Luxembourg’s new coalition government has strongly stated its commitment to sustaining the long-term development of its financial centre in general and to strengthening the competitiveness of the Luxembourg investment fund industry in particular.
New Government also sets out action plan for fight against tax fraud and tax evasion to comply with OECD Global Forum
Luxembourg’s new coalition government has strongly stated its commitment to sustaining the long-term development of its financial centre in general and to strengthening the competitiveness of the Luxembourg investment fund industry in particular. It has also set out its action plan for the fight against tax fraud and tax evasion, committing to taking immediate remedial measures to ensure that Luxembourg becomes compliant with the standards defined by the OECD ‘Global Forum on transparency and Exchange of information for tax purposes’ well in advance of the deadline.
Marc Saluzzi, Chairman of the Association of the Luxembourg Fund Industry (ALFI), observes: “The new government clearly appreciates the importance of the financial services sector to the Luxembourg economy and is committed to ensure that it remains a centre of excellence in financial services, fully compliant to international standards.”
Within the financial services arena, key areas of focus of the new government programme include:
- The consolidation Luxembourg’s the position as the leading global regulated fund domicile through continual improvements in the legal and regulatory frameworks. The government commits that it will not increase the subscription tax and that it will examine the fiscal regime of investment funds in order to enhance the competitiveness of investment funds based in Luxembourg.
- Continued efforts to transform Luxembourg into the leading European domicile for alternative investment funds. The government plans to lead promotional efforts to attract leading private equity funds to Luxembourg. In addition, the government will adopt measures to attract more front-office functions to Luxembourg, including the reform of the carried interest taxation rules.
- The government plans to maintain a very high quality supervision of the financial sector, supplementing the resources of the Luxembourg regulator to ensure quality and to guarantee an efficient application process.
- A refusal to introduce a financial transaction tax at the EU level
- Continued diversification into new markets, including efforts to maintain Luxembourg’s position as the first centre in Europe for the renminbi as well as the European centre of choice for cross-border investments with Mainland China; strengthening existing relationships with Gulf countries to promote Luxembourg as the leading European hub for Islamic Finance; the launch of an action programme around socially responsible investing, including micro-finance and impact finance.
In addition, following Luxembourg’s negative rating by the OECD Global Forum on transparency and Exchange of information for tax purposes, the new Government adopted an action plan on 9th December, highlighting its full commitment to fight against tax fraud and tax evasion. The new government is committed to taking immediate remedial measures, ensuring that Luxembourg becomes compliant to the Global Forum standards well in advance of the deadline. These measures include:
- A draft Bill immobilizing bearer shares and securities, which has already been brought before Parliament,
- A draft Bill approving the Convention on Mutual Administrative Assistance in Tax Matters will be submitted before the end of 2013, enabling Luxembourg to exchange banking information on request with all states that are party to the convention,
- An amendment to the law of 31 March 2010, bringing approval of tax conventions and setting out the procedure for information exchange.
Mr Saluzzi concludes that “ALFI welcomes the clarification of this commitment and looks forward to ensuring that Luxembourg remains the partner of choice for asset managers around the globe.”