Tax Compliance

The Common Reporting Standard (hereinafter the “CRS”) is a set of tax compliance rules and regulations established by the Organisation for Economic Co-operation and Development (hereinafter the “OECD”), aiming at detecting and discouraging tax evasion by achieving global tax co-operation via an automatic exchange of information between the tax authorities of the Grand Duchy of Luxembourg (“Luxembourg”) and the ones of CRS Participating Jurisdictions and CRS Reportable Jurisdictions.

The CRS has been implemented at the European Union level through the Council Directive 2014/107/UE of December 9th, 2014 as regards mandatory automatic exchange of information in the field of taxation, known as “DAC 2”.

Relationships and exchange of information with non-EU countries are governed either by means of the OECD Multilateral Competent Authority Agreement or by bilateral agreements.

DAC 2 has been transposed into Luxembourg law by the Luxembourg law dated December 18th, 2015 on the automatic exchange of financial account information in the field of taxation (the “CRS Law”) which entered into force on January 1st, 2016.

The main consequence of the CRS Law is that our Bank is required to report various data and information on an yearly basis regarding its clients -both individuals and legal entities- to the Luxembourg tax authorities (the “Administration des Contributions Directes”), which will in turn automatically exchange such information with the competent tax authorities of the country(ies) where the client’s tax residence(ies) is/are deemed to be located.

The above mentioned CRS reporting has been performed by our Bank for the first time in 2017 and should relate to the immediately preceding calendar year.

If the concerned client is a tax resident of a CRS Reportable Jurisdiction, the data and information to be reported by the Bank to the Administration des Contributions Directes include the following:

  • the identity of such client, and other client-related information (e.g. the identity of the ultimate beneficial owner(s) if the client is a legal entity or acts in the name and on behalf of another person, the Tax Identification Number);
  • the client’s account(s) number(s) held with the Bank and the corresponding account balances at year-end;
  • any financial income generated by these accounts, including interests from cash accounts and dividends, interests from securities accounts as well as gross sales and redemption proceeds from the said securities accounts.

The first reporting has occurred in 2017, and will cover the January 1st to December 31st, 2016 period.

For practical purposes and your reference, we have reflected below some main notions and terms used in the Bank’s ‘Self-certification regarding tax residence - Individuals’ and ‘Self-certification regarding tax residence - Legal entities’.

  1. CRS Participating Jurisdiction (Juridiction Partenaire):

    In accordance with the CRS Law, Luxembourg considers that the noition of “Participating Jurisdiction” designates:

    • CRS Reportable Jurisdiction (as defined below); or
    • any other jurisdiction (i) which formally committed to implement the CRS either by signing the relevant Multilateral Competent Authority Agreement (MCAA) or by entering into bilateral agreements with Luxembourg, but to which Luxembourg does not report (yet) and (ii) listed as Participating Jurisdiction under the Grand Ducal Regulation of 15 March 2016 as amended from time to time (the “Luxembourg Regulation”).

    The following countries are qualified as CRS Participating Jurisdictions in accordance with the Luxembourg Regulation: Albania, Anguilla, Andorra, Antigua and Barbuda, Argentina, Aruba, Australia, Austria, Barbados, Belgium, Belize, Bermuda, Brazil, British Virgin Islands, Bulgaria, Canada, Cayman Islands, Chile, China, Colombia, Cook Islands, Costa Rica, Croatia, Curacao, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Ghana, Germany, Gibraltar, Greece, Grenada, Greenland, Guernsey, Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Israel, Italy, Japan, Jersey, Kuwait, Latvia, Liechtenstein, Lithuania, Malesia, Malta, Marshall Islands, Mauritius, Mexico, Monaco, Montserrat, Nauru, Netherlands, Niue, Norway, Poland, Portugal, Romania, Russia, Saint Kitts and Nevis, Saint Lucia, Saint Martin, Saint Vincent and the Grenadines, Samoa, San Marino, Saudi Arabia, Seychelles, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Turks and Caicos Islands, United Kingdom, Uruguay.

    http://www.oecd.org/tax/automatic-exchange/commitment-and-monitoring-process/AEOI-commitments.pdf.

    The above list and notion of CRS Participating Jurisdictions are relevant in order to classify and perform a due diligence on an account holder/entity pursuant to the CRS. Even if the account holder/entity is located in a non-CRS Participating Jurisdiction, it may qualify as “Passive NFE” for which the beneficial owner/controlling person need to be identified and potentially reported if he is tax resident of a CRS reportable jurisdiction.

  2. CRS Reportable Jurisdiction (Juridiction soumise à declaration): Any jurisdiction with which automatic exchange of information under the CRS has been agreed and is in place.

    Such CRS Reportable Jurisdictions are in principle the Member States of the European Union, jurisdictions which entered into the OECD Multilateral Competent Authorities Agreement, jurisdictions which entered into a bilateral agreement with Luxembourg and jurisdictions which entered into an agreement with the European Union under which such jurisdiction should provide tax information.

    The following countries are qualified as CRS Reportable Jurisdictions in accordance with the Luxembourg Regulation: Argentina, Austria, Barbados, Belgium, Bulgaria, Colombia, Croatia, Curacao, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Greenland, Guernsey, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Malta, Mexico, Montserrat, Netherlands, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, United Kingdom.

  3. Account held with the Bank: Under the CRS, both cash and securities accounts are in scope for reporting purposes..
  4. Taxpayer Identification Number or equivalent number (hereinafter “TIN”): The TIN is one of various client-related pieces of identification information which the Bank will have to report to the Administration des Contributions Directes. The reporting by the Bank of such data to the Luxembourg tax authorities will in turn facilitate the automatic exchange of information by the latter with their counterparts in other CRS Participating Jurisdictions. The OECD Website includes some useful guidance as to the domestic rules in most CRS Participating Jurisdictions governing the issuance, structure, use and validity of the TIN; it is accessible via this hypertext link: http://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/tax-identification-numbers/.
  5. For legal entities only:
    • (i) Passive Non-Financial Entity: A Non-Financial Entity which is not an Active Non-Financial Entity (see below).
    • (ii) Active Non-Financial Entity: A Non-Financial Entity which meets any of the following criteria:
      a) Operating company:
      A company that generates 50% or more of its gross income from active operations (as opposed to investments), and of which less than 50% of the assets held during the preceding calendar year or other appropriate reporting period are assets that produce or are held for the production of passive income.
      b) Holding or financing company of a non-financial group:
      Substantially all of the activities of the Non-Financial Entity consist of holding (in whole or in part) the outstanding stock of, or providing financing and services to, one or more subsidiaries that engage in trades or businesses other than those of a financial institution, except that a legal entity does not qualify for this status if it functions as an investment fund, such as a private equity fund, a venture capital fund, a leveraged buyout fund, or any investment vehicle whose purpose is to acquire or fund companies and then hold interests in those companies as capital assets for investment purposes;
      c) Start-up company:
      The Non-Financial Entity is not yet operating a business and has no prior operating history, but is investing capital into assets with the intent to operate a business other than that of a financial institution, provided that the Non-Financial Entity no longer qualifies for this exception after 24 months following the date of its incorporation;
      d) Legal entity in liquidation or reorganization:
      The Non-Financial Entity was not a financial institution in the past five years, and is in the process of liquidating its assets or is reorganizing with the intent to continue or recommence operations in a business other than that of a financial institution;
      e) Treasury centre of a non-financial group:
      The Non-Financial Entity primarily engages in financing and hedging transactions with, or for, related legal entities that are not financial institutions, provided that the group of any such related legal entities is primarily engaged in a business other than that of a financial institution;
      f) Non-profit Non-Financial Entity.
    • (iii) Other: Any of the following:
      a) A financial institution
      b) An Active Non-Financial Entity as per the various definitions above, under (ii) b)) to e).
      c) A governmental entity, or an international organization, or a central bank, or the wholly-owned entities of any of the former.
      d) A legal entity that is regularly traded on a stock exchange or some other regulated market.