Access to AML information on taxpayers by Luxembourg tax authorities

On 10 August 2018 new provisions entered into force in national law to allow the Luxembourg tax authorities to have access to information on taxpayers for anti-money laundering (“AML”) purposes (the “Law”). The Law implements the Directive 2016/2258 of 6 December 2016 (amending Directive 2011/16) as regards access to AML information by tax authorities.

In domestic law, the newly transposed provisions will impact:

  • administrative cooperation in the tax field (Law of 29 March 2013);
  •  the common reporting standard (Law of 18 December 2015); and
  • country-by-country reporting (Law of 23 December 2016).

The information collected by the professionals foreseen in the AML law of 12 November 2004 (i.a. , financial institutions, financial sector professionals, collective investment undertaking, notaries, bailiffs, accountants, lawyers, etc.) within the context of their due diligence obligations is now available to the Luxembourg direct tax authorities upon request. This includes the information itself and the documents, and also the mechanism and process triggered by the professionals when they are performing their due diligence duties towards their clients.

In particular, the following information is concerned:

  • client identification (including name) and verification based on reliable and independent sources;
  • identification of the effective beneficial owner;
  • all measures taken by the professionals to understand the ownership and control of a structure;
  • evaluation and collection of information regarding the aim and nature of the contemplated business relationship
  • analysis of the transactions concluded throughout the business relationship;
  • the commercial activities performed by the client and any potential risk arising therefrom;
  • identification of the beneficial owner as recipient of any payment.

In addition, the Luxembourg tax authorities may now be provided with copies of and references for the data and information gathered by the professionals, and any requested and registered information on the relevant transactions at stake necessary for the identification or reconstitution of transactions for a 5 year period as from the ending date of the business relationship.

Please note that the VAT authorities already had access to the information detailed above, which access is henceforth extended to the direct tax authorities.