Luxembourg's selection of IGA Model 1 has proved prescient. This is the model chosen by almost all countries, including countries often considered tax havens, such as the Cayman Islands, the Bahamas, British Virgin Islands, Guernsey etc., which have also signed up to CRS. Luxembourg is now competing with countries with the same laws and tax regulations - one point in favour of Luxembourg’s competitivity.
The international groups now fear that their reputations will be damaged in the public opinion if they choose to invest in countries such as Luxembourg. With the automatic exchange of information, in Luxembourg they find a renowned international financial centre that advocates transparency. Far from the capital outflows predicted by some, Luxembourg is consolidating its position as a leading centre of financial excellence for international groups.
For Luxembourg, the automatic exchange of information will mean transparency and the fight against tax evasion and will send a strong signal to the rest of the world, particularly to those who see us as just another tax haven. The political message is clear: those days are over.
Quentin Vialette - Manager Tax and Compliance Analysis
1 FATCA : Foreign Account Tax Compliance Act
2 Automatic Exchange Of Information