Luxembourg will meet US tax-law requirements
Luxembourg announced on Tuesday that it will share information with the US tax authorities about bank accounts held in the country by US citizens and residents of the United States.
The announcement was made on the eve of a summit of European Union leaders at which holdouts Luxembourg and Austria are under pressure from EU partners to implement the automatic sharing of bank account information among EU states to combat tax evasion and fraud.
The US Foreign Account Tax Compliance Act (FATCA) was enacted in 2010 by Congress to target US taxpayers with foreign bank accounts so as to ensure they paid their contributions.
To-date, Luxembourg, like Austria, has applied a withholding tax on the interest paid on such accounts at source and has only supplied account information to foreign tax authorities on request.
From January 2015, however, Luxembourg will do so automatically, a statement said Tuesday.
It said this put treatment of US bank account holders on the same basis as that of EU depositors under the terms of a 2003 EU directive on information sharing.
However, Luxembourg made no mention of a 2008 EU revision of the 2003 ruling which expands its scope and which is due to be discussed at an EU leaders summit on Wednesday targeting tax evasion and fraud.
At the same time, the statement demanded equal treatment for Luxembourg compared with other international financial centres which are lukewarm on the prospect of greater regulatory intrusion into their business.
“Luxembourg wishes to see the same conditions apply to all competing financial centres and to see the automatic exchange of information accepted as the international standard,” the statement said.
Additionally, Luxembourg said it wanted to see the fruits of European Commission negotiations with financial centres Switzerland, Liechtenstein, Andorra, Monaco and San Marino on sharing such information.