Finance in Luxembourg – “A reputation as a tax haven takes time to disappear”
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LUXEMBOURG – The players in the financial center and the authorities claim that the country is no longer a tax haven. However, this is still debated.
On the occasion of revelations such as LuxLeaks and OpenLux, Luxembourg has regularly been pointed out abroad in recent years for its advantageous taxation. The term “tax haven” comes up regularly. But the authorities now reject him. While transparency efforts were launched at European level in 2000, it was the financial crisis of 2008 that “strengthened and accelerated the movement”, explains the Ministry of Finance. The following year, the Grand Duchy agreed to join the OECD information exchange standard. This resulted in the automatic exchange of information, effective since 2015.
“The criteria which make a paradise are in particular the absence of fiscal puncture, banking secrecy or the absence of exchange of information. Or, all this does not or no longer takes place in Luxembourg”, adds Nicolas Mackel, CEO of Luxembourg for finance, the development agency of the financial center. According to him, the country “has done everything to no longer meet the definition of a tax haven”. The evolution is not only national, since “the tax environment has changed a lot at EU and OECD level, so much so that it is difficult to imagine that a country that is a member of these organizations be a tax haven”.
“We should have gone much further”
Nicolas Mackel acknowledges that Luxembourg is still suffering from its image: “a sale of reputation takes time to disappear”. The rules would have even changed “before the LuxLeaks scandal”, whose trial took place in 2016. “Now, Luxembourg is in the forefront at European level regarding transparency”, adds the expert. This transparency has not harmed Luxembourg’s performance, according to him: “Assets under management have almost doubled between 2014 and 2021, from 260 to 506 billion euros, despite the automatic exchange of information”. The country would have other assets, such as “the structuring of international investments”. He recalls that taxation is lower in other countries, such as Ireland.
Not everyone sees things the same way. “Banking secrecy persists for residents. There is still information that the banks cannot disclose, ”laments MP Nathalie Oberweis (déi Lénk). Discussions are underway to abolish what is called “professional secrecy”, but this has not yet materialized. In the words of the elected left, “there has been progress, but all this remains opaque, we should go much further”. “We always view the financial center with a critical eye,” she concludes.