     4.      In order to conform to the international transparency standard,
     Luxembourg recently introduced legislation, and in particular a new law
     governing access to banking information or information protected by secrecy
     rules. This legislation implements Luxembourg’s international commitments
     into domestic law. Certain aspects of this legislation will require further
     investigations during the course of the phase 2 review.
     5.       Banking information is, in particular, available thanks to the anti-
     money laundering (AML) legislation. The rules according to which informa-
     tion relating to numbered accounts must be kept derive from a grand ducal
     regulation adopted on 1 February 2010. The legal framework surrounding the
     holding of such accounts could also be clarified and will be subject to further
     investigation during the course of the phase 2 review.
     6.       Luxembourg law generally guarantees the availability of information
     on companies and partnerships. All companies and partnerships must register
     with the Register of Commerce and Companies (Registre du commerce et des
     sociétés, “RCS”) within a month of their creation. The law usually requires
     the provision of information to the RCS relating to the shareholders and part-
     ners of these companies and partnerships as well as updates to this informa-
     tion. However sociétés anonymes (SAs, or public limited companies), sociétés
     en commandite par actions (Se.c.as, or partnerships limited by shares), and
     sociétés européennes (SE, European companies) are themselves required to
     keep information on the holders of registered shares, through a register of
     shares.
     7.       Luxembourg law authorises the issuance of bearer securities by SAs,
     S.e.c.as, and SEs, but there are no mechanisms in place to ensure the avail-
     ability of information on holder of bearer shares in all circumstances. The
     fact that investment companies (in particular SICAV and SICAF3) are author-
     ised to issue shares in bearer form constitutes, in this context, a loophole in
     the legal and regulatory framework in Luxembourg. Therefore, element A1
     is assessed as not being in place.
     8.       Information on other relevant entities and arrangements is generally
     available when the information exchange takes place under a revised treaty.
     Lastly, Luxembourg legislation guarantees the availability of accounting
     information. In fact, there are legal obligations applicable to any business
     entity as well as to trusts, fiducies and foundations.

3.   SICAV: open-end investment company; SICAF: close-end investment company.


                PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
                                                                              EXECUTIVE SUMMARY – 9



       9.       Luxembourg Phase 2 Peer Review, scheduled for the second half of
       2012, will consider the practical application by its competent authorities of the
       legal framework governing transparency and information exchange. In the
       meantime, a follow up report on the steps undertaken by Luxembourg to answer
       the recommendations made in this report should be provided to the PRG within
       six months after the adoption of this report.




PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
                                                                                    INTRODUCTION – 11




                                        Introduction


Information and methodology used for the peer review of Luxembourg

       10.      The assessment of the legal and regulatory framework of Luxembourg
       was based on the international standards for transparency and exchange of
       information as described in the Global Forum’s Terms of Reference, and was
       prepared using the Global Forum’s Methodology for Peer Reviews and Non-
       Member Reviews. The assessment was based on information available to the
       assessment team including the laws, regulations, and exchange of informa-
       tion arrangements in force or effect as at the end of May 2011, Luxembourg’s
       responses to the Phase 1 questionnaire and supplementary questions, informa-
       tion supplied by partner jurisdictions and other relevant sources.
       11.      The Terms of Reference breaks down the standards of transparency
       and exchange of information into 10 essential elements and 31 enumer-
       ated aspects under three broad categories: (A) availability of information;
       (B) access to information; and (C) exchange of information. This review
       assesses Luxembourg’s legal and regulatory framework against these ele-
       ments and each of the enumerated aspects. In respect of each essential ele-
       ment a determination is made that: (i) the element is in place; (ii) the element
       is in place but certain aspects of the legal implementation of the element need
       improvement; or (iii) the element is not in place. These determinations are
       accompanied by recommendations for improvement where relevant. A sum-
       mary of the findings against those elements is set out on pages 73-75 of this
       report.
       12.      The assessment was conducted by a team which consisted of two
       expert assessors and one representative of the Global Forum Secretariat: Ms
       Shauna Pittman, Counsel, Canada Revenue Agency and Ms Silvia Allegrucci
       civil servant in the Department of Finance for Italy and Mr. Rémi Verneau
       from the Secretariat of the Global Forum. The assessment team has assessed
       the Luxembourg legal and regulatory framework in the field of transpar-
       ency and exchange of information and its relevant exchange of information
       mechanisms.



PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
12 – INTRODUCTION

Overview of Luxembourg

      13.     Landlocked between Germany, Belgium, and France, Luxembourg is
      one of the smallest states of Western Europe in terms of area (2600 km²) and
      population (500,000). With a total GDP of nearly EUR 40 billion and a per
      capita GDP of nearly EUR 80 000, it has one of the highest standard of living
      amongst the OECD member countries.
      14.      Formerly dependent on the steel industry, the Luxembourg economy
      is today characterised by the importance of its financial sector, which in
      2008 represented 30% of GDP, 12% of employment and 20% of tax revenues.
      Other features of the Luxembourg labour market are its low unemployment
      rate (6.1%), its high employment rate (with a workforce of 370 000) and its
      openness, with 150 000 cross-border workers. Belgium, Germany and France
      account for 60% of Luxembourg’s exports and more than 75% of its imports.
      The European Union (EU) as a whole accounts for 85% of Luxembourg’s
      exports and nearly 95% of its imports.
      15.      Luxembourg is a founding member of the EU and the Economic
      and Monetary Union of countries forming the euro area. The capital city of
      Luxembourg is also the seat of the Court of Justice of the European Union,
      the European Court of Auditors and several European administrations.
      Luxembourg is a founding member of the OECD and the UN. It is also a
      member of other international organisations such as the IMF and the WTO.
      As a member of the OECD, Luxembourg takes part in the Global Forum and
      its Peer Review Group.

      General information on the legal and fiscal system

      Legal system
      16.      Luxembourg (or the Grand Duchy of Luxembourg) is a constitutional
      monarchy. The unicameral legislature consists of the Chamber of Deputies,
      which has 60 members elected by universal suffrage for a five-year term. The
      executive branch comprises the Grand Duke as Head of State and the gov-
      ernment led by the Prime Minister. The Grand Duke promulgates laws and
      issues regulations and decrees for execution of laws. Luxembourg has three
      official languages, Luxembourgish, French and German.
      17.     The Luxembourg legal system is rooted in Roman and Germanic law
      known as civil law. International treaties that have been approved by law as
      well as European legislation stand at the pinnacle of the legal hierarchy. The




                PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
                                                                                    INTRODUCTION – 13



       courts have consistently held4 that international law takes precedence over
       domestic law, including the Luxembourg Constitution. In domestic law, the
       Constitution of 17 October 1868 is at the summit of the pyramid, followed by
       laws, grand ducal regulations, ministerial or government-in-council regula-
       tions, municipal (“communal”) regulations, and circulars and memorandums,
       by descending order of hierarchy.
       18.     The legal value of circulars depends on the issuing authority. Circulars
       issued by administrative authorities, such as revenue authorities, only provide
       guidance relating to the legal and regulatory provisions, while circulars issued
       by supervisory authorities, such as financial and insurance sectors supervisory
       authorities, are binding on the persons subject to this supervision5.
       19.      The Luxembourg legal system is divided into a judicial jurisdiction
       for civil, criminal and commercial matters and an administrative jurisdiction
       for administrative matters. While administrative jurisdictions are competent
       for the matters relating to direct taxations, judicial jurisdictions deal with
       indirect taxations as well as recovery litigations (whether relating to direct or
       indirect taxations). There is also a Council of State, an advisory body com-
       prising 21 members appointed by the Grand Duke, which renders its opinion
       on legislative bills and proposals as well as on draft grand ducal regulations.

       Taxation system
       20.    One feature of the Luxembourg tax system is that it embraces three
       tax administrations:
                the Direct Tax Administration (Administration des contributions
                directes, ACD), which assesses and collects individual income tax,
                corporate income tax (impôt sur les collectivités) and the municipal
                business tax;
                the Stamp Duties and State Properties Administration (Administration
                de l’enregistrement et des domaines, AED) is responsible for assess-
                ing and collecting VAT, stamp duties and succession taxes;and
                the Customs and Excise Administration (Administration des Douanes
                et des Accises, ADA) is responsible for excise duties, consumption
                taxes on alcohol, and the vehicle tax.
       21.     These three administrations have jurisdiction in the field of exchange
       of information regarding taxes for which they are responsible.

4.     Superior Court of Justice, Decision of 8 June 1950; Superior Court of Justice,
       Decision of 14 July 1954; Council of State, Decision of 21 November 1984.
5.     To the extent that such authorities may be allowed to apply sanctions. This has
       been the case for the financial sector supervisory authority since 2010.


PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
14 – INTRODUCTION

      22.     Individuals and legal persons resident in Luxembourg are taxable
      on their worldwide income. All natural persons who have their domicile or
      habitual abode in Luxembourg are considered residents. Legal persons are
      considered to be residents if they have their statutory headquarters or their
      central administration (“effective place of management”) in Luxembourg.
      Non-resident individuals or legal persons are taxed on their income from
      Luxembourg sources.
      23.     As a member of the European Union, Luxembourg participates in the
      common VAT system. The normal rate of tax is 15%, and the reduced rate
      is 6%. The taxation of occupational incomes of individuals is progressive,
      with a maximum rate of 39%. Corporations (collectivités, i.e. companies
      and legal persons) are subject to profit tax at a rate of 20% on profits up to
      EUR 15 000, and 21% above this amount. They are also subject to the munici-
      pal business tax at a rate of 3% multiplied by the municipal rate (200-400%).
      24.     In 2008, total tax revenues amounted to 38% of GDP, with the VAT
      representing 22% of tax revenues, the personal income tax 20%, and the cor-
      poration tax 30%. As indicated above, the financial system alone produces
      20% of tax revenues in Luxembourg.
      25.      Luxembourg’s network of bilateral mechanisms for the exchange of
      information today covers 68 jurisdictions, all of which are covered by double
      taxation treaties. Since March 2009, when it gave its formal commitment to
      implement international standards of transparency and exchange of informa-
      tion, Luxembourg has only concluded agreements and protocols that include
      the full version of article 26 of the OECD Model Tax convention, particularly
      as it concerns the exchange of information held by banks.
      26.     As a member of the European Union, Luxembourg also exchanges
      information in accordance with Directive 77/799/EEC concerning mutual
      assistance in the field of direct taxation, the revision of which was recently
      adopted by the European Union Council.

      Overview of commercial laws and other relevant factors for
      exchange of information
      27.      At the end of 2010, the Luxembourg financial sector included 147
      banks with balance sheets totalling nearly EUR 800 billion; 111 investment
      companies, with balance sheets totalling EUR 1.6 billion; 112 other “finan-
      cial sector professionals” with balance sheets totalling EUR 21 billion; 3 652
      undertakings for collective investment managing assets of EUR 2 100 billion;
      243 venture capital/private equity companies (SICAR); 26 securitization
      organisms, and 15 pension funds.




                PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
                                                                                    INTRODUCTION – 15



       28.     The financial sector is regulated by the Financial Sector Act of 5 April
       1993 and various specific laws regarding each category of professionals con-
       cerned. The Financial Sector Supervisory Commission (“CSSF”), which oper-
       ates under the authority of the Minister of Finance, is the competent authority
       for the prudential supervision of credit institutions, other financial sector
       professionals, undertakings for collective investment, pension funds taking the
       form of SEPCAV6 and ASSEP7, approved securitization organisms, SICARs,
       paying institutions, postal financial services proposed by the mail and telecom-
       munications company, financial instruments markets, including its operators,
       and auditors. The CSSF also vets the license applications of banks and other
       financial sector professionals prior to approval by the Minister of Finance.
       29.     The insurance sector is governed by the Insurance Sector Act of
       6 December 1991 and regulated by the Insurance Commission (CAA), which
       conducts prudential supervision. The CAA examines license applications
       for insurance companies, for granting by the Minister of Finance. At the
       end of 2009, the Luxembourg insurance sector included 97 direct insurance
       companies and 251 reinsurance companies, with balance sheets totalling
       EUR 140 billion.
       30.     Notaries (limited in number to 36), bailiffs, attorneys (nearly 1 600),
       auditors (nearly 500), accountants (nearly 1 400) and real estate agents
       (nearly 1 000) in Luxembourg are all regarded as constituting non-financial
       professions and enterprises under anti-money laundering legislation and are
       required, pursuant to this legislation, to perform customer due diligence8.
       31.     Luxembourg’s anti-money laundering (AML) legislation is based
       primarily on the instruments provided by the European Union. The FATF
       (Financial Action Task Force) evaluation published in February 2010 indi-
       cated that Luxembourg legislation could be improved in terms of how pro-
       fessionals covered by AML legislation identify their customers. As well,
       the simplified due diligence obligations stipulated by legislation were found
       not compliant with FATF standards. In response to these observations,
       Luxembourg has amended its AML regulatory framework with publication,
       on 1 February 2010, of a grand ducal regulation and adoption, on 27 October
       2010, of a new law strengthening the legal framework for combating money
       laundering and the financing of terrorism. In particular, the definition of
       beneficial ownership has now been amended and rules regulating the opening
       and holding of numbered accounts are now included in Luxembourg law (see
       below further developments under section A.1.3).

6.     Open-end Pension Savings Company.
7.     Pension Savings Association
8.     Figures as of 31 December 2009. Cf. FATF report on Luxembourg published on
       19 February 2010.


PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
16 – INTRODUCTION

Recent developments

      32.      Luxembourg has signed 28 agreements and protocols that comply
      with article 26 of the OECD Model Tax Convention. The list of agreements
      under negotiation is publicly available on the Internet site of the ACD (see list
      of negotiations under way, section 3.2 below). 20 of these agreements were
      ratified by the law of 31 March 2010 which also introduced a new procedure
      for access to information. Four of these treaties9 are still waiting ratification
      by Luxembourg’s counterpart,
      33.     A new EU Council Directive on Administrative Cooperation in the
      Field of Direct Taxation, consistent with the international standard on trans-
      parency and exchange of information, was adopted by the Council of the
      European Union on 15 February 2011 and will come into effect on 1 January
      2013. Upon its entry into force, this text will allow Luxembourg to exchange
      information in accordance with the standard with 15 more jurisdictions.
      34.    During the course of 2011Luxembourg will be ratifying seven new
      double taxation treaties or protocols amending a treaty already in force
      (Barbados, Hong Kong (China), Japan, Panama, Portugal, San Marino and
      Sweden). The draft law ratifying those agreements was tabled in the Chamber
      of Deputies on 2 March 2011.




9.    Belgium, Mexico, Turkey, and the US.


                PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
                               COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 17




                      Compliance with the Standards




A. Availability of information



Overview

       35.      Effective exchange of information requires the availability of reliable
       information. In particular, it requires information on the identity of owners
       and other stakeholders as well as accounting information on the transactions
       carried out by entities and other organisational structures. Such information
       may be kept for tax, regulatory, commercial or other reasons. If information
       is not kept or the information is not maintained for a reasonable period of
       time, a jurisdiction’s competent authority may not be able to obtain and pro-
       vide it when requested. This section of the report assesses the adequacy of
       Luxembourg’s legal and regulatory framework on availability of information.
       36.    Luxembourg has a legal and regulatory framework according to which
       information on the identity of shareholders of companies and partnerships
       must generally be available.
       37.      All companies and partnerships are required to register themselves
       with the Register of Commerce and Companies (“RCS”) in the month follow-
       ing their incorporation (cf. Law of 19 December 2002). Articles of incorpora-
       tion must be provided for registration and are published either totally or in the
       form of extracts. Cooperative companies (sociétés coopératives) are required
       to disclose in their statutes the names of their members and must provide to
       the RCS any amendment made to these statutes. The law requires limited
       liability companies (sociétés à responsabilité limitée, S.à.r.ls), general part-
       nerships (sociétés en nom collectif, S.e.n.cs), limited partnerships (sociétés



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      en commandite simple, S.e.c.ss) and partnerships under civil law to report
      the names of their shareholders and partners upon registration and to update
      that information thereafter in the RCS. Public limited companies (sociétés
      anonymes, SAs), European companies (SEs) and partnerships limited by
      shares (sociétés en commandite par action, S.e.c.as) are not bound by this last
      obligation but must keep a register of registered shares.
      38.     Luxembourg legislation authorises the issuance of bearer securities
      by SAs, SEs, and S.e.c.as, including investment companies when they take
      one of these three forms of companies. The mechanisms in place do not guar-
      antee that information on their holders will be available in all circumstances.
      39.      Luxembourg is signatory to the Hague Convention on trusts and their
      recognition. A trust may be administered from Luxembourg, or assets located
      in Luxembourg may be held through a trust. Luxembourg also authorises the
      creation of fiducies. The law requires deeds of trust or fiducie to be registered
      when they cover real properties, boats or aircraft. When there is an exchange
      of information pursuant to information exchange mechanisms that comply
      with the complete version of article 26 of the OECD model convention, the
      trustee or fiduciary ( fiduciaire) is required to provide full information on
      the trust or fiducie. Lastly, the AML legislation adopted by Luxembourg,
      and recently updated, requires service providers to retain information on the
      settlors (i.e. creators) and beneficiaries of trusts and fiducies.
      40.     Luxembourg foundations are always created for a philanthropic, usu-
      ally charitable, purpose, and must be authorised by the Minister of Justice.
      The conditions for operation of these entities require that information on their
      founders and beneficiaries be available.
      41.      All relevant entities and arrangements, companies, partnerships,
      foundations and fiducies must keep accounting records and substantiating
      documentation for 10 years, pursuant to accounting regulations. This ensures
      the availability of such information and allows the entities’ transactions to be
      traced for purposes of establishing their financial positions and preparing their
      financial statements.
      42.      Pursuant to AML legislation, Luxembourg banks and financial insti-
      tutions are required to perform customer due diligence and to hold records of
      transactions conducted by their current customers for a period of at least five
      years. The rules under which information relating to numbered accounts must
      be kept derive from a grand ducal regulation adopted on 1 February 2010.
      The legal framework surrounding the holding of such accounts could also be
      clarified and will be subject to further investigation during the course of the
      phase 2 review.




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A.1. Ownership and identity information
 Jurisdictions should ensure that ownership and identity information for all relevant
 entities and arrangements is available to their competent authorities.


       Companies (ToR10 A.1.1)
       43.     Company law is organised in Luxembourg by the law of 10 August
       1915, as amended. Pursuant to that law, five types of companies can be cre-
       ated in Luxembourg:
                the société anonyme (SA), or “public limited company”, articles 23 ff of
                the law of 10 August 1915, is a company the capital of which is divided
                into shares and which is constituted by one or more persons who are
                liable vis-à-vis the company and third parties only to the extent of their
                invested capital. The statutes of these companies and any amendments
                thereto must be notarised to be valid (“on pain of nullity”). Their capi-
                tal (minimum EUR 30 986.69) must be fully subscribed. There were
                51 000 SAs registered in Luxembourg on 31 December 2010;
                the Société Européenne (SE) or “European Company” is a company
                with a European dimension, and does not strictly fall under the ter-
                ritorial scope of the legislation relating to domestic companies in
                force in the country where it has been incorporated. European com-
                panies are regulated by Council Regulation (EC) No 2157/2001 of
                8 October 2001 on the Statute for a European company (SE), which
                was transposed into Luxembourg law by the law of 25 August 2006.
                Pursuant to Article 10 of the EU Regulation, the laws that apply
                to SEs are those that apply to public limited companies (SAs). The
                minimum capital for a SE is EUR 120 000. 20 SEs were registered in
                Luxembourg at 31 December 2010. All rules hereafter described for
                SAs apply to European companies;
                the Société en commandite par actions (S.e.c.a) or “partnership
                limited by shares”, articles 102 ff of the law of 10 August 1915, is
                formed between one or several partners who are jointly and sever-
                ally liable (the active partners) and one or more limited shareholders
                whose responsibility is limited to the amount of their contributions
                (the limited-liability partners). The statutes of these companies and
                any amendments thereto must be notarised to be valid. The rules
                applicable to SAs apply to S.e.c.a, unless otherwise provided by law.
                Ownership and record keeping requirements for SAs and S.e.c.as are

10.    Terms of Reference to Monitor and Review Progress towards Transparency and
       Exchange of Information.


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              the same. There were nearly 900 S.e.c.as registered in Luxembourg
              on 31 December 2010;
              the Société à responsabilité limitée (S.à.r.l) or “limited liability
              company”, articles 179 ff of the law of 10 August 1915, is formed by
              one or more members, to a maximum of 40, whose liability is lim-
              ited to their contributions. The statutes of these companies and any
              amendments thereto must be notarised to be valid. The shares are
              represented by non negotiable securities which may be transferred
              only under the specific conditions stipulated by law. The capital (mini-
              mum EUR 12 394.68) must be fully subscribed. There were more than
              46 000 S.à.r.ls in Luxembourg on 31 December 2010; and
              the Société coopérative or “cooperative company”, articles 113 ff
              of the law of 10 August 1915, has at least seven members, whose
              number and contributions can vary and whose shares are unavailable
              to third parties. There were 133 cooperative companies registered in
              Luxembourg on 31 December 2010.

      Publicity and registration formalities
      44.     By article 27 of the law of 10 August 1915, the deed establishing an
      SA must indicate the form of the company and its name, its headquarters, its
      business purpose, and the identity of the natural or legal person or persons
      signing the deed. The same rules apply to SEs and S.e.c.as and, pursuant to
      Article 184 of the law, to S.à.r.ls. The deed constituting a cooperative com-
      pany, to be valid, must state the name of the company, its headquarters, its
      business purpose, and a specific naming of members (article 115).
      45.     The procedures for registering companies in Luxembourg are stipu-
      lated by the law of 19 December 2002. Article 1 provides that all companies,
      as well as the branches of foreign companies, must be registered with the
      Register of Commerce and Companies (RCS). The RCS is a single registry
      operating under the authority of the Minister of Justice. It can be consulted
      by the public, and this can be done via Internet. All documentation deposited
      with the RCS is kept for a period of 20 years after the person’s registration is
      deleted (cf. article 23 of the Grand Ducal Regulation of 23 January 2003).
      46.     Pursuant to article 6 of the law of 19 December 2002, any commer-
      cial company must apply for registration, for which it must produce its deed
      of incorporation and indicate its corporate name, its legal form, the exact
      address of its headquarters, and the amount of its capital. All companies
      must also indicate the name of the persons authorised to manage, administer
      and sign for the company as its legal agents. SAs, SEs and S.e.c.as are not
      required to provide the names of their members for registration. On the other
      hand, S.à.r.ls must report the identity of their members: full name, date and


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       place of birth in the case of natural persons, and name, legal form and address
       of legal persons.
       47.     Registration in the RCS, pursuant to article 15 of the law of 19 Decem-
       ber 2002, and provision of the statutes to the RCS, pursuant to article 9 (1) of
       the law of 10 August 1915, must take place within the month after the date of
       the finalised statutes. This Article also provides that any person may inspect
       the documents deposited with the RCS. Furthermore, within two months fol-
       lowing their deposit with the RCS, those documents are published in section
       C of the Mémorial, the official gazette of Luxembourg (article 9(3) of the law).
       48.      Article 11 of the law of 10 August 1915 provides that, to be valid, any
       amendment to company instruments must be made in the form required by
       its constitutive instrument. Thus, amendments to the deeds of SA, S.e.c.a, SE
       and S.à.r.l must be notarised. Article 11 bis §2 requires that any deeds amend-
       ing provisions that by law must be deposited and published be deposited with
       the RCS and published in the Mémorial C.
       49.     The instruments of SA and S.e.c.a do not necessarily contain infor-
       mation on their shareholders. This information is not required for registration
       and consequently is not updated in the RCS. Information on the members of
       cooperative companies is an integral part of their constitutive instrument. It
       must therefore be updated in the RCS under the same conditions as those for
       deposit of the original deed.
       50.     Article 11 bis (2) 3 of the law of 15 August 1915 provides that all
       changes relating to S.à.r.ls’ shareholders must also be disclosed and pub-
       lished. These changes must be reported to registration authorities in the
       month following the changes (article 9 of the law). According to the law of
       19 December 2002 (article 1, paragraph 3) these changes are recorded in the
       RCS, published in the Memorial C and kept by registration authorities in the
       folder of the company concerned.

       Register of registered shares
       51.       SAs, SEs, and S.e.c.as must keep a register of registered shares at their
       corporate offices, containing a full name of each shareholder, the number of shares
       held, and the date of transfer of the shares, with the identity of their new holder
       (articles 39 and 40 of the law of 10 August 1915). If registered shares are converted
       into bearer shares, the date of the conversion must be recorded in the register.
       52.      Pursuant to article 185 of the same law, each S.à.r.l must keep, at its
       company headquarters, a register containing complete and authentic copies
       of the constitutive instrument of the company, of the instruments amending
       that instrument, as well as a list of the names, professions and addresses of
       the members, and a record of transfers of corporate units. Every member may



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      inspect the register. Transfers of shares in an S.à.r.l. may be confirmed by a
      notary or in a private document (article 190). Shares may not be transferred
      inter vivos to non-members without the agreement of the general assembly of
      members representing at least three-quarters of the company’s capital.
      53.      Cooperative societies must also maintain a register mentioning the
      identity of their members (name, profession and address) (article 118 of the
      law). An updated list must be filed every six months with the RCS (arti-
      cle 133), and may be consulted by the public (article 135).

      Tax requirements
      54.      Companies are required to register with the direct taxation admin-
      istration (ACD), pursuant to §165d of the General Taxation Act (“LGI”).
      This provision requires persons others than natural persons to report to the
      competent local taxation office “facts that, in tax matters, create, modify or
      end a personal obligation to pay taxes”. For this reason, in practice, once a
      company’s statutes have been published in Mémorial C, the local taxation
      office registers the company and sends it an opening declaration.
      55.    On this occasion, companies may be asked to provide, on request,
      information concerning the company headquarters, its mailing address, the
      names and addresses of recent directors and managers and of members or
      shareholders. However, as this information is already publicly available in
      Memorial C, it is requested by ACD only to the extent that there are remain-
      ing uncertainties as regards its accuracy.
      56.      Companies subject to the VAT must also register with the indirect
      taxation administration (AED) and file a declaration with the local tax office
      when they begin business, or when there is a change or cessation in activity
      in the manner and form prescribed by the administration (article 61 of the
      VAT law). The registration form requires that the information include the
      company name, its legal form, the date of publication in Mémorial C, the type
      of activity or the names and addresses of shareholders and members.
      57.      As persons subject to corporate income tax, companies are required to
      submit an annual return to the ACD by 31 May of each year (articles 116 and
      162 of the Income Tax Act) in the manner provided for by the Grand Ducal
      regulation of 13 mars 1970 and on the form established by the administration
      (article 7 of the regulation). Tax form No. 500 (resident companies) requires
      communication of information including the names of shareholders holding at
      least 10 % of the company’s capital. Companies are required to disclose such
      information which is necessary for the application of some fiscal provisions,
      in particular the exemption of withholding tax on dividends from Luxembourg
      sources (article 166 of the income tax law) and the taxation of the benefits
      granted to their shareholders as hidden distributions of benefits (article 164 of


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       the law). In addition, the tax return indicates that, amongst others, the infor-
       mation that must be submitted upon the filing of this declaration includes the
       attendance list and the minutes of the general meeting of shareholders.

       Obligation to publicise major holdings in the company
       58.      Pursuant to EU regulations (Directive 2004/109/EC of 15 December
       2004), on 11 January 2008 Luxembourg adopted a law on transparency of
       information on the issuers of securities. That law establishes the obligation
       regarding notification of major shareholdings in issuing bodies whose shares
       are eligible for trading on a regulated stock exchange (primarily SA, SE and
       S.e.c.a) and where Luxembourg is the member state of origin.
       59.      Pursuant to articles 8 to 14 of this law, any natural person or legal
       entity that directly or indirectly acquires securities conferring on it a voting
       rights percentage of 5% or more of all voting rights must advise the issuer
       and the CSSF. Such notification is also required when the percentage of
       voting rights reaches or exceeds 10%, 15%, 20%, 33 2/3%, 50% and 66 2/3%.
       The issuing company must immediately publish any change in the voting
       rights attached to the different categories of shares.
       60.      The effect of this obligation is that all shareholdings in excess of 5%
       in listed Luxembourg companies must be publicly disclosed.

       Professionals providing registered offices
       61.      The law of 31 May 1999 establishes specific rules governing profes-
       sionals providing registered offices to companies. Article 1 of that law provides
       that only a credit institution or another professional of the financial sector and
       the insurance sector, an attorney-at-law (“avocat à la Cour”), a European
       lawyer, an external auditor, an approved external auditor, and an accountant
       can provide registered offices to companies.
       62.      Under article 2 of that law, such agents must know the real identity
       of the members of the bodies of the company registered with it and must hold
       the relevant documentation and keep it up to date. That information must be
       retained for at least 5 years after the relations between the company and the
       agent have ceased.
       63.      As service providers, agents providing registered offices are also
       subject to the rules contained in Luxembourg’s AML legislation. In particular,
       this legislation provides that all professionals providing services to companies,
       partnerships and fiducies fall specifically within the scope of application of the
       AML law when they provide registered offices or an administrative or postal
       address to third parties (article 2 of the law of 12 November 2004). Pursuant
       to article 3 of that law, these service providers must identify their clients and


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      retain information on the identity of their clients and beneficial owners, as
      well as all information regarding transactions conducted, for five years (see
      below). A credit institution or another professional of the financial sector and
      the insurance sector, an external auditor, an approved external auditor, and an
      accountant are in all cases professionals covered by AML/CFT legislation and
      required to perform CDD towards their customers in all circumstances.

      Foreign companies
      64.     Foreign companies that have their principal establishment in Luxem-
      bourg (“effective seat of management”) are subject to the same formalities as
      companies established under Luxembourg law (cf. article 158 of the law of
      10 August 1915).
      65.      These companies are required to register with the RCS in Luxembourg,
      following the same rules as those that apply to Luxembourg companies; they
      must register with the ACD, and they must submit annual tax returns to the
      ACD (model No 500, “resident companies”). They are also required to keep a
      register of shares in the same conditions as apply to Luxembourg companies.
      Further, they can issue bearer shares, if so allowed pursuant to the legislation
      under which they are incorporated.
      66.    Consequently, information on these companies is available under the
      same conditions as those described above for Luxembourg companies.

      Investment companies, financial holding companies (SOPARFIS) and
      family wealth management companies (SPFs)

      Investment companies (SICAV, SICAF, and SICAR)
      67.      A SICAV, according to the law of 17 December 2010, is an open-
      ended (i.e. share capital not fixed) investment company which may, in princi-
      ple, issue new shares at any time, and shareholders may redeem their shares.
      This type of company must adopt the form of an SA or an SE (art. 25 and 32
      of the law) and be approved by the CSSF. The minimum capital upon forma-
      tion is EUR 31 000 but a threshold of EUR 1 250 000 must be reached six
      months after the approval by the CSSF at the latest. A SICAV is subject to the
      rules that apply to SA, unless the law provides otherwise (art. 25). There were
      1 500 SICAV registered on 31 December 2010.
      68.       SICAFs are also governed by the law of 17 December 2010. These
      are closed-ended (i.e. share capital is fixed) investment companies. This
      type of investment company can take the form of an SA, an SE, a S.e.c.a, an
      S.à.r.l, an S.e.c.s (limited partnership, see below section A.1.3 of this report),
      an S.e.c.n (general partnership, see below section A.1.3 of this report) or a



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       cooperative company and be approved by the CSSF. The minimum capital
       upon formation is EUR 31 000 but a threshold of EUR 1 250 000 must be
       reached six months after the agreement by the CSSF, at the latest. The rules
       that apply to SA, SE, S.e.c.a, S.à.r.l, S.e.c.s, S.e.c.n and cooperative compa-
       nies apply to a SICAF in the absence of any contrary requirements in the law.
       69.       A SICAR (investment company in risk capital) is, according to the
       law of 15 June 2004, an investment company taking the form of an SA, an
       S.à.r.l, a S.e.c.a or an S.e.c.s (limited partnership, see below section A.1.3 of
       this report), the purpose of which is to invest in private equity. Before operat-
       ing, a SICAR must be approved by the CSSF. Only institutional and profes-
       sional investors can invest in a SICAR (minimum investment: EUR 125 000).
       The minimum capital is EUR 1 000 000 and must be reached in the 12
       months following the approval granted to the investment company. Unless
       otherwise provided by the Law of 15 June 2004, SICARs are subject to the
       rules that apply to companies after which they are modelled.
       70.      The rules regarding the establishment of companies under the company
       law of 10 August 1915 apply to SICAVs, SICAFs and SICARs. Accordingly,
       investment companies must be registered in the RCS and provide their deeds
       of incorporation including the identity of the natural or legal persons signing
       the deed as well as the identity of their representatives. For SICARs taking the
       form of an S.e.c.s, there is no obligation to disclose the identity of the partners
       (art. 4 of the law of 15 June 2004). These investment companies can issue
       bearer shares when they take the form of an SA, a SE, or S.e.c.a. Luxembourg
       has nevertheless advised that SICARs mainly issue registered shares since
       SICARs’ securities can only be held by some specific categories of investors
       whose legal status must be checked systematically.
       71.      For tax purposes, SICAFs and SICAVs are not subject to corporate
       income tax (art. 173 of the law of 17 December 2010) but to an annual subscrip-
       tion tax of 0.05% or in specific cases 0.01%, of the company’s assets. These
       companies are therefore required to submit a declaration for payment of this tax
       to the AED, but are not subject to other tax requirements in terms of registra-
       tion by tax authorities or declaration of income. Dividends paid by investment
       companies, when paid to foreign investors, are exempt from withholding tax.
       72.     SICARs are subject to corporate and communal taxes. Income from
       transferable securities and capital gains are tax exempt. As entities liable and
       subject to taxes, SICARs must be registered by the ACD. All dividends paid
       by a SICAR to its investors are not subject to any withholding tax and these
       dividends are not subject to tax in Luxembourg.




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      Financial holding companies (“SOPARFI”)
      73.     “SOPARFIs” do not constitute a specific type of company. These
      are SAs, S.e.c.as or S.à.r.ls that are regulated by the general law applicable to
      companies (law of 10 August 1915) and whose purpose is to manage holdings
      in a group of companies but that can also have a commercial activity, directly
      or indirectly attached to holding management.
      74.      As previously mentioned in paragraphs 43 to 49, all SAs, S.e.c.as
      or S.à.r.ls must be registered in the RCS and provide, to this extent (i) the
      deed of incorporation including the identity of the natural or legal person
      or persons signing the deed as well the identity of their representatives and
      (ii) when these companies take the form of a S.à.r.l the identity of all mem-
      bers (information further required to be updated). “SOPARFIs” are also
      required to keep a register of registered shares in the same conditions as those
      applicable to SAs, S.e.c.as and S.à.r.ls. When these companies take the form
      of an SA or an S.e.c.a they can issue bearer shares.
      75.      As a “SOPARFI” does not constitute a specific type of company, for
      tax purposes, it is subject to general taxation rules provided for by Luxembourg
      legislation for companies. A “SOPARFI”:
               is subject to corporate and communal taxes at the normal rate on its
               income. It can, under conditions, be tax exempt on the dividends received
               from companies in which it has a substantial interest (article 166 LIR);
               is not taxed on the capital gains resulting from the disposition of holdings;
               is subject to a 15 % withholding tax on the dividends paid subject to
               double taxation conventions concluded by Luxembourg and the EU
               Parent Companies Directive; and
               is subject to corporate, communal and wealth taxes and VAT for all
               its commercial activities.
      76.     “SOPARFIs” must register with the ACD and file an annual tax
      return with this administration.

      Family wealth management companies (SPF)
      77.      The Luxembourg law of 11 May 2007 allows the creation of “family
      wealth management companies” (sociétés de gestion de patrimoine familial,
      SPF). These entities do not constitute a new type of company as such; they take the
      form of an S.à.r.l, an SA, an S.e.c.a, or a cooperative company (article 1 of the law):
               the exclusive purpose of which is to acquire, hold, manage and realise
               financial assets;




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                the shares of which are reserved to investors who are individuals
                or entities acting in the interest of the private wealth of one or more
                individuals, or an intermediary acting for the account of the investor
                representing individuals; and
                the statutes of which provide explicitly that it is subject to the provi-
                sions of the law of 11 May 2007.
       78.      2 400 SPFs were registered on 15 June 2011.
       79.      The rules for registering an SPF are the same as those for the type of
       company after which it is modelled. Therefore, SPFs must be registered in the
       RCS and provide, to this extent, the deed of incorporation, the identity of the
       natural or legal person or persons signing the deed as well as the identity of
       their representatives and, when these companies take the form of an S.à.r.l the
       identity of all members (information further required to be updated). These
       companies, when they take the form of an SA or an S.e.c.a can issue bearer
       shares. They are also required to keep a register of registered shares under the
       same conditions as those applicable to SAs, S.e.c.as and S.à.r.ls.
       80.     On the other hand, there are special tax rules applicable to these
       companies. It is specified that SPFs are not subject to corporate income tax
       but to an annual subscription tax of 0.25% of the company’s capital, with a
       minimum of EUR 100 and a maximum of EUR 125 000. The SPF is therefore
       required to submit a declaration for payment of this tax, but it is not subject
       to other tax requirements in terms of registration or declaration of income.
       Controls to which an SPF is subject are designed to search for and audit facts
       concerning the fiscal status and elements necessary to ensure and validate the
       correct and precise collection of taxes owed by the company (article 6 (2) of
       the law of 11 may 2007 concerning the creation of an SPF).

       Anti-money laundering legislation and information held by nominees

       Anti-money laundering legislation
       81.     The anti-money laundering rules are set out in the law of 12 November
       2004 as most recently amended by the law of 27 October 2010.11 For the bodies
       and persons to whom the law applies, these rules include obligations regarding
       the identification of customers and verification of their identities.



11.    The current AML/CFT legislation mainly derives from Directive 2005/60/EC of
       the European Parliament and of the Council of 26 October 2005 on the Prevention
       of the use of the Financial System for the Purpose of Money Laundering and
       Terrorist Financing.


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      82.     Pursuant to article 2 of the law, the persons and entities subject to the
      obligation concerning customer identification are, amongst others:
              credit institutions and financial institutions authorised to exercise
              their activities in Luxembourg;
              insurance companies authorised to exercise their activities in Luxem-
              bourg;
              undertakings for collective investment (including SIC) and invest-
              ment companies (which covers SICAF, SICAR and other securitisa-
              tion companies);
              notaries;
              tax advisors, accountants, accounting professionals and statutory
              auditors; and
              attorneys, when acting as trust and company service providers12, when
              assisting their clients in preparing or conducting transactions involv-
              ing the purchase and sale of real properties or businesses, the opening
              or management of bank accounts, the constitution, domiciliation,
              management or direction of fiducies, companies or similar structures,
              or where they are involved on behalf of their clients in any financial
              or real estate transaction.
      83.   The identification obligations deriving from article 3 of the law apply
      when:
              a customer wishes to enter into business relationships;
              a customer wishes to conduct a transaction in which the amount
              reaches or exceeds EUR 15,000, whether the transaction is carried out
              in one or several operations that appear to be related;
              money laundering or the financing of terrorism is suspected; or
              there are doubts about the truthfulness or accuracy of the identifica-
              tion data concerning a customer already identified.
      84.      Pursuant to article 3 of the law, the identification and its verification
      of the customer are to be done on the basis of documents, data or information
      from reliable and independent sources. In addition, appropriate measures



12.   According to article 1 of the law of 12 November 2004, these services include form-
      ing companies, serving as director or in a similar capacity, providing a registered
      office or a business address, serving as a trustee, acting as a “nominee” (proxy)
      shareholder for another person.


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       commensurate with the AML/CFT risk profile of the customer13 have to be
       taken to verify this information. The CSSF circular No 8/387 of 19 December
       2008 specifies the documents on which this identification must be based. It
       provides in particular that:
                the identification and verification of customers who are natural per-
                sons shall be made in principle on the basis of an official identifica-
                tion paper which certifies the identity of the person (e.g. passport,
                identity card, driving license, residence permit, or any other official
                document carrying a photograph allowing unequivocal identification
                of the person concerned).
                the identification and verification of customers who are legal per-
                sons shall be made on the basis of (1) articles of incorporation (or
                equivalent), (2) recent extract from the trade register (or equivalent).
                In addition, identification and verification of the identity of the rep-
                resentatives (agents) of legal persons or persons delegated by those
                bodies is to be done on the basis of the same rules as those for natural
                persons.
       85.      Moreover, the organisations and persons targeted by AML legislation
       must identify any beneficial owner of the customer as defined in article 1 of
       the law of 12 November 2004 and take reasonable steps to verify the custom-
       er’s identity.14 Following the assessment conducted by the FATF as it results
       from the report adopted in 2010, Luxembourg has adopted the Grand Ducal
       regulation of 1 February 2010 which provides in article 1 (2) more detailed
       obligations to identify and verify the identity of beneficial owners. For all
       customers, the obligation to identify the beneficial owner requires determin-
       ing whether the client is acting on behalf of another person and then taking
       all reasonable measures to obtain sufficient identification data to ascertain

13.    Cf. CSSF circular 08/387 of 19 December 2008.
14.    Directive 2005/60/EC of the European Parliament and of the Council of 26 October
       2005 on the prevention of the use of the financial system for the purpose of money
       laundering and terrorist financing. The Directive defines “beneficial owner” as
       “the natural person(s) who ultimately owns or controls the customer and/or the
       natural person on whose behalf a transaction or activity is being conducted”: In
       the case of corporate entities, it include “(i) the natural person(s) who ultimately
       owns or controls a legal entity through direct or indirect ownership or control over
       a sufficient percentage of the shares or voting rights in that legal entity, including
       through bearer share holdings, other than a company listed on a regulated market
       that is subject to disclosure requirements consistent with Community legislation or
       subject to equivalent international standards; a percentage of 25 % plus one share
       shall be deemed sufficient to meet this criterion; (ii) the natural person(s) who
       otherwise exercises control over the management of a legal entity.”


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      the identity of that other person. For customers that are legal persons or
      arrangements, the obligation requires taking all reasonable steps to:
              understand the ownership and control structure of the client;
              determine the individuals who ultimately own or control the customer.
      86.      The entities and professionals covered by the law of 12 November
      2004 must retain all information relating to identification and transactions for
      five years after the business relationship has ceased or after the transaction
      has been carried out (article 3.6 of the law). They must also inform, without
      delay, the financial information unit located in the prosecutor office of the
      Luxembourg district court (tribunal d’arrondissement de Luxembourg) in
      case of any suspicion of money laundering (art 5 of the law).

      Nominees
      87.      Anti-money laundering legislation establishes an obligation regard-
      ing identification of customers for a whole series of service providers. Thus,
      article 1 of the law of 12 November 2004, as amended, provides that any
      professional serving as nominee shareholder for another person is considered
      to be providing services to companies and fiducies. This professional is fur-
      thermore subject to due diligence obligations with respect to the customer.
      88.     Moreover, the Luxembourg tax authorities have the power to require
      any person, including attorneys and financial institutions, to provide any
      information for purposes of the exchange of information, provided that such
      exchange takes place under the aegis of a treaty that contains an article 26
      consistent with the standard (see section 3.1 below). Thus, any person acting
      as nominee must disclose the identity of the person for whose account the
      shares are held.

      Conclusion
      89.    In light of the obligations imposed by the various regulations in force
      in Luxembourg:
              SAs, SEs and S.e.c.as must keep a register of registered shares and, if
              they are listed, they must know the identity of shareholders who own
              more than 5% of their capital. However, these companies are also
              authorised to issue bearer securities (see section A.1.2 below).
              the names of the members of a cooperative company are indicated
              in its statutes and are reported to the RCS. This information must be
              kept up-to-date in the statutes and in the RCS.




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                the names of S.à.r.ls’ shareholders are disclosed to the RCS upon
                initial registration and all changes must be reported to registration
                authorities. Moreover, these companies are required to keep an up-
                to-date register identifying their shareholders.
                foreign companies are subject to the same obligations as Luxembourg
                companies when they have their place of effective management in
                Luxembourg (including maintaining a register of shares or issu-
                ing bearer shares if also allowed pursuant to the legislation under
                which they are incorporated). The branches of foreign companies are
                required to register with the RCS and must at that time provide infor-
                mation that includes the name of the country in which they have their
                principal registration.
                all these companies are required to register with the tax administra-
                tion and are subject to reporting and filing obligations that include
                the identity of their members under certain circumstances. There is
                however no clear requirement to provide the identity of shareholders
                or members in companies in all situations; and
                investment companies, SPFs and SOPARFIs are subject to the same
                registration and record keeping requirements as companies after
                which they are modelled (registration in the RCS, share register,
                bearer securities). SICAVs, SICAFs and SPFs have specific tax obli-
                gations which can limit, for tax administrations, the availability of
                their information.

       Bearer shares (ToR A.1.2)
       90.      Shares of SAs, SEs, and S.e.c.as may be issued in bearer form (arti-
       cles 37.4 and 103 of the law of 10 August 1915). The holders of these shares
       are not identified in the register of shareholders that these companies must
       keep.
       91.     Luxembourg law provides mechanisms for ensuring the availability
       of information on the identity of the holders of bearer shares under specific
       circumstances:
                for companies listed on a regulated market, as described above, when
                the percentage of voting rights exceeds certain thresholds (10%, 15%,
                20%, 33 1/3%, 50% and 66 2/3%). In this case, the shareholder must
                declare himself to the company and to the Financial Sector Supervisory
                Authorities (CSSF); and
                through the information that must be supplied in support of the
                declaration that companies are to file with the Luxembourg tax
                authorities, in particular the lists of attendance at general meetings


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              of shareholders. In addition, holdings of over 10% of the capital of
              the company must be reported on this return, in particular for the
              application of the Luxembourg Parent -subsidiary directive and for
              the taxation of hidden distributions of profits.
      92.      However, although there are parallel mechanisms that ensure the avail-
      ability of this information in specific situations, there is no overall obligation to
      identify the holders of bearer shares under all circumstances in Luxembourg.

      Partnerships (ToR A.1.3)
      93.     Under the Luxembourg legislation (law of 10 August 1915 and Civil
      Code), three types of partnerships can be created in Luxembourg:
              the Société en Nom Collectif (S.e.n.c, “general partnership” or
              “unlimited company”), articles 14 and 15 of the law of 10 August
              1915, is one formed by at least two partners who are jointly and sev-
              erally liable without limitation for the company’s obligations. The
              shares of an S.e.n.c cannot, in principle, be transferred. No minimum
              capital is required to form an S.e.n.c. The partnership may be formed
              by notarial or private deed. At 31 December 2010 there were 400
              S.e.n.cs registered in Luxembourg;
              the Société en Commandite Simple (S.e.c.s, “limited partnership”),
              article 16 of the law of 10 August 1915, is a partnership formed by
              one or several partners who are jointly and severally liable without
              limit (the active or general partners), and one or more limited part-
              ners (the silent partners) whose liability is limited to the level of
              their contribution. Limited partners cannot engage in management
              activity, even through a power of attorney. No minimum capital is
              required to form such a partnership. An S.e.c.s may be formed by
              notarial deed but this is not mandatory. At 31 December 2010 there
              were more than 800 S.e.c.ss registered in Luxembourg; and
              it is also possible to create a Société civile (“partnership under civil
              law”), articles 1832 et seq of the Civil Code, which is partnership the
              purpose of which can only be civil (not commercial). This partner-
              ship comprises two or more members that decide to pool something
              with a view to sharing the benefit that may result from this pooling
              or, in the cases provided by the law, by one person that allocate goods
              to a non commercial activity. A partnership under civil law may be
              formed by notarial deed but this is not mandatory. On 31 December
              2010, 3500 such partnerships were registered in Luxembourg.




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       Publicity and registration formalities
       94.      Article 5 of the law of 10 August 1915 provides that the deeds estab-
       lishing S.e.n.cs and S.e.c.ss are to be published under the form of extracts at
       the expense of the company and that the extract must, under sanction, con-
       tain the personal particulars of all active partners in S.e.n.cs and S.e.c.ss and
       silent partners in S.e.c.ss. Deeds establishing partnerships under civil law are
       entirely published and must contain, amongst others, the personal particulars
       of all partners (article 8 of the law). Pursuant to article 9 of the law this infor-
       mation must be provided to the RCS in the month following the date of the
       finalised statutes, any document being then kept in the folder of the partner-
       ship concerned.
       95.      Article 1 of the law of 19 December 2002 provides for the registra-
       tion of S.e.n.cs and S.e.c.ss as well as partnerships under civil law in the RCS.
       Article 6 of the same law provides expressly that S.e.n.cs and S.e.c.ss must
       provide, for registration in the RCS, their business name, their legal form,
       the full address of their head office, a description of the business purpose,
       the amount of corporate capital as well as the full names and date of birth
       of the members or, in the case of legal persons, their corporate name, legal
       form, full private or professional address, and the number of shares held by
       each. The application for registration must be submitted within the month
       following the event that makes registration necessary (article 15 of the law of
       19 December 2002. This last information must also be provided by partner-
       ships under civil law for registration (article 10 of the law).
       96.     As all partnerships deeds are published, all changes concerning these
       deeds must, pursuant to article 11 bis 2 of the Law of 10 August 1915, be pub-
       lished and provided, on this occasion, to registration authorities.

       Information held by S.e.n.c, S.e.c.s, and partnerships under civil law
       97.     S.e.n.cs, S.e.c.ss and partnerships under civil law are not required to
       keep registers recording the identity of their members.

       Tax requirements
       98.       Partnerships are required to register with the ACD, pursuant to §165d
       of the General Taxation Act (“LGI”). This provision requires persons others
       than natural persons to report to the competent local taxation office “facts
       that, in tax matters, create, modify or end a personal obligation to pay taxes”.
       For this reason, in practice, once an extract relating to a partnership has been
       published in Mémorial C, the local taxation office registers the partnership
       and sends it an opening declaration.




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      99.     On this occasion, partnerships may be asked to provide, on request of
      the ACD, information concerning the partnership headquarters, its mailing
      address, the names and addresses of recent directors and managers, and of
      members or partners. Indeed, as this information is already publicly available
      in Memorial C, additional information is requested by ACD only in case of
      uncertainty.
      100.     Partnerships subject to the VAT must also register with the indirect
      taxation administration (AED) and file a tax declaration with the local tax
      office when they begin business, or when there is a change or cessation in
      activity in the manner and form prescribed by the administration (article 61
      of the VAT law). The registration form requires that the information include
      the company name, its legal form, the date of publication in Mémorial C, the
      type of activity or the names and addresses of members.
      101.    Although the income of partnerships is taxable in the hands of their
      members, such entities are required to submit an annual declaration to the
      ACD in their own name (articles 116 and 162 of the Income Tax Act) in the
      manner provided for by the Grand Ducal regulation of 13 mars 1970 and
      on the return established by the administration (article 7 of the regulation).
      Declaration No. 300 requires communication of information including the
      names of partners. As this information is necessary for the calculation of
      the personal income tax of all of the partnership’s members, its provision is
      mandatory, and failure to provide it can lead to the application of sanctions
      by the local taxation office pursuant to §§ 166 and 202 of the LGI.

      AML legislation
      102.     The obligations described under section A.1.1 for companies apply as
      well to partnerships. Attorneys and tax advisors as well as all professionals
      deemed to be company service providers fall specifically within the scope
      of application of the AML law when they assist their clients in the prepara-
      tion or conduct of transactions concerning the establishment, management
      or direction of companies (article 2 of the law of 12 November 2004). By
      article 3 of that law, these service providers must identify their clients and
      retain information on the identity of their clients and the beneficial owners of
      partnerships, as well as all information regarding transactions conducted, for
      five years

      Conclusion
      103.     Information that Luxembourg partnerships must provide upon registra-
      tion includes the identity of their members. This information must be updated
      in the RCS. The tax administration also receives this information on an annual
      basis, through the compulsory declarations that partnerships must file.


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       Trusts and fiducies (ToR A.1.4)
       104.     Luxembourg is signatory to the Hague Convention of 1 July 1985
       on the Law Applicable to Trusts and on their Recognition. In addition,
       Luxembourg legislation allows the creation of fiducies under Luxembourg
       law (cf. law of 27 July 2003 on trusts and fiduciary contracts).

       Fiducies under Luxembourg law
       105.     Pursuant to article 5 of the law of 27 July 2003, a fiduciary contract
       is a contract by which one person, the settlor ( fiduciant), agrees with another
       person, the fiduciary ( fiduciaire) that, subject to the obligations determined
       by the parties, the fiduciary becomes the owner of assets which shall form a
       fiduciary property. In contrast to a trust, a fiducie involves a definitive trans-
       fer of ownership of the assets placed in fiducie. Article 6, however, stipulates
       that the fiduciary property is distinct from the property of the fiduciary, and
       that the fiduciary must, in its accounts, record the fiduciary property sepa-
       rately from its own property.
       106.     Article 4 of the same law specifies only a credit institution, an invest-
       ment firm, an investment company with variable or fixed share capital, a
       securitisation company, a fiduciary representative acting in the context of a
       securitisation transaction, a management company of common funds or of
       securitisation funds, a pension fund, an insurance or reinsurance undertaking
       or a national or international public body operating in the financial sector can
       act as fiduciary. All of these professionals are covered by AML obligations.
       107.     Luxembourg law requires the registration15 of fiducie contracts when-
       ever they concern real estate, aircraft, ships or boats registered in Luxembourg
       (article 12.1). This registration is done by the AED, which keeps a copy of the
       fiduciary contract. Moreover, in any public register in which the capacity of
       owner is inscribed, irrespective of the reason or circumstance, the fiduciary
       must be mentioned in that capacity after the indication of the owner of the
       property (article 11 of the law). It should be noted, however, that if no real
       estate, ship or boat is held through the fiducie, there is no requirement for the
       deed to be registered.
       108.     Luxembourg taxation rules provide that income from Luxembourg
       sources received via a fiducie is taxable in the hands of the settlor (pursuant
       to article 11 of the tax adaptation law). The resulting tax obligations depend
       on the nature of the settlor (natural or legal person). Then as well, section 164
       of the LGI provides that any person holding an asset in the capacity of

15.    Registration in this case means the formality by which certain deeds must be
       deposited with the indirect taxes administration; it will, in principle, be subject to
       payment of a stamp tax.


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      fiduciary must be able, upon demand, to identify the real owner of the prop-
      erty, and this implies the availability of such information.

      AML legislation
      109.     The obligations described under section A.1.1 for companies apply as
      well to fiducies. Attorneys, notaries, tax advisors, credit institutions and finan-
      cial intermediaries are covered by the AML law and must perform CDD in all
      situations. In addition, all other professionals providing services to companies
      and fiducies fall specifically within the scope of application of the AML law
      when they assist their client in the preparation or conduct of transactions
      concerning the establishment, management, provision of registered offices or
      direction of fiducies (article 2 of the law of 12 November 2004). By article 3
      of that law and the grand ducal regulation of 1 February 2010, these service
      providers must identify their clients and retain information on the identity
      of their clients and beneficial owners, as well as all information regarding
      transactions conducted, for five years. For customers that are legal persons or
      arrangements, the obligation requires taking all reasonable steps to:
              understand the ownership and control structure of the client; and
              determine the individuals who ultimately own or control the customer.

      Foreign trusts
      110.    There is no provision in Luxembourg law that would prohibit a
      resident from acting as trustee, administrator or manager or from having the
      responsibility to distribute profits or to administer a trust that is constituted
      under foreign legislation. The law of 27 July 2003 merely ratifies the Hague
      Convention without creating a legal framework covering trusts created under
      foreign law.
      111.    Thus, for example, and contrary to the situation of fiducies, a trustee
      administering a foreign trust does not have to belong to a specific category of
      professionals.
      112.     As with fiducies, the property held in a trust is separate from the
      personal property of the trustee. Luxembourg law requires the registration
      of trust contracts when they concern real estate, aircraft, ships or boats reg-
      istered in Luxembourg (article 12.1). There is no obligation to register these
      deeds in other situations. This registration is done by the AED, which keeps
      a copy of the trust contract. Moreover, in any public register in which the
      capacity of owner is inscribed, irrespective of the reason or circumstance, the
      trustee must be mentioned in that capacity after the indication of the owner of
      the property (article 11 of the law).



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       113.     The law of 27 July 2003 requires the registration of deeds of trust
       when the property, aircraft or boat is placed in trust after the effective date
       of the law. Deeds of trust established pursuant to grand ducal regulation of
       19 July 1983, the previous body of regulations applicable to trusts, are not
       subject to the registration requirement.
       114.     Luxembourg taxation rules provide that income from Luxembourg
       sources received via a trust is taxable in the hands of the settlor (pursuant to
       article 11 of the tax adaptation law). The resulting tax obligations depend on
       the nature of the settlor (natural or legal person). As well, section 164 of the
       LGI provides that any person holding an asset in the capacity of fiduciary
       must be able, upon demand, to identify the real owner of the property.

       AML legislation
       115.     The obligations described above for fiducies apply to trusts under the
       same conditions. Professionals acting as trust service providers are required
       to identify their clients and the beneficial owners of trusts.

       Conclusion
       116.     Luxembourg law provides mechanisms ensuring that:
                the tax authorities have available information on trusts and fiducies
                when the deeds governing those entities have been registered (this is
                the case when real estate, aircraft and boats registered in Luxembourg
                are transferred to a trustee or a fiduciary);
                the tax authorities may require any fiduciary or trustee to disclose the
                identity of the settlors of trusts and fiducies; and
                under all circumstances, clients and the beneficial owners of trusts
                administered by professional trustees and fiducies will be identified
                pursuant to the obligations flowing from AML legislation.
       117.     These multiple requirements, taken together, ensure the availability
       of information on the settlors and beneficiaries of fiducies and trusts admin-
       istered by professional trustees in Luxembourg.

       Foundations (ToR A.1.5)
       118.    In Luxembourg, foundations are non-profit entities established for
       purely philanthropic purposes.
       119.   Pursuant to article 27 of the law on associations and foundations of
       21 April 1928, as amended, any person may, by means of a notarial will or



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      testament, subject to approval by grand ducal decree, assign all or part of his
      property to the creation of a foundation which shall enjoy civil personality.
      Foundations are deemed to be establishments that, with the income from
      the capital allocated at their creation or received thereafter, and excluding
      the pursuit of material gain, assist in the realisation of a work of philan-
      thropic, social, religious, scientific, artistic, pedagogic, sporting or tourism-
      related nature. At the end of 2010 there were 200 foundations registered in
      Luxembourg.
      120.      A foundation may possess, in ownership or otherwise, only the proper-
      ties needed to fulfil its purposes. All bequests to a foundation must, pursuant to
      article 36 of the law, be authorised by the authorities responsible for supervising
      foundations (Ministry of Justice). For the duration of its existence, a foundation
      is subject to supervision by the authorities, who must in particular ensure that
      the properties deeded to the foundation are being used in accordance with its
      objective (article 40). To this end, an annual report must be submitted to the
      supervisory authority. If the foundation is incapable of performing the services
      for which it was created it may be dissolved by decision of the competent court
      (article 41).
      121.    Article 30 of the law on foundations states that a foundation’s articles
      of association must contain the following, at a minimum:
              the purpose or purposes for which the institution is created;
              the name of the institution and its headquarters, which must be in
              Luxembourg; and
              the full name, address and nationality of its directors.
      122.     The deed creating the foundation must be notarised, and is thus sub-
      ject to AML obligations, including identification of the founder. The benefi-
      ciaries, of which there may be only a class of persons, are known through the
      purpose for which the foundation is created.
      123.     Any deed creating a foundation must be reported to the Minister of
      Justice for approval (article 28 of the law) and the statutes of the foundation
      must be approved by grand ducal decree. After such approval, the statutes
      and any amendments thereto must be published in Memorial C. Lastly, the
      foundation (although it cannot pursue a commercial activity) must be regis-
      tered with the RCS. All the foundation’s statutes must be submitted with the
      application for registration (article 32 of the law).
      124.     As a non-commercial entity, a foundation is not subject to corporate
      tax. Thus, foundations do not have to be registered with the ACD. However,
      as a relevant entity within the meaning of Luxembourg tax legislation, a foun-
      dation is subject to supervision by the Luxembourg administration in order to
      ensure, in particular, that the conditions under which it is administered make


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       it indeed a non-commercial entity. To this end, the foundation must keep all
       the records needed to demonstrate that the funds collected have been used in
       accordance with the stated purpose of the foundation.

       Conclusion
       125.     Given the philanthropic nature of Luxembourg foundations, the obli-
       gations concerning their registration and recognition, and the obligations for
       reporting information to the supervisory authorities, Luxembourg legislation
       ensures conservation of the necessary information with respect to the found-
       ers, directors and beneficiaries of foundations.

       Enforcement provisions to ensure the availability of information
       (ToR A.1.6)

       Penalties for failure to legally document the establishment of bodies,
       to register them, or to keep information
       126.     Failure to register with the RCS within the time limit prescribed by the
       law of 10 August 1915 entails liability for a fine of EUR 25 to 250 (article 10).
       A fine of EUR 500 to 25 000 applies to those who fail to include the infor-
       mation required by law in the instruments, draft constituent instruments, or
       notices published in Mémorial C or deposited with the RCS (article 163 (8) of
       the law) and to the managers of S.à.r.ls who have not published changes in their
       membership. The persons responsible for managing Luxembourg branches are
       also liable to a fine of EUR 500 to 25 000 if they fail to perform the publicity
       formalities (article 163 (8) of the law). In addition, any persons having omitted
       to ask for registrations required under the law of 19 December 2002 (article 21
       (5) of the law) are liable to a fine from EUR 251 to 5 000.
       127.      In the case of foundations, the law of 21 April 1928 provides that, if
       it fails to produce the publications required by law, the foundation may not
       assert its legal personality vis-à-vis third parties, who shall, however, have
       the ability to hold that fact against it (article 43 of the law).
       128.     Persons who fail to deposit their declarations with the ACD within
       the prescribed time limits are liable to a penalty of up to 10% of the amount
       of tax owing (§ 168 of the LGI). Furthermore, when information needed to
       determine the income of this person or a third party (as partners in a part-
       nership) has not been provided, a fine (astreinte pécuniaire) not to exceed
       EUR 1 239.47 (§ 202 of the LGI) may be applied. Finally, pursuant to § 217 of
       the LGI, when no taxation information has been provided to the tax adminis-
       tration, the tax office will make the tax assessment.




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      129.     Luxembourg law provides no specific penalty for situations in which
      SA, S.e.c.a, S.à.r.l and cooperative companies fail to keep a register of shares.
      However, article 203 of the law of 10 August 1915 provides that companies
      that have seriously violated the provisions of the Commercial Code or the
      laws governing commercial companies will be dissolved under request of the
      State Prosecutor. This sanction can be applied when the register of the shares
      has not been kept or has been inconsistently kept. It is moreover noted that
      for S.à.r.ls and cooperative companies, the share register is only an additional
      means to ensure the availability of ownership information, this information
      being already disclosed and updated in the RCS. The Luxembourg authorities
      have indicated that they are willing to use this sanction in cases in which a
      company would fail to maintain its share register.

      Disclosure of major interests
      130.     In the case of failure to respect the provisions of the transparency law,
      article 25 of the law of 11 January 2008 provides for the application of admin-
      istrative fines of EUR 125 to 125 000 while article 26 provides for criminal
      sanctions of the same amount. Article 28 of the law provides that in this case
      the exercise of voting rights relating to the shares exceeding the fraction that
      should have been notified is suspended. This suspension is lifted when the
      shareholder makes the notification.
      131.     Moreover, according to the same Article, “where the voting rights
      of the company incorporated in Luxembourg have been exercised notwith-
      standing their suspension provided for by the law, the district court (Tribunal
      d’arrondissement) in the district in which the company’s registered office is
      located, sitting in commercial matters, may, on request of the company or one
      of its shareholders holding voting rights or any other person having a justifi-
      able interest, pronounce the nullity of part or all of the decisions of the gen-
      eral meeting if, without the voting rights exercised unlawfully, the quorum
      or majority requirements for the decision in question had not been reached.
      The nullity action shall [expire] five years [after] the date on which the voting
      rights were exercised.”

      AML legislation
      132.     Failure to respect AML obligations is punished with a criminal pen-
      alty ranging from EUR 1 250 to EUR 1 250 000, depending on the severity
      of the violation (article 9 of the Law of 12 November 2004).




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       Conclusion
       133.     Luxembourg legislation provides for sanctions in situations in which
       the information required by law is not kept. The effectiveness of the measures
       in place in Luxembourg for ensuring the availability of information will be
       examined during Phase 2.

                  Determination and factors underlying recommendations

                                      Phase 1 determination
       The element is not in place.
                 Factors underlying
                 recommendations                               Recommendations
       Luxembourg allows for the issuance            Luxemburg should ensure the
       of bearer securities by SAs, SEs and          availability of information relating to
       S.e.c.as without having mechanisms            SA, SEs and S.e.c.a bearer securities
       allowing for the identification of such       holders in all circumstances.
       securities holders in all circumstances.
       This possibility is also open to invest-
       ment companies taking the form of a
       SA or a S.e.c.a.
       Ownership information relating to             Luxembourg should ensure that own-
       foreign partners of SICARs which take         ership information relating to SICARs
       the form of an S.e.c.s is not available       which take the form of an S.e.c.s is
       in Luxembourg in all circumstances.           available in all circumstances.


A.2. Accounting records
        Jurisdictions should ensure that reliable accounting records are kept for all
        relevant entities and arrangements.

       General requirements (ToR A.2.1)

       Obligations flowing from accounting legislation
       134.     Pursuant to articles 8 to 21 of the Commercial Code, as well as
       articles 24 et seqq of the law of 19 December 2002, all companies and part-
       nerships (SA, SE, S.e.c.a, S.à.r.l, S.e.n.c, and S.e.c.s) must keep accounting
       records (article 8 of the commercial code). These obligations also apply to
       investment companies such as SICAVs, SICAFs, SICARs or SPFs. Foreign
       companies having their place of effective management in Luxembourg as
       well as the branches of foreign companies are subject to the same obligations.




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      135.    The accounts must cover all operations, assets and obligations of any
      kind, debts, obligations and commitments of any kind (article 10 of the code).
      All accounting is based on a system of books and accounts and conducted in
      line with the customary regulations for double entry bookkeeping (article 11).
      All transactions are recorded promptly, reliably and fully, in chronological
      order (article 11).
      136.     All enterprises must conduct a complete annual inventory of assets
      and entitlements of any kind, and their debts, obligations and commitments of
      any kind (article 16 of the code). These accounts must be filed annually with
      the RCS in the month following their approval, and no later than seven months
      after the close of the calendar year (article 75 ff of the law of 19 December
      2002). These annual accounts must provide a fair picture of the net worth, the
      financial situation and the earnings of the enterprise (article 26 of the law).
      137.    S.e.n.c and S.e.c.s whose turnover in the most recent financial year,
      excluding value-added tax, is no more than EUR 100 000 before taxes may
      keep “simplified” accounting records. This simplification allows for such
      firms to keep their books without reference to a specific chart of accounts,
      and to avoid having to file their accounts on an annual basis with the RCS.
      Nevertheless, these two types of partnerships must submit an annual tax
      return to the tax authorities (see below).
      138.     Fiduciaries, who must be professionals, are subject as such to the
      same obligations as those described above. In addition, the law of 27 July
      2003 on trusts and fiduciary contracts provides specifically that fiduciar-
      ies must keep separate accounts of fiduciary properties. Lastly, professional
      trustees are required to observe general accounting obligations applicable to
      all professionals established in Luxembourg.
      139.     Foundations are required to deposit their annual accounts and budget
      with the Ministry of Justice, as the supervisory authority, within two months
      after the close of the year (article 34 of the law of 21 April 1928 on founda-
      tions). These accounts must be published in Mémorial C. They must contain
      data to demonstrate that the foundation is operating in accordance with its
      objectives, for purposes of supervision.
      140.     Companies’ Managers or administrators that have not provided to the
      annual general meeting the company’s annual account within the six months
      following the end of the accounting period as well as managers or adminis-
      trators that have failed to make these documents public, are sanctioned with
      a fine from EUR 500 to 25 000 (art. 163 2° of the company law of 10 August
      1915). Managers or administrators that have, in a fraudulent intention, not
      published the annual accounts are sanctioned by imprisonment from one
      month to two years and a fine from EUR 5 000 to 125 000 or one of these
      two sanctions only (art 166 2° of the company law of 10 August 1915).



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       Obligations flowing from tax legislation
       141.     Section 160 of the LGI requires the keeping of accounting data. This
       article provides that all persons required to keep accounting data pursuant to
       laws other than tax legislation must also keep such data for tax purposes.
       142.    In addition to the provisions of the commercial code and the law of
       19 December 2002, the LGI imposes supplementary obligations with respect
       to record-keeping (section 162 of the LGI). Thus, it requires that entries in the
       books must be continuous and complete, prohibits the use of fictitious names
       and any changes to the accounting data, and requires that accounting docu-
       ments be numbered consecutively.
       143.      All legal persons must file with the ACD an annual tax return by the end
       of May following the taxation period (article 116 LIR) on the tax forms estab-
       lished by the administration (article 7 of the grand ducal regulation). This obliga-
       tion applies whether the legal entity is directly taxed on the income received (such
       as companies) or is transparent such as a partnership (see art. 162 LIR). Article 8
       of this regulation also provides that “taxpayers having accounts and books must
       enclose a copy of the balance sheet as well as a profits and losses account”.
       144.    Only SICAVs, SICAFs, and SPFs are excused from filing earnings
       declarations with the ACD; they are merely required to declare and pay the
       subscription tax to the AED. As entities subject to commercial laws, these
       companies are however not exempted from record keeping requirements.

       Conclusion
       145.     Given both the accounting and the tax legislation, Luxembourg
       ensures the availability of accounting data from which it is possible to accu-
       rately review all transactions, to assess the financial position of all entities,
       and to prepare financial statements.

       Underlying documentation (ToR A.2.2)
       146.    Luxembourg accounting legislation requires that all book entries be
       backed by supporting documentation, which is to be kept in chronological
       order (article 14 of the commercial code). These documents may be kept in
       the form of copies, which must be true copies of the original documents.
       147.     Furthermore, since Luxembourg is an EU member and thus party to
       the intra-community VAT system, its businesses are subject to special require-
       ments regarding evidence of transactions carried out. In particular, it is neces-
       sary to keep all documents that can be used to review intra-community flows
       of goods and services, including invoices issued and received, goods delivery
       notes, or the contracts under which purchases and sales have been conducted.



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      148.    These various requirements ensure that when Luxembourg enter-
      prises are required to keep accounting data, those data are backed by the
      necessary documentation on the transactions performed.

      Document retention (ToR A.2.3)
      149.    Luxembourg accounting legislation requires that all accounting
      records of any kind must be kept for 10 years after the close of the accounting
      year to which they relate (article 16 of the commercial code).
      150.     In case of dissolution, commercial companies are deemed to exist for
      their liquidation and all documents must be kept for at least five years after
      liquidation.
      151.    The documents kept in the RCS may be destroyed when 20 years
      have elapsed after the entity concerned has been deleted.
      152.     For tax purposes, the books and accounting records as well as all com-
      mercial documents must be kept for 10 years after the end of the calendar year
      that follows the close of the fiscal year (section 162 of the LGI). All documents
      required by law to be kept for VAT purposes must be retained for 10 years.

                Determination and factors underlying recommendations

                                   Phase 1 determination
      The element is in place.




A.3. Banking information
       Banking information should be available for all account-holders.

      Record-keeping requirements (ToR A.3.1)
      153.    In Luxembourg, the obligation to keep banking information flows
      from the simultaneous application of several laws:
              the financial sector law of 5 April 1993, article 37.1 of which provides
              that “credit institutions and investment companies must keep a record
              of all services they have provided and all transactions they have con-
              ducted, sufficient to allow the Commission to ensure that they are
              observing their legal obligations, and in particular their obligations
              to their customers”;




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                grand ducal regulation of 13 July 2007, which requires banking data
                to be kept for five years;
                the commercial code, which requires the keeping of books and
                records for accurately tracing transactions conducted (cf. section A.
                2.1 above);
                article 3 of the law of 12 November 2004 on the fight against money-
                laundering requires identification and verification of the identity of
                customers who seek to establish an ongoing business relationship
                with financial institutions; and
                lastly, grand ducal regulation of 1 February 2010 prohibits accounts
                opened under fictitious names and provides rules for keeping infor-
                mation on numbered accounts.
       154.    By article 3 of the AML law, the situations in which bodies and per-
       sons subject to the law are required to identify their customers are as follows:
                the customer wishes to enter into business relationships;
                the customer wishes to carry out a transaction of which the amount
                reaches or exceeds EUR 15 000, whether the transaction is carried
                out in one or several operations that appear to be related;
                money laundering or the financing of terrorism is suspected; and
                there are doubts about the truthfulness or accuracy of the identifica-
                tion data concerning an already identified customer.
       155.    In particular, a professional who is unable to identify the customer
       and determine the purpose for which the business relationship is established
       may not carry out a transaction through a bank account, establish a business
       relationship, or carry out a transaction.
       156.    Article 3.6 of the law requires that all financial institutions preserve
       all documents necessary to reconstitute transactions. The law requires that
       substantiating documentation and records concerning transactions conducted
       under a business relationship shall be kept for at least five years.

       Numbered accounts
       157.     A numbered account is a bank account where the identity of the
       holder is not known to all staff of the bank but is limited to a very restricted
       number of persons within that bank. Most staff of the institution where this
       account is held cannot contact a specific customer and have access to its data.
       Transactions relating to a numbered account are conducted with the number
       of the account and not the identity of its holder.



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      158.     Recent Luxembourg legislation – Grand Ducal regulation of 1 February
      2010 – explicitly and in a general manner prohibits the keeping of accounts
      under fictitious names with the exception of numbered accounts. The purpose
      of the new Grand Ducal regulation, the publication of which followed the
      2009 FATF evaluation, clarifies that the holding of these accounts is subject
      to the same customer due diligence requirements as is the holding of nominal
      accounts.
      159.     Article 5 of the regulation provides that “the holding of numbered
      accounts is allowed to credit and financial institutions, but in strict compliance
      with specific rules adopted by establishments that use this type of accounts.
      These rules should determine the conditions under which such accounts can
      be opened and should clarify their operation. These rules should provide
      adequate administration of these accounts so as to fully comply with the pro-
      visions of the law (i.e., the law to combat money laundering of 2004) and in
      particular the provisions concerning the customer due diligence requirements,
      the recording and storage of data, and the unrestricted access to these data
      both internally by the people responsible for the fight against money launder-
      ing and financing of terrorism and other appropriate staffs and by the compe-
      tent authorities.” A circular16 of the CSSF published in 2008 already provided
      for that “when numbered accounts or saving books are opened, professionals
      must manage them in a way allowing them to always fully respect the require-
      ments they are subject to according to the amended Law of 12 November 2004
      and this circular” (see paragraph 30 of this circular).
      160.    Questioned on the breadth of the obligations under this new regula-
      tion, Luxembourg authorities clarified that the numbered accounts opened
      since the entry into force of the Grand ducal regulation as well as accounts
      opened prior to its entry into force are covered by these new rules. Thus, the
      customer due diligence obligations apply to all of the numbered accounts held
      in Luxembourg including number accounts open before the 2010 grand ducal
      regulation. Luxembourg has not been able to specify either the number of
      numbered accounts held with financial institutions or the amount of deposits
      on these accounts. Detailed figures should be provided by Luxembourg for
      its phase 2 review.
      161.    It is noted that the Luxembourg new legislation refers, as regards
      the implementation of these legal obligations, to the internal rules adopted
      by financial institutions. It is further noted that the Grand Ducal regulation
      provides that these rules must allow for full compliance with the provisions
      of the law (i.e., the anti money laundering legislation). The administrative
      authorities have not issued any guidelines detailing these legal requirements
      and specifying how financial institutions must comply with these obligations.

16.   Whose value is different from a law or a grand ducal regulation.


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       The conditions under which the supervisory authorities will ensure the com-
       pliance with these rules have not yet been defined. Thus, some aspects of the
       legal framework under which the holding of numbered accounts take place
       could be clarified.
       162.     Further investigations will be conducted by the evaluation team
       during the Phase 2 review to determine the conditions under which financial
       institutions were, with the only provisions of the Grand Ducal regulation, able
       to meet their new obligations.
       163.    If an institution covered by the financial sector law is in breach of
       the obligations under the law of 12 November 2004, the CSSF may impose
       sanctions ranging from a notification to a warning, followed by a fine of
       EUR 250 to 250 000, and finally a ban on operations. Any violation of the
       obligations provided for by the law on the fight against money laundering is
       punished with a criminal penalty under section 9 of the Act of 12 November
       2004 (sanctions from EUR 1 250 to 1 250 000).

                  Determination and factors underlying recommendations

                                      Phase 1 determination
       The element is in place.
                 Factors underlying
                 recommendations                               Recommendations
       There are some questions regarding            CDD rules applying to numbered
       how CDD rules apply in practice to            accounts opened prior the enactment of
       numbered accounts opened prior                Grand Ducal Regulation of 1 February
       to the enactment of Grand Ducal               2010 should be clarified by Luxembourg
       Regulation of 1 February 2010.                authorities.




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B. Access to Information



Overview

       164.     A variety of information may be needed in respect of the administra-
       tion and enforcement of relevant tax laws and jurisdictions should have the
       authority to access all such information. This includes information held by
       banks and other financial institutions as well as information concerning the
       ownership of companies or the identity of interest holders in other persons or
       entities. This section of the report examines whether the Luxembourg’s legal
       and regulatory framework gives to the authorities access powers that cover the
       right types of persons and information, and whether the rights and safeguards
       that are in place would be compatible with effective exchange of information.
       165.    Luxembourg legislation provides two different procedures for access
       to information:
                in the context of treaties concluded before March 2009, and the
                Mutual Assistance Directive 77/799/EEC, the Luxembourg authori-
                ties use, to comply with the EOI provisions contained in non-updated
                treaties, the information gathering powers conferred on them by
                domestic legislation. Under those powers, they may require taxpayers
                and third parties to provide information of all kinds, except banking
                information or information held by insurance companies and SPFs,
                and may request information from other Luxembourg administra-
                tions. These powers are backed by provisions to compel the produc-
                tion of the information requested; and
                for conventions concluded since March 2009 and ratified by the law
                of 31 March 2010, specific information gathering measures have been
                introduced by Luxembourg. These measures allow for the gathering
                of information of all kinds, including banking information, regard-
                less whether it is held by taxpayers themselves or by a third party.
                The Luxemburg authorities have advised that this new procedure
                grants access to information in accordance with the conditions pro-
                vided for by the international standards.



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50 – COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

      166.    Access to information powers are supported by measures to compel
      the provision of information. For the implementation of treaties that have
      not yet been updated, this includes administrative fines and powers to seize
      documents. The new procedure introduced by the Law of 31 March 2010 pro-
      vides for administrative fines up to EUR 250 000 in case of refusal to provide
      the requested information. The effectiveness of this new procedure will be
      assessed during the Phase 2 review.
      167.     In the context of treaties signed since 2009 the rules governing pro-
      fessional secrecy, and in particular banking secrecy, are to be applied within
      the strict limits established by the commentaries to article 26 of the OECD
      model convention. Thus, access to information held by financial institutions
      is ensured in the context of these treaties. For the other conventions, the same
      information, as well as information held by insurance companies and SPF
      cannot, for the moment, be obtained by competent authorities in the field of
      EOI.
      168.    Although the phase 1 review concludes that there is no taxpayer prior
      notification procedure in Luxembourg, further scrutiny will be given during
      the course of the phase 2 review to the conditions under which any party
      concerned by an exchange of information or holding information, includ-
      ing any third party, may object, without any exception, to the provision of
      information.

B.1. Competent Authority’s ability to obtain and provide information
 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).


      Access to information powers provided by Luxembourg domestic
      tax legislation
      169.      As regards access to information for purposes of the international
      exchange of information, the Luxembourg competent authority’s information
      gathering powers are set out in domestic legislation (LGI, the general taxation
      act). In the context of treaties that do not provide for the exchange of banking
      information, and in the context of the EU Mutual Assistance Directive 77/799/
      EEC, it is these provisions that are applicable for responding to requests for
      information.
      170.   The Luxembourg administration has broad powers of access to the
      information held by taxpayers and third parties. It may summon taxpay-
      ers and require them to provide any information and to present all their


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       accounting documents (cf. LGI §204 ff). If the request for information from
       the taxpayer does not produce the expected results, the Luxembourg authori-
       ties may require third parties to produce the information requested or to
       submit their own accounts.
       171.    The LGI empowers the ACD to request information from other
       administrations, including tax administrations and financial intelligence unit,
       for purposes of responding to information requests received (LGI §188). A
       cooperation agreement between tax administrations was in fact adopted on
       24 December 2008 to organise such exchanges.
       172.    It should be noted that the AED may also requisition information
       and documents. However, as each administration has its own information
       access procedures, the ACD cannot use these powers, as it is the competent
       authority only for the exchange of information on request in direct taxation
       matters. They were therefore not examined in this report. In addition, accord-
       ing to Luxembourg legislation control and supervision of SPFs are under the
       responsibility of the AED and the Law on the SPF indicates that search for
       and audit facts concerning the fiscal status and elements necessary to ensure
       and validate the correct and precise collection of taxes owed by the company
       can be done by the AED.

       Access to information powers provided by the Law of 31 March
       2010
       173.     The absence of provisions in Luxembourg’s domestic tax legisla-
       tion that would allow the tax administrations to access information held by
       financial institutions, insurance companies and SPFs has led Luxembourg
       to take specific measures in order to give effect to the treaties concluded
       since March 2009 that call for the exchange of banking information. These
       new provisions were introduced into Luxembourg legislation by the law of
       31 March 2010. They cover not only access to information held by financial
       institutions, insurance companies and SPFs but, more generally, access to all
       types of information.
       174.     The law of 31 March 2010 ratifying the first 20 treaties concluded
       since March 2009 provides (article 2) that for application of the exchange of
       information as stipulated in the conventions cited [by the law], Luxembourg
       tax administrations (the ACD, with respect to direct taxation but also the
       AED or the ADA for taxes for which they are competent) are authorised to
       requisition the information requested. This new procedure is strictly limited
       in scope to these 20 treaties17, plus the treaty with India (through application

17.    Armenia, Austria, Bahrain, Belgium, Denmark, Finland, France, Germany, Iceland,
       Liechtenstein, Mexico, Monaco, Netherlands, Norway, Qatar, Spain, Switzerland,


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      of a most-favoured-nation clause). The bill providing for the ratification of the
      seven other treaties signed by Luxembourg since March 2009, tabled in the
      Chamber of Deputies on 2 March 2011, contains similar provisions.
      175.    The new procedure provides for an initial screening of the incoming
      request received by the Luxembourg competent authority.
      176.     These applications will be examined on a priority basis against the
      requirements set forth in the exchanges of letters annexed to the treaties.
      These exchanges of letters specify how the foreseeable relevance of requests
      must be understood (see section C.1.1 below). The Luxembourg authorities
      have explicitly confirmed that the identification of the person who is the sub-
      ject of the request can be made by disclosure of the name and address of that
      person. All other forms of identification are accepted, where they allow the
      identification of the person with sufficient precision, such as by the disclosure
      of a bank account number.
      177.     When it is established that the request can be favourably received,
      article 3 of the law authorises the tax administrations (that is the ACD, AED,
      or ADA) to requisition the requested information from the holder of that
      information. That person has one month as of notification of the requisition
      decision to communicate the information to the ACD.
      178.     This new procedure applies in principle to all requests for informa-
      tion made under a treaty entered into force through the Law of 31 March
      2010. In principle, this covers, for the 21 jurisdictions affected, all requests
      relating to 2011 and the following years, except for the exchange with France,
      Germany and India (2010) and United States (2009).
      179.    Luxembourg has also indicated that the new rules do not prevent the
      ACD from using tax information held on the file of the taxpayer or another
      taxpayer, when responding to a request for information. Such information can
      be transmitted to the requesting jurisdiction without prior notice to the person
      who is the subject of the request in Luxembourg.
      180.     Similarly, it has been indicated that the ACD will also be able to con-
      sult other public authorities if they hold the information requested. The ACD
      will pursue this route whenever it would facilitate the exchange of informa-
      tion. In this situation the person who is the subject of the request does not
      have to be informed of the transmission of the information.

      Banking information (ToR B.1.1)
      181.     Access to banking information takes place through the procedure
      stipulated by the law of 31 March 2010.

      Turkey, United Kingdom and United States.


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       182.     This procedure allows for waiver of the banking secrecy enshrined in
       Luxembourg’s financial and tax legislation. Such information is now acces-
       sible for the 21 ratified agreements that allow for this possibility.18
       183.     In light of the wording of article 3 of this law, information may be
       requested from the holder, i.e. the banks as the first resort, but this does not pre-
       clude, if necessary, requiring the person concerned by the request to produce
       information. From the provisions of the law, however, it is not clear whether the
       Luxembourg authorities will avail themselves of this dual possibility.
       184.    After the Luxembourg authorities have reviewed and validated the
       request for information, the holder of the information requested will be
       required to provide it within one month (article 3 of the law of 31 March 2010).
       185.    The Luxembourg authorities were asked about the conditions of
       access to banking information in situations in which an incoming request for
       information is accompanied only by a bank account number. They replied
       that such access is possible and would be granted. It was stated that the pro-
       visions of the procedure implemented by the law of 31 March 2010 are broad
       enough to allow the tax authorities to question Luxembourg banks in these
       circumstances, including where such request refers to a numbered account.
       186.    Access to banking information is currently impossible in cases in
       which the respective treaty does not expressly provide for it. This is in fact
       the case for the 40 treaties to which Luxembourg is party that have not yet
       been brought up to the standard.

       Ownership and identity information (ToR B.1.1) and accounting
       records (ToR B.1.2)
       187.    If the exchange of information takes place under a tax treaty that has
       not been updated since March 2009, the Luxembourg authorities, to comply
       with the EOI provisions contained in these non-updated treaties, use their
       domestic information gathering mechanisms to provide the information to the
       requesting jurisdiction. All types of information concerning ownership and
       all accounting data can be obtained by this route unless secrecy provisions
       would apply (see below section B.1.5).
       188.    For the treaties ratified by the law of 31 March 2010, Luxembourg
       authorities will use the procedure provided for by this law.




18.    17 of these agreements are already in force.


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      Use of information gathering measures absent domestic tax interest
      (ToR B.1.3)
      189.      The concept of “domestic tax interest” describes situations in which
      a contracting party can only provide information to another contracting party
      if it has an interest in gathering this information for its own needs.
      190.     There is nothing in Luxembourg legislation to restrict the use of
      domestic information gathering powers to situations in which the information
      is required by the ACD for its own use.

      Enforcement provisions to compel production and access to
      information (ToR B.1.4)

      Law of 31 March 2010
      191.     In the context of the new procedure for access to information, arti-
      cle 5 of the law of 31 March 2010 provides that if the information requested is
      not supplied within a month after notification of the decision to requisition it,
      an administrative fine of up to EUR 250 000 may be imposed on the holder
      of the information. The amount is set by the director of the competent tax
      administration or the person delegated to this effect.
      192.     The Luxembourg tax authorities have confirmed that, beyond this
      fine, there are no other means to compel communication of the documents
      sought by the requesting jurisdiction. The Luxembourg authorities have no
      power to seize documents, in particular banking documents, in connection
      with the international exchange of banking information.
      193.     However, the procedure introduced by the law of 31 March 2010 is
      new and its effectiveness is difficult to assess, particularly as the first of the
      information exchange agreements only came into force in April 2010. In fact,
      a fine of EUR 250 000 may in itself be sufficiently dissuasive. For this reason,
      additional investigations will be undertaken during the Phase 2 review, look-
      ing both at the level of responses from persons required to provide information
      and at the adequacy of the fines imposed by the Luxembourg authorities.

      Provisions applicable to the old treaties
      194.     Access to information is regulated by the LGI. Section 202 of that
      law provides that the ACD may enforce its communication orders by fines not
      exceeding EUR 1 239.47, by execution at taxpayer’s cost, and by documents
      seizure.
      195.  Before a constraining measure is decided upon, the taxpayer must be
      summoned to provide the information requested, under threat of a constraining



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       order and with the stipulation of a reasonable deadline for compliance. In situa-
       tions in which such a summons is fruitless, the tax authorities may seize docu-
       ments to obtain the information.

       Secrecy provisions (ToR B.1.5)

       Secrecy obligations of financial institutions and insurers
       196.     Article 41 of the law of 5 April 1993 on the financial sector provides
       that information received from persons working in the banking sector in the
       context of their professional activity must be kept secret. Disclosure of this
       information is punished, pursuant to article 458 of the criminal code, by
       imprisonment of 80 days to six months and a fine of EUR 500 to5000. The
       secrecy obligation ceases when the disclosure of the information is authorised
       by virtue of a legislative provision, including those predating the law cited
       (article 41).
       197.   Section 111-1 of the law of 6 December 1991 on the insurance sector
       imposes the same obligations of confidentiality for persons working in the
       insurance sector.
       198.     Lastly, article 178 bis of the LGI provides expressly that the ACD may
       not, for tax purposes, request information from credit institutions, profession-
       als of the sector, finance companies, undertakings for collective investment,
       or family wealth management companies.
       199.     To overcome the inaccessibility of banking information in the context
       of the international exchange of information, a specific instrument for access
       to information was included in the law of 31 March 2010 ratifying the 20 trea-
       ties concluded by Luxembourg containing provisions similar to article 26(5)
       of the OECD model convention.
       200. The Council of State confirmed this point in its opinion of 2 February
       2010, repeated in the parliamentary report preceding adoption of the law:
                According to the draft law, a request for information received
                from a competent foreign authority shall henceforth cause the
                Luxembourg tax authorities to collect information from third-party
                holders, including financial institutions […]. The information thus
                obtained may however be used only for purposes of the exchange
                of information organised by the draft law.
                The draft law authorises the tax administrations to collect infor-
                mation both from the taxpayer and from third parties, and in par-
                ticular from financial institutions. The information thus obtained
                may be communicated to foreign tax administrations […].



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      201.    It is clear that the legal and regulatory framework in place in Luxem-
      bourg allows the exchange of banking information for the 20 treaties ratified
      by Luxembourg in 2010 that provide for this possibility. The same holds, by
      extension, for the convention with India.19
      202. Strictly equivalent provisions are provided by the bill ratifying the
      seven other treaties concluded by Luxembourg. This bill was tabled by the
      Chamber of Deputies on 2 March 2011.
      203.    For the 40 treaties that have not yet been brought up to standard by
      Luxembourg, restrictions on access to information held by financial institu-
      tions and insurance companies continue to apply. These restrictions have an
      impact that extends beyond banking information, in that these professionals,
      together with attorneys, are part of the only professions authorised to act as
      professionals providing registered offices and fiduciaries.

      Professional secrecy for attorneys and accountants
      204. The professional secrecy of lawyers is covered by article 35 of the law
      of 10 August 1991 on the legal profession. Lawyers are subject to professional
      secrecy in criminal matters. Law offices as well as communications by any
      means between lawyers and their clients are sacrosanct and hence protected
      by the professional secrecy of lawyers. Any violation of secrecy is punishable
      pursuant to article 458 of the criminal code.
      205.    Section 176 of the LGI provides that any person interrogated may
      refuse to respond to questions if the response would be incriminating for the
      person or a member of his family.
      206.   Section 177 of that law allows the following persons to refuse to supply
      information:
              defenders and lawyers when involved in criminal matters; and
              lawyers, for any information they obtained in the exercise of their
              profession. However, this rule does not apply to facts that lawyers may
              have learned in the course of counsel or representation in tax matters.
      207.     Therefore, Luxembourg legislation provides that information received
      by an attorney during communications the purpose of which was to seek or
      provide legal advice are covered by confidentiality rules. However, any other
      information, and in particular factual information, acquired in the course of
      counsel must be disclosed on request of the revenue authorities. The attorney-
      client privilege provided for by Luxembourg law is consistent with the terms


19.   Pursuant to the most favoured nation clause.


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       of reference. In addition, there are no other professional secrecy rules that
       would prevent the access to information for EOI purposes.

       Other rules
       208.    Luxembourg’s domestic legislation does not allow access to informa-
       tion held by SPFs under the treaties that have not yet been updated.

       Conclusion
       209.    While the law of 31 March 2010 has removed restrictions relating to
       professional secrecy rules, those restrictions remain in place for treaties that
       are not covered by the rules set forth in that law. Luxembourg should ensure
       an exchange of information in accordance with the standard with all its rel-
       evant partners.

                  Determination and factors underlying recommendations

                                      Phase 1 determination
       The element is place, but certain aspects of the legal implementation of
       the element need improvement.
                 Factors underlying
                 recommendations                               Recommendations
       Limitations in access to information          Luxembourg should ensure access
       provided for by Luxembourg’s domestic         to information held by financial
       legislation are currently overridden          institutions, insurance companies, and
       in respect of only 28 of the 68 signed        SPFs for all its relevant partners.
       agreements. Only these new rules
       allow for access to information held by
       financial institutions, insurance compa-
       nies, and SPFs.


B.2. Notification requirements and rights and safeguards
 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.


       Not unduly prevent or delay exchange of information (ToR B.2.1)
       210.    The procedure for collecting information under Luxembourg’s
       domestic tax law (LGI) does not provide for the notification of the person
       who is the subject of the request for information.



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      211.     This is no longer the case with the new procedure instituted by the
      law of 31 March 2010. Article 4 thereof merely states that “after examining
      the request for information, the tax administration shall, by registered letter,
      notify its decision to requisition information to the holders of that informa-
      tion.” While the person required to provide the information has the right to
      appeal that decision before the judicial authorities, this possibility stems from
      the general rights and guarantees available to any person to challenge an
      administrative decision. Moreover, in situations in which the information is in
      the possession of the administration or is part of the data publicly available in
      Luxembourg, the new exchange procedure does not require the person who is
      the subject of the request to be informed and creates no specific right to seek
      annulment of the decision to transmit the information to the requesting party.
      212.     On the other hand, the law of 31 March 2010 provides (last sentence
      of article 4) that “the notification of the decision to the holder of the requested
      information constitutes notification to any other person concerned.” Thus,
      any person targeted by the requisition decision as well as all third parties
      concerned have the right, under that provision, to appeal the decision before
      the administrative tribunal. This appeal has a supsensive effect (article 6 of
      the law).
      213.    The possibility that any person concerned or having an interest in the
      exchange of information may challenge the decision to transmit that informa-
      tion constitutes a right which, while in substance is not objectionable, must
      be compatible with the effective exchange of information. At this stage, it
      is not possible to judge the impact of the rights and safeguards provided by
      Luxembourg legislation on the exchange of information. Additional inves-
      tigation of the right of any person concerned to challenge the exchange of
      information will have to be conducted during the Phase 2 review.

                Determination and factors underlying recommendations

                                    Phase 1 determination
      The element is in place.




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C. Exchanging Information



Overview

       214.    Jurisdictions generally cannot exchange information for tax purposes
       unless they have a legal basis or mechanism for doing so. In Luxembourg, the
       legal authority to exchange information is derived from double tax conven-
       tions (DTCs) and tax information exchange agreements (TIEAs) once they
       become part of Luxembourg’s domestic law. This section of the report exam-
       ines whether Luxembourg has a network of information exchange agreements
       that would allow it to achieve effective exchange of information in practice.
       215.   Luxembourg today has a network of bilateral information exchange
       mechanisms covering 68 jurisdictions. Luxembourg may also exchange infor-
       mation with its EU partners under the Mutual Assistance Directive 77/799/
       EEC, thus bringing to 69 the number of jurisdictions with which Luxembourg
       can exchange information on request.
       216.    Luxembourg has concluded 27 protocols or conventions for the
       exchange of banking information since March 2009, to which should be added
       the convention negotiated with India, by application of the most favoured nation
       clause. All these agreements contain a complete article 26, supplemented by an
       exchange of letters. Three of the information exchange arrangements negoti-
       ated by Luxembourg – with Austria, Panama and Switzerland – include in their
       exchange of letters restrictions that are not consistent with the international
       standard. Those agreements require communication of the name and address of
       the person covered by the request and the person in possession of the informa-
       tion requested. Luxembourg has undertaken steps with Austria, Switzerland
       and Panama to bring these agreements to the standard. The other agreements
       concluded by Luxembourg are consistent with the standard.
       217.     Luxembourg was quick to ratify the first 20 treaties signed 20, call-
       ing for the exchange of banking information. 17 are already in force. Those

20.    To which should be added the treaty with India, in application of a most favoured
       nation clause.


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      agreements have now been put into effect through the law of 31 March 2010,
      which instituted a new access to information procedure covering banking
      information. The other seven signed agreements that contain this possibility
      will be ratified in the course of 2011. The bill providing for the ratification of
      these agreements was tabled in the Chamber of Deputies on 2 March 2011.
      218.    The network of mechanisms that Luxembourg has in place for exchang-
      ing banking information covers its principal trading partners (Luxembourg con-
      ducts 75% of its trade with its three neighbours, Belgium, France and Germany).
      Luxembourg has in addition undertaken steps to conclude agreements meeting
      the standard with all its treaty partners.
      219.     In this context, it is also noted that as of 1 January 2013, Luxembourg
      will be in a position, thanks the new EU administrative co-operation Directive,
      to exchange information in a manner consistent with the standard with all EU
      Member States.
      220.     Apart from a few old treaties, all the agreements concluded by Luxem-
      bourg, and in particular the 28 treaties most recently signed, contained provi-
      sions on the confidentiality of the information received. Those provisions are
      also accompanied by domestic legal rules with equivalent effects. Similarly,
      all treaties concluded by Luxembourg contain provisions ensuring that the
      rights and safeguards of taxpayers and third parties are preserved.

C.1. Exchange of information mechanisms

 Exchange of information mechanisms should allow for effective exchange of information.

      221.     Luxembourg has signed 68 agreements for the exchange of information.
      Since March 2009, 27 protocols or conventions have been concluded to give
      effect to Luxembourg’s commitment to the international transparency standard.
      The convention with India has similar effects, through application of a most
      favoured nation clause.
      222.   Beyond the exchange of information on request in direct tax matters
      Luxembourg, as a member of the European Union, is party to the Community
      VAT system and consequently to the exchange of information in VAT matters
      under EC regulation 1798/2003.

      Foreseeably relevant standard (ToR C.1.1)
      223.     The international standard for exchange of information envisages
      information exchange upon request to the widest possible extent. Nevertheless
      it does not allow “fishing expeditions,” i.e. speculative requests for informa-
      tion that have no apparent nexus to an open inquiry or investigation. The



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       balance between these two competing considerations is captured in the stand-
       ard of “foreseeable relevance” which is included in Article 26(1) of the OECD
       Model Taxation Convention set out below:
                The competent authorities of the contracting states shall exchange
                such information as is foreseeably relevant to the carrying out
                of the provisions 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 their political subdivisions or local authorities in so far as
                the taxation thereunder is not contrary to the Convention. The
                exchange of information is not restricted by Articles 1 and 2.
       224.    Of the 68 agreements signed by Luxembourg, the 2821 concluded
       since 2009 refer to paragraph 1 of article 26 and the notion of foreseeable
       relevance as stipulated by the international standard.
       225.    All the agreements concluded since March 2009 provide, as well, for
       an exchange of letters which clarifies the notion of “foreseeably relevant”.
       These exchanges of letters, which have the same force as the treaties, nor-
       mally include:
                a definition of the notion of “foreseeably relevant” the purpose of
                which is “to provide for exchange of information in tax matters to
                the widest possible extent, without leaving contracting states at lib-
                erty to engage in ‘fishing expeditions’ or to request information that
                is unlikely to be relevant to the tax affairs of a given taxpayer”; and
                a list of information that must be provided by the competent authority
                of the requesting party to the competent authority of the requested
                party, normally corresponding to paragraph 5 of article 5 of the
                model TIEA. The information that must be communicated includes
                the identity of the person under examination; a statement of the
                information sought, including its nature and the form in which the
                requesting state wishes to receive the information from the requested
                state; the tax purpose for which the information is sought; and, to the
                extent known, the name and address of any person believed to be in
                possession of the requested information.
       226.     Asked about the interpretation of these exchanges of letters, the
       Luxembourg authorities confirmed that these provisions were interpreted
       in light of the commentaries on paragraph 1 of article 26 of the model tax


21.    As noted earlier, 27 agreements have been concluded, to which the agreement
       with India should be added. To facilitate reading of this report, it is accepted that
       Luxembourg has concluded 28 agreements containing a full version of article 26.


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     convention and on paragraph 5 of article 5 of the model information exchange
     agreement published by the OECD.
     227.    It is, however, noted that the provisions of the exchanges of letters con-
     cluded by Luxembourg deviate from the wording of article 5 (5) of the OECD
     model TIEA in the case of the protocols concluded with Austria, Panama and
     Switzerland. These three protocols require communication of the name of
     the person under examination in the requesting state as well as the name and
     address of the person in possession of the information in the requested state.
     In requiring the communication of this information, these three protocols are
     not up to the standard.
     228.    Luxembourg has also approached Austria, Switzerland and Panama
     with a view to making, as quickly as possible, the agreements signed with
     these countries consistent with the standard.
     229.     The 40 agreements concluded by Luxembourg before its commitment
     to the standard, and which have not yet been updated, contain no reference to
     the notion of “foreseeable relevance”, but instead use the terms “necessary”,
     “relevant” or “foreseeably relevant”. The commentary on article 26 of the
     OECD model convention considers that the terms “necessary” or “relevant”
     mean the same thing for the exchange of information as the expression “fore-
     seeably relevant”. Thus, these treaties may be recognised as conforming to
     the standard with respect to foreseeable relevance.

     In respect of all persons (ToR C.1.2)
     230.     For exchange of information to be effective it is necessary that a
     jurisdiction’s obligations to provide information are not restricted by the
     residence or nationality of the person to whom the information relates or by
     the residence or nationality of the person in possession or control of the infor-
     mation requested. For this reason the international standard for exchange of
     information envisages that exchange of information mechanisms will provide
     for exchange of information in respect of all persons.
     231.    In this area, the 28 agreements concluded by Luxembourg since
     March 2009 are on all points consistent with the OECD model tax conven-
     tion. Of the 40 treaties not already updated to meet the standard, 21 specifi-
     cally mention that the exchange of information is not restricted by article 1 of
     the convention.

     Exchange of all types of information (ToR C.1.3)
     232.    Jurisdictions cannot engage in effective exchange of information if
     they cannot exchange information held by financial institutions, nominees or
     persons acting in an agency or a fiduciary capacity. Both the OECD Model


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       Tax Convention and the Model Agreement on Exchange of Information, which
       are the authoritative sources of the standards, stipulate that bank secrecy
       cannot form the basis for declining a request to provide information and that
       a request for information cannot be declined solely because the information
       is held by nominees or persons acting in an agency or fiduciary capacity or
       because the information relates to an ownership interest.
       233.     Article 26 (5) of the OECD Model Convention provides that a con-
       tracting state may not decline to supply information solely because it is
       held by a bank, other financial institution, nominee or person acting in an
       agency or a fiduciary capacity, or because it relates to ownership interests in
       a person. Luxembourg authorities have advised that exchange of information
       relating to SPFs can take place under agreements signed since 2009.
       234.     The 28 agreements concluded by Luxembourg since its commitment
       to the standard contain provisions equivalent to paragraph 5 of article 26 of the
       OECD model convention. These are the agreements with Armenia, Austria,
       Bahrain, Barbados, Belgium, Denmark, Finland, France, Germany, Hong Kong
       (China), Iceland, India22, Japan, Liechtenstein, Mexico, Monaco, Netherlands,
       Norway, Panama, Portugal, Qatar, San Marino, Spain, Sweden, Switzerland,
       Turkey, United Kingdom and United States.
       235.    The possibility of exchanging banking information does not exist
       under the conventions that have not yet been updated to meet the standard.

       Absence of domestic tax interest (ToR C.1.4)
       236.      The concept of “domestic tax interest” describes a situation where a
       contracting party can only provide information to another contracting party
       if it has an interest in the requested information for its own tax purposes. A
       refusal to provide information based on a domestic tax interest requirement
       is not consistent with the international standard. EOI partners must be able
       to use their information gathering measures even though invoked solely to
       obtain and provide information to the requesting jurisdiction.
       237.     All the information exchange mechanisms concluded since March
       2009 contain, without exception, an express provision (equivalent to arti-
       cle 26 (4) of the OECD Model Tax Convention) according to which the
       requested party will submit the information requested regardless of whether
       it has a domestic tax interest in obtaining that information.
       238.    The agreements that have not been updated since March 2009 con-
       tain no express provision relating to the non-application of the principle of


22.    With respect to India, by application of the most-favoured-nation clause.


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     domestic tax interest. However, these treaties are interpreted by Luxembourg
     as allowing access to all information without reference to that principle.

     Absence of dual criminality principles (ToR C.1.5)
     239.      The principle of dual criminality provides that assistance can only be
     provided if the conduct being investigated (and giving rise to an information
     request) would constitute a crime under the laws of the requested jurisdic-
     tion if it had occurred in the requested jurisdiction. In order to be effective,
     exchange of information should not be constrained by the application of the
     dual criminality principle.
     240.     None of the information exchange mechanisms concluded by Luxem-
     bourg since March 2009 contains the principle of dual incrimination for limit-
     ing the exchange of information. This is also the case with the 40 agreements
     not yet updated.

     Exchange of information in both civil and criminal tax matters
     (ToR C.1.6)
     241.    Information exchange may be requested both for tax administration
     purposes and for tax prosecution purposes. The international standard is not
     limited to information exchange in criminal tax matters but extends to infor-
     mation requested for tax administration purposes (also referred to as “civil
     tax matters”).
     242.    Every information exchange mechanisms concluded since March
     2009 provides for the exchange of information in both civil and criminal mat-
     ters. This is also the case for the agreements signed before that date.

     Provide information in specific form requested (ToR C.1.7)
     243.     In some cases, a Contracting State may need to receive information
     in a particular form to satisfy its evidentiary or other legal requirements.
     Such forms may include depositions of witnesses and authenticated copies
     of original records. Contracting States should endeavour as far as possible to
     accommodate such requests. The requested State may decline to provide the
     information in the specific form requested if, for instance, the requested form
     is not known or permitted under its law or administrative practice. A refusal
     to provide the information in the form requested does not affect the obligation
     to provide the information
     244.    There are no restrictions in the information exchange mechanisms con-
     cluded by Luxembourg that might prevent it from providing information in the
     form requested, as long as this is consistent with its administrative practices.



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       In force (ToR C.1.8)
       245.    Exchange of information cannot take place unless a jurisdiction has
       exchange of information arrangements in force. The international standard
       requires that jurisdictions take all steps necessary to bring information
       arrangements that have been signed into force expeditiously.
       246. In Luxembourg all tax treaties, whether double taxation conventions,
       protocols amending existing conventions, or information exchange agree-
       ments, must be ratified by the Chamber of Deputies.
       247.    Of the 28 agreements concluded by Luxembourg since March 2009,
       20 were ratified by means of the law of 31 March 2010. The agreement with
       India, which was ratified previously and complied with the standard by reason
       of a most favoured nation clause, is also in force. Luxembourg indicated that
       the agreements with Barbados, Hong Kong (China), Japan, Panama, Portugal,
       San Marino and Sweden would be ratified in the course of 2011.
       248.     Of the 21 agreements ratified, 17 are already in force, and the other
       four23 are awaiting ratification by Luxembourg’s partners.

       In effect (ToR C.1.9)
       249.   For information exchange to be effective, the parties to an EOI arrange-
       ment need to enact legislation necessary to comply with the terms of the
       arrangement.
       250.    In the case of Luxembourg, the crucial point is to ensure access to
       banking information in a situation in which domestic tax legislation provides
       for banking secrecy and does not authorise access to such information for the
       purposes of international information exchange.
       251.    In addition to ratifying its agreements by means of the law of
       31 March 2010, Luxembourg has instituted a specific procedure for access
       to banking information, described above under section B1. These provisions
       guarantee access to banking information notwithstanding the secrecy rules
       to which the criminal code subjects all financial institutions in Luxembourg.
       252.    Luxembourg has also given express effect to the agreement con-
       cluded with India, through the law of 31 March 2010, thus respecting the most
       favoured nation clause in that treaty.




23.    Belgium, Mexico, Turkey, and the US.


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               Determination and factors underlying recommendations

                                   Phase 1 determination
      The element is in place, but certain aspects of the legal implementation
      of the element need improvement.
               Factors underlying
               recommendations                              Recommendations
      Of the 28 agreements concluded by           Luxembourg should ensure, in line
      Luxembourg, since its commitment to         with its commitment to the standard,
      the standard in March 2009, 3 estab-        that each of its EOI mechanisms
      lish restrictions which are inconsistent    strictly respects the standard of
      with the standard.                          transparency
      As a result of domestic law limitations     Luxembourg should ensure that
      with respect to access to informa-          all the treaties signed could allow
      tion, only 25 of the 68 signed EOI          for an exchange of information in
      mechanisms allow for exchange of            accordance with the international
      information in accordance with the          standard.
      international standard. Of these 25
      agreements, 17 are in force.


C.2. Exchange of information mechanisms with all relevant partners
      The jurisdictions’ network of information exchange mechanisms should cover
      all relevant partners.

     253.     The standards require that jurisdictions exchange information with
     all relevant partners, meaning those partners who are interested in entering
     into an information exchange arrangement. Agreements cannot be concluded
     only with counterparties without economic significance. If it appears that a
     jurisdiction is refusing to enter into agreements or negotiations with partners,
     in particular ones that have a reasonable expectation of requiring information
     from that jurisdiction in order to properly administer and enforce its tax laws
     it may indicate a lack of commitment to implement the standards.
     254.    Since its commitment to the standard, all the exchange-of-informa-
     tion agreements concluded by Luxembourg contain a full version of article 26
     of the OECD model convention.
     255.     Luxembourg’s policy with respect to conventions favours the conclu-
     sion of double taxation treaties containing provisions for the exchange of infor-
     mation. Thus, Luxembourg has sought to negotiate protocols amending the
     conventions already in force (20 in total: Austria, Belgium, Denmark, Finland,
     France, Germany, Hong Kong (China), Iceland, Japan, Mexico, Netherlands,
     Norway, Portugal, San Marino, Spain, Sweden, Switzerland, Turkey, United


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       Kingdom, and United States) and to negotiate seven new tax conventions (with
       Armenia, Bahrain, Barbados, Liechtenstein, Monaco, Panama, and Qatar)
       with a view to developing its economic relations. At the time this report was
       drafted, Luxembourg indicated that it does not refuse to propose in the future
       to its relevant partners to conclude tax information exchange agreements.
       256.    Luxembourg has a network of bilateral information exchange arrange-
       ments with 68 jurisdictions24. It has 28 protocols or conventions allowing the
       exchange of banking information. As indicated above, 20 of those agreements
       were ratified by Luxembourg in 2010, to which the convention with India
       may be added. The law ratifying the other seven agreements was tabled in
       the Chamber of Deputies on 2 March 201125. The following figures show
       the number of jurisdictions with which Luxembourg has an agreement that
       respects the international standard of transparency:
                18 OECD members;26
                11 of Luxembourg’s EU partners;27
                8 of the G20 members;28
                27 of the Global Forum member jurisdictions;29 and
                its 3 neighbour countries (Belgium, France and Germany).
       257.     These figures shows that Luxembourg’s neighbouring countries
       (75% of its trade takes place with its three neighbours (Belgium, France and
       Germany)) as well as a significant number of EU and OECD member states
       now have an exchange-of-information agreement with Luxembourg allowing
       for the exchange of banking information.
       258.   Furthermore, Luxembourg is party to the new EU administrative
       co-operation Directive adopted on 15 February 2011. From the entry into

24.    To which may be headed Cyprus, pursuant to the Mutual Assistance Directive
       77/799/EEC.
25.    Bahrain, Barbados, Liechtenstein, Monaco, Panama, Qatar and San Marino.
26.    Austria; Belgium; Denmark; Finland; France; Germany; Iceland; Japan; Mexico;
       the Netherlands; Norway; Portugal; Spain; Sweden; Switzerland; Turkey; the United
       Kingdom and the United States.
27.    Austria; Belgium; Denmark; Finland; France; Germany; the Netherlands; Portugal;
       Spain; Sweden; the United Kingdom.
28.    France; Germany; India; Japan; Mexico; Turkey; the United Kingdom and the United
       States.
29.    Austria; Bahrain; Barbados; Belgium; Denmark; Finland; France; Germany; Hong-
       Kong, China; Iceland; India; Japan; Liechtenstein; Mexico; Monaco; the Netherlands;
       Norway; Panama; Portugal; Qatar; San Marino; Spain; Sweden; Switzerland; Turkey;
       the United Kingdom and the United States.


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68 – COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION

      force of this agreement, Luxembourg will have relationships consistent with
      the standard with the 15 EU Member States currently not covered by an EOI
      mechanism in accordance with the standard. This will bring the number of
      bilateral relationships conforming to the standard to 43 as from 1 January
      2013 at the latest.
      259.    In addition to these signed agreements, Luxembourg has reported that:
              it has initialled standard-consistent agreements with Canada, FYROM30,
              Italy, Korea, Malaysia, Oman, Romania, Russia, Saudi Arabia, and
              South Africa;
              it is now negotiating agreements with Malta, Singapore, and Ukraine;
              it is about to open negotiations with Botswana, Croatia, Hungary, Jersey,
              New Zealand, Senegal, The Seychelles, Sri Lanka and Tajikistan; and
              and it has proposed to Albania, Argentina, Australia, Azerbaijan,
              Brazil, Bulgaria, Chile, China, Cyprus31, Czech Republic, Estonia,
              Georgia, Greece, Indonesia, Ireland, Israel, Kazakhstan, Kyrgyzstan,
              Kuwait, Laos, Latvia, Lithuania, Mauritius, Moldavia, Mongolia,
              Morocco, Poland, Slovak Republic, Slovenia, Thailand, Trinidad and
              Tobago, Tunisia, the United Arab Emirates, Uzbekistan, and Viet Nam
              that negotiations be held. Sometimes these proposals have not received a
              response. Discussions between Australia and Luxembourg on the most
              appropriate instrument for exchange of information are still ongoing.
      260.    Luxembourg has indicated that its principal economic partners are
      within the European Union: 90% of its trade is with member countries of the
      EU, and 75% of that trade takes place with its three neighbours (Belgium,
      France and Germany). The majority of EU member states do not today have
      an agreement consistent with the standard, but an agreement with Italy may be
      signed shortly. The commentaries received from Luxembourg’s Community
      partners show that Luxembourg has concluded agreements with all those EU


30.   Former Yugoslav Republic of Macedonia.
31.   1. Footnote from Turkey: the information contained in this document refers to
      “Cyprus”, meaning the southern portion of the island. There is no single author-
      ity representing both Turkish and Greek Cypriots on the island. Turkey recog-
      nises the Turkish Republic of Northern Cyprus (TRNC). Until such time as a
      lasting and equitable solution is found in the United Nations context, Turkey will
      maintain its position on the “Cyprus question”.
      2. Footnote from all European Union states members of the OECD and the
      European Commission: The Republic of Cyprus is recognised by all members of the
      United Nations except Turkey. The information shown in this document concerns
      the zone under the effective control of the Government of the Republic of Cyprus.


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                                  COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION – 69



       jurisdictions that have expressed an interest in negotiating with Luxembourg
       an agreement that respects the international transparency standard. Luxem-
       bourg therefore has a treaty network covering all its relevant partners.

                  Determination and factors underlying recommendations

                                      Phase 1 determination
       The element is in place.
                 Factors underlying
                 recommendations                               Recommendations
       Luxembourg cannot exchange                    Luxembourg should continue to
       information in accordance with the            develop its EOI mechanisms network
       international standards under its EOI         to the standard, regardless of their
       agreements with several partners.             form.


C.3. Confidentiality
        The jurisdictions’ mechanisms for exchange of information should have adequate
        provisions to ensure the confidentiality of information received.

       Information received: disclosure, use, and safeguards (ToR C.3.1)
       261.     Governments would not engage in information exchange without the
       assurance that the information provided would only be used for the purposes
       permitted under the exchange mechanism and that its confidentiality would
       be preserved. Information exchange instruments must therefore contain con-
       fidentiality provisions that spell out specifically to whom the information can
       be disclosed and the purposes for which the information can be used. In addi-
       tion to the protections afforded by the confidentiality provisions of informa-
       tion exchange instruments, countries generally impose strict confidentiality
       requirements on information collected for tax purposes.
       262.    All treaties recently signed by Luxembourg contain a confidentiality
       provision in line with Article 26 (2) of the OECD model convention.
                Any information received under paragraph 1 by a Contracting
                State shall be treated as secret in the same manner as informa-
                tion obtained under the domestic laws of that State and shall be
                disclosed only to persons or authorities (including courts and
                administrate bodies) concerned with the assessment or collection
                of, the enforcement or prosecution in respect of, the determination
                of appeals in relation to the taxes referred to in paragraph 1, or
                the oversight of the above. Such persons or authorities shall use




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70 – COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION

             the information only for such purposes. They may disclose the
             information in public court proceedings or in judicial decisions.
     263.    Luxembourg domestic law also contains provisions guaranteeing
     the confidential nature of information exchanged, namely an obligation of
     professional secrecy on the part of officials as well as experts involved in a
     tax enforcement procedure, a tax procedure under criminal law, or a com-
     munication from a tax authority in another procedure (cf. LGI section 22).
     Violations are punishable by a fine or imprisonment of up to six months (cf.
     LGI section 412).

     All other information exchanged (ToR C.3.2)
     264. The confidentiality provisions in Luxembourg’s agreements and
     Luxembourg’s domestic legislation do not draw a distinction between infor-
     mation received in response to requests and information forming part of the
     requests themselves. As such, these provisions apply equally to all requests,
     background documents to such requests, and any other communications
     between the requesting and requested jurisdictions.

               Determination and factors underlying recommendations

                                   Phase 1 determination
      The element is in place.


C.4. Rights and safeguards of taxpayers and third parties
       The exchange of information mechanisms should respect the rights and
       safeguards of taxpayers and third parties.

     Exceptions to requirement to provide information (ToR C.4.1)
     265.     The international standard allows requested parties not to supply
     information in response to a request in certain identified situations. Among
     other reasons, an information request can be declined if the requested infor-
     mation would disclose confidential communications protected by attorney-
     client privilege. Attorney-client privilege is a feature of the legal systems of
     many countries.
     266.    However, communications between a client and an attorney or other
     admitted legal representative are generally deemed confidential only to the
     extent that the attorney or admitted legal representative is acting in that
     capacity. When the definition of attorney privilege in domestic legislation of
     the requested jurisdiction is broader, this does not constitute valid grounds for



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                                  COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION – 71



       refusing a request for information exchange. Consequently, when a lawyer is
       acting as nominee shareholder, trustee, settlor, company director or under a
       power of attorney to represent a company in its business affairs, a request for
       exchange of information flowing from and related to such activities cannot
       be refused on grounds of attorney privilege.
       267.     The double taxation conventions concluded by Luxembourg contain a
       provision equivalent to the exemption in article 26 (3) of the OECD model tax
       convention allowing the state to refuse to exchange certain types of informa-
       tion, including that which would disclose a trade, business, industrial, com-
       mercial or professional secret or trade process.

                  Determination and factors underlying recommendations

                                      Phase 1 determination
       The element is in place.


C.5. Timeliness of responses to requests for information
        The jurisdiction should provide information under its network of agreements
        in a timely manner.

       Responses within 90 days (ToR C.5.1)
       268.     In order for exchange of information to be effective, the information
       needs to be provided in a timeframe which allows tax authorities to apply it to
       the relevant cases. If a response is provided but only after a significant lapse of
       time the information may no longer be of use to the requesting authorities. This
       is particularly important in the context of international co-operation as cases in
       this area must be of sufficient importance to warrant making a request.

       Organisational process and resources (ToR C.5.2)
       269.    The headquarters of the direct taxes administration is the competent
       authority for EOI in the field of direct taxation. A detailed review of this
       directorate organization, its ties with Luxembourg local authorities in charge
       of information gathering as well as the way the new gathering of information
       procedure implemented by the law of 31 March 2010 is applied in practice,
       will be conducted during the course of the phase 2 review.




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72 – COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION

     Unreasonable, disproportionate or unduly restriction conditions for
     EOI (ToR C.5.3)
     270.    There are no aspects of Luxembourg’s agreements or its laws that
     appear to impose additional restrictive conditions on the exchange of infor-
     mation, beyond the ones foreseen by article 26 of the OECD tax convention
     or TIEA models.

               Determination and factors underlying recommendations

                                   Phase 1 determination
      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.




                PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
                   SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS – 73




                 Summary of Determinations
           and Factors Underlying Recommendations


                                      Factors underlying
      Determination                   recommendations                     Recommendations
 Jurisdictions should ensure that ownership and identity information for all relevant entities
 and arrangements is available to their competent authorities. (ToR A.1)
 The element is not in          Luxembourg allows for the            Luxembourg should ensure
 place                          issuance of bearer securities        the availability of information
                                by SAs, SEs and S.e.c.as             relating to SAs, SEs and
                                without having mechanisms            S.e.c.as bearer securities
                                allowing for the identification of   holders in any circumstances.
                                such securities holders in any
                                circumstances. This possibility
                                is also opened to investment
                                companies taking the form of a
                                SA or a S.e.c.a.
                                Ownership information                Luxembourg should ensure
                                relating to foreign partners         that ownership information
                                of SICARs which take the             relating to SICARs which
                                form of an S.e.c.s is not            take the form of an S.e.c.s is
                                available in Luxembourg in all       available in all circumstances.
                                circumstances.
 Jurisdictions should ensure that reliable accounting records are kept for all relevant entities
 and arrangements. (ToR A.2)
 The element is in place




PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
74 – SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS

                                  Factors underlying
     Determination                recommendations                      Recommendations
Banking information should be available for all account-holders. (ToR A.3)
The element is in place      There are some questions            CDD rules applying to
                             regarding how CDD rules             numbered accounts opened
                             apply in practice to numbered       prior the enactment of
                             accounts opened prior to the        Grand Ducal Regulation
                             enactment of Grand Ducal            of 1 February 2010 should
                             Regulation of 1 February 2010.      be clarified by Luxembourg
                                                                 authorities.
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)
The element is in            Limitations in access to            Luxembourg should ensure
place but some               information provided for by         access to information held
elements of the legal        Luxembourg’s domestic legis-        by financial institutions,
implementation of            lation are currently overridden     insurance companies, and
the element needs            in respect of only 28 of the 68     SPFs for all its relevant
improvements                 signed agreements. Only these       partners.
                             new rules allow for access to
                             information held by financial
                             institutions, insurance compa-
                             nies, and SPFs.
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)
The element is in place




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                   SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS – 75



                                      Factors underlying
      Determination                   recommendations                     Recommendations
 Exchange of information mechanisms should allow for effective exchange of information.
 (ToR C.1)
 The element is in              Of the 28 agreements                 Luxembourg should ensure, in
 place but some                 concluded by Luxembourg,             line with its commitment to the
 elements of the legal          since its commitment to the          standard, that each of its EOI
 implementation of              standard in March 2009, 3            mechanisms strictly respects
 the element needs              establish restrictions which are     the standard of transparency
 improvements                   inconsistent with the standard.
                                As a result of domestic law limi-    Luxembourg should ensure
                                tations with respect to access       that all the treaties signed
                                to information, only 25 of the 68    could allow for an exchange
                                signed EOI mechanisms allow          of information in accordance
                                for exchange of information in       with the international
                                accordance with the interna-         standard.
                                tional standard. Of these 25
                                agreements 17 are in force.
 The jurisdictions’ network of information exchange mechanisms should cover all relevant
 partners. (ToR C.2)
 The element is in place        Luxembourg cannot exchange           Luxembourg should
                                information in accordance with       continue to develop its EOI
                                the international standards          mechanisms network to the
                                under its EOI agreements with        standard, regardless of their
                                several partners.                    form.
 The jurisdictions’ mechanisms for exchange of information should have adequate provisions
 to ensure the confidentiality of information received. (ToR C.3)
 The element is in place
 The exchange of information mechanisms should respect the rights and safeguards of
 taxpayers and third parties. (ToR C.4)
 The element is in place
 The jurisdiction should provide information under its network of agreements in a timely
 manner. (ToR C.5)
 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.




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                                                                                        ANNEXES – 77




      Annex 1: Jurisdiction’s Response to the Review Report32



       This annex is left blank because Luxembourg has chosen not to
       provide comments to include in it.




32.    This Annex presents the jurisdiction’s response to the review report and shall not
       be deemed to represent the Global Forum’s views.


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78 – ANNEXES




      Annex 2: List of all Exchange-of-Information Mechanisms
                               in Force



Multilateral agreements

           Luxembourg is party to:
           The EU Council Directive 77/799/EEC of 19 December 1977 (as amended)
       concerning mutual assistance by the competent authorities of the Member
       States in the field of direct taxation and taxation of insurance premiums.
       This Directive came into force on 23 December 1977 and all EU members were
       required to transpose it into national legislation by 1 January 1979. The current
       EU members, covered by this Council Directive, are: Austria, Belgium, Bulgaria,
       Cyprus33, Czech Republic, Denmark, Estonia, Finland, France, Germany,
       Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta,
       Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden,
       and the United Kingdom. A new EU Council Directive on Administrative
       Cooperation in the Field of Direct Taxation, consistent with the international
       standard on transparency and exchange of information, was adopted by the
       Council of the European Union on 15 February 2011 and will come into effect
       on 1 January 2013.

33.    1. Footnote from Turkey: the information contained in this document refers to
       “Cyprus”, meaning the southern portion of the island. There is no single author-
       ity representing both Turkish and Greek Cypriots on the island. Turkey recog-
       nises the Turkish Republic of Northern Cyprus (TRNC). Until such time as a
       lasting and equitable solution is found in the United Nations context, Turkey will
       maintain its position on the “Cyprus question”.
       2. Footnote from all European Union states members of the OECD and the
       European Commission: The Republic of Cyprus is recognised by all members
       of the United Nations except Turkey. The information shown in this document
       concerns the zone under the effective control of the Government of the Republic
       of Cyprus.




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                                                                                           ANNEXES – 79



Bilateral agreements

                                       Type of
No.         Jurisdiction            arrangement        Date of signature      Date entry into force
 1    Albania                      DTC                     14.01.2009                      ---
 2    Armenia                      DTC                     23.06.2009                   09.04.2010
                                   DTC                     18.10.1962                   07.02.1964
 3    Austria
                                   DTC Protocol            07.07.2009                   01.09.2010
 4    Azerbaijan                   DTC                     16.06.2006                   02.07.2009
 5    Bahrain                       DTC                    06.05.2009                   10.11.2010
 6    Barbados                     DTC                     01.12.2009                      ---
                                   DTC                     17.09.1970                   30.12.1972
 7    Belgium                      DTC Protocol            11.12.2002                   11.12.2002
                                   DTC Protocol            16.07.2009                       ---
 8    Brazil                        DTC                    08.11.1978                   23.07.1980
 9    Bulgaria                     DTC                     27.01.1992                   15.03.1994
 10   Canada                        DTC                    10.09.1999                   10.10.2000
 11   China                        DTC                     12.03.1994                   28.07.1995
 12   Czech republic                DTC                    18.03.1991                   30.12.1992
                                    DTC                    17.11.1980                   22.03.1982
 13   Denmark
                                    DTC Protocol           04.06.2009                   09.04.2010
 14   Estonia                       DTC                    23.05.2006                   23.01.2007
                                    DTC                    01.03.1982                   27.03.1983
 15   Finland
                                    DTC Protocol           01.07.2009                   12.04.2010
                                    DTC                    24.11.2006                   27.12.2007
 16   France
                                    DTC Protocol           03.06.2009                   29.10.2010
 17   Georgia                       DTC                    15.10.2007                   14.12.2009
                                    DTC                    23.08.1958                   06.06.1960
 18   Germany
                                    DTC Protocol           11.12.2009                   23.12.2010
 19   Greece                       DTC                     22.11.1991                   26.08.1995
                                    DTC                    02.11.2007                   20.01.2009
 20 Hong-Kong
                                    DTC Protocol           11.11.2010                       ---
 21   Hungary                       DTC                    15.01.1990                   21.04.1991
 22 India                          DTC                     02.06.2008                   09.07.2009
 23 Indonesia                      DTC                     14.01.1993                   10.03.1994
 24   Ireland                      DTC                     14.01.1972                   25.02.1975




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80 – ANNEXES

                                     Type of
No.         Jurisdiction          arrangement         Date of signature      Date entry into force
                                  DTC                     04.10.1999               19.09.2001
25 Iceland
                                  DTC Protocol            28.08.2009               28.04.2010
26 Israel                         DTC                     13.12.2004               22.05.2006
27 Italy                          DTC                     03.06.1981               04.02.1983
                                  DTC                     05.03.1992                27.12.1992
28 Japan
                                  DTC Protocol            25.01.2010                    ---
29 Kazakhstan                     DTC                     26.06.2008                    ---
30 Kuwait                         DTC                     11.12.2007                    ---
31    Latvia                      DTC                     14.06.2004               14.04.2006
32 Liechtenstein                  DTC                     26.08.2009                17.12.2010
33 Lithuania                      DTC                     22.11.2004               14.04.2006
34 Malaysia                       DTC                     21.11.2002               02.07.2004
35 Malta                          DTC                     29.04.1994                14.02.1996
36 Mauritius                      DTC                     15.02.1995                12.09.1996
                                  DTC                     07.02.2001                27.12.2001
37    Mexico
                                  DTC Protocol            07.10.2009                    ---
38 Moldavia                       DTC                     11.07.2007               04.12.2009
39 Monaco                         DTC                     27.07.2009               03.05.2010
40 Mongolia                       DTC                     05.06.1998               12.03.2004
41    Morocco                     DTC                     19.12.1980                16.02.1984
                                  DTC                     08.05.1968                20.10.1969
42    The Netherlands
                                  DTC Protocol            29.05.2009                01.07.2010
                                  DTC                     06.05.1983               27.01.1985
43 Norway
                                  DTC Protocol            07.07.2009               12.04.2010
44 Panama                         DTC                     07.10.2010                    ---
45 Poland                         DTC                     14.06.1995                31.07.1996
                                  DTC                     25.05.1999               30.12.2000
46 Portugal
                                  DTC Protocol            07.09.2010                   ---
47    Qatar                       DTC                     03.07.2009               09.04.2010
48 Romania                        DTC                     14.12.1993                08.12.1995
49 Russia                         DTC                     28.06.1993                07.05.1997
                                  DTC                     27.03.2006               29.12.2006
50 San Marino
                                  DTC Protocol            18.09.2009                   ---
51    Singapore                   DTC                     06.03.1993                24.05.1996




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                                                                                           ANNEXES – 81



                                       Type of
No.         Jurisdiction            arrangement        Date of signature      Date entry into force
 52   Slovak republic               DTC                    18.03.1991                   30.12.1992
 53 Slovenia                       DTC                     02.04.2001                   08.12.2002
 54 South Africa                   DTC                     23.11.1998               08.09.2000
 55 South Korea                    DTC                     07.11.1984                   26.12.1986
                                   DTC                     03.06.1986                   19.05.1987
 56 Spain
                                   DTC Protocol            10.11.2009                   16.07.2010
                                   DTC                     14.10.1996                   15.03.1998
 57 Sweden
                                   DTC Protocol            07.09.2010                       ---
                                   DTC                     21.01.1993                   09.02.1994
 58 Switzerland
                                   DTC Protocol            25.08.2009                   19.11.2010
 59 Thailand                       DTC                     06.05.1996                   22.07.1998
 60 Trinidad and Tobago            DTC                     07.05.2001                   20.11.2003
 61   Tunisia                      DTC                     27.03.1996                   18.10.1999
                                   DTC                     09.06.2003                   18.01.2005
 62 Turkey
                                   DTC Protocol            30.09.2009                       ---
 63 Ukraine                        DTC                     06.09.1997                      ---
 64 United Arab Emirates           DTC                     20.11.2005               19.06.2009
                                   DTC                     24.05.1967                   03.07.1968
 65 United Kingdom
                                   DTC Protocol            02.07.2009                   28.04.2010
                                   DTC                     03.04.1996                   20.12.2000
 66 United States
                                   DTC Protocol            20.05.2009                       ---
 67 Uzbekistan                     DTC                     02.07.1997                   01.09.2000
 68 Viet Nam                       DTC                     04.03.1996                   19.05.1998




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82 – ANNEXES




                Annex 3: List of all Laws, Regulations
                   and Other Relevant Material



     Commercial legislation
         Law of 1915 on commercial companies and partnerships
         Law of 21 April 1928 on foundations
         Law of 31 July 1929 on the fiscal regime of ‘société de participation
            financières’
         Law of 31 May 1999 on professionals providing registered office
         Law of 19 December 2002 concerning the commerce and company reg-
            ister as well as annual accountings of enterprises
         Law of 27 July 2003 on trusts and fiduciary contracts
         Law of 11 May 2007 concerning the creation of familial assets manage-
            ment companies
         Law of 20 April 2009 on electronic submission by the commerce and
            company register
         Law of 10 December 2010 on new international accounting norms for
            enterprises
         Grand ducal regulation of 23 January 2003 concerning the commerce and
            company register as well as annual accountings of enterprises
         Grand ducal regulation of 22 April 2009 concerning the commerce and
            company register as well as annual accountings of enterprises

     Fiscal legislation
         General tax law of 22 May 1931
         Law of 27 November 1933 concerning the recovery of direct taxes and
            excise duties on alcohols and social insurance contributions



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                                                                                        ANNEXES – 83



           Adaptation fiscal law of 16 October 1934
           Wealth tax law of 16 October 1934
           Commercial tax law of 1 December 1936
           Law of 17 April 1964 modified, concerning the reorganisation of the
              direct taxes administration
           Anti money laundering legislation
           Law of 12 November 2004 concerning the fight against anti money laun-
              dering and combating the financing of terrorism
           Grand-ducal regulation of 1er February 2010 detailing some provisions of
              Law of 12 November 2004 concerning the fight against anti money
              laundering and combating the financing of terrorism
           Law of 27 October 2010 reinforcing the legal framework in the field of
              fight against anti money laundering and financing of terrorism

       Financial legislation
           Law of 6 December 1991 concerning the supervision of insurance companies
           Law of 5 April 1993 concerning the financial sector
           Law of 15 June 2004 on capital risk investment companies

       Treaties ratification
           Law of 31 March 2010 concerning the approval of double tax conventions
              and introducing the applicable procedure in the field of exchange of
              information on request

       Administrative co-operation
           Law of 15 March 1979 concerning the mutual assistance in the field of
              direct taxes
           Law of 27 April 2006 transposing the EU 2004/56/CE Directive con-
              cerning the mutual assistance between competent authorities of the
              member states in the field of direct taxes
           Law of 19 December 2008 concerning cooperation between administra-
              tions and justice
           Grand ducal regulation of 15 March 1979 concerning the international
              mutual assistance in the field of direct taxes



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84 – ANNEXES

     Other
         Law of 1 December 1978 concerning administrative tax claims
         Decision of 8 June 1950 of the Supreme court of justice
         Decision of 18 June 2007 of the Administrative court of appeal of
            Luxembourg




               PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – LUXEMBOURG © OECD 2011
          ORGANISATION FOR ECONOMIC CO-OPERATION
                     AND DEVELOPMENT
     The OECD is a unique forum where governments work together to address the
economic, social and environmental challenges of globalisation. The OECD is also at the
forefront of efforts to understand and to help governments respond to new developments
and concerns, such as corporate governance, the information economy and the challenges of
an ageing population. The Organisation provides a setting where governments can compare
policy experiences, seek answers to common problems, identify good practice and work to
co-ordinate domestic and international policies.
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                        OECD PUBLISHING, 2, rue André-Pascal, 75775 PARIS CEDEX 16
                          (23 2011 43 1 P) ISBN 978-92-64-11787-7 – No. 58601 2011
Global Forum on Transparency and Exchange of Information
for Tax Purposes

PEER REVIEWS, PHASE 1: LUXEMBOURG
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the
multilateral framework within which work in the area of tax transparency and exchange
of information is carried out by over 100 jurisdictions which participate in the work of the
Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the
implementation of the standards of transparency and exchange of information for tax
purposes. These standards are primarily reflected in the 2002 OECD Model Agreement
on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the
OECD Model Tax Convention on Income and on Capital and its commentary as updated in
2004, which has been incorporated in the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant
information for the administration or enforcement of the domestic tax laws of a requesting
party. “Fishing expeditions” are not authorised, but all foreseeably relevant information
must be provided, including bank information and information held by fiduciaries,
regardless of the existence of a domestic tax interest or the application of a dual
criminality standard.
All members of the Global Forum, as well as jurisdictions identified by the Global Forum
as relevant to its work, are being reviewed. This process is undertaken in two phases.
Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for
the exchange of information, while Phase 2 reviews look at the practical implementation of
that framework. Some Global Forum members are undergoing combined – Phase 1 plus
Phase 2 – reviews. The ultimate goal is to help jurisdictions to effectively implement the
international standards of transparency and exchange of information for tax purposes.
All review reports are published once approved by the Global Forum and they thus
represent agreed Global Forum reports.
For more information on the Global Forum for Transparency and Exchange of
Information for Tax Purposes and for copies of the published review reports, please visit
www.oecd.org/tax/transparency and www.eoi-tax.org.


  Please cite this publication as:
  OECD (2011), Global Forum on Transparency and Exchange of Information for Tax Purposes
  Peer Reviews: Luxembourg 2011: Phase 1: Legal and Regulatory Framework, Global Forum on
  Transparency and Exchange of Information for Tax Purposes: Peer Reviews, OECD Publishing.
  http://dx.doi.org/10.1787/9789264117884-en
  This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical
  databases. Visit www.oecd-ilibrary.org, and do not hesitate to contact us for more information.




                                                     ISBN 978-92-64-11787-7

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