Luxembourg is heading for automatic exchange of tax information

Luxembourg has recently accepted a bill which approves a number of tax treaties and has backed a draft law transposing Article 8 of the European Council Directive on administrative assistance in tax matters.

The Governing Council of Luxembourg approved the tax treaties with such countries as Guernsey, Jersey, the Isle of Man, Saudi Arabia and the Czech Republic, as well as protocols amending existing tax treaties with Slovenia and Denmark. The goals of the treaties are to prevent double taxation and strengthen bilateral economic relations. All of the agreements are based on the Organization for Economic Cooperation and Development’s (OECD) Model Convention, where exchange of information shall be executed upon request.

Transposition into Luxembourg law Article 8 of the European Council Directive from February 15, 2011 means cooperation and provision for the automatic and mandatory exchange of information for five specific categories of income and capital. These categories are income from employment, director’s fees, life insurance products, pensions, and the ownership of and income from immovable property.

Article 8 of the European Union’s (EU) Directive requires that the competent authority of an EU member state has to exchange information relating to persons residents in another EU member state for taxable periods starting from January 1, 2014. This has to be done in a systematic manner and without any request as long as information is available.

From 2015, EU member states have to implement automatic information exchange and by 2017 at the latest the mechanism has to be applied for at least three of the income categories.