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Luxembourg: Draft legislation to amend FATCA and CRS rules

Luxembourg: Draft legislation to amend FATCA, CRS rules

The Luxembourg tax authorities on 20 February 2020 proposed a draft bill (no. 7527) that would amend the law relating to the FATCA and common reporting standard (CRS) regimes.


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Under the proposed legislation, financial institutions would be required:

  • Not to engage in practices designed to circumvent FATCA or CRS reporting
  • To keep record of actions taken and evidence used to confirm that due diligence procedures are followed for a period of 10 years after the year in which the information is required to be reported
  • To have policies, controls, procedures and IT systems that would be proportionate to the financial institution’s nature, particularities and size, in an effort to fulfill their reporting and due diligence obligations

In the case of no reportable accounts, financial institutions would be required to submit a “nil report” by 30 June.

  • A financial institution could be subject to a penalty in an amount up to €10,000 if it fails to submit either information for a reportable account or nil report.
  • A financial institution could be liable to pay a penalty of €250,000 if it fails to comply with its obligations. Additionally, if a financial institution fails to communicate information about a reportable account or communicates a lower amount than the reportable amount for an account, then a penalty of up to 0.5% could be levied on the total amount not communicated for a reportable account.
  • The draft legislation clarifies that the Luxembourg tax authorities could use the information gathered from reports submitted by Luxembourg reporting financial institutions, or collected during audits, for FATCA or CRS purposes only.

The amendments were introduced to the CRS legislation so that Luxembourg’s legislative framework would comply with the main aspects of CRS regime and would be applicable as from 1 January 2021.

The amendments to FATCA legislation were introduced to maintain consistency in the overall approach for FATCA and CRS.

Read a March 2020 report prepared by the KPMG member firm in Luxembourg

Read a March 2020 report [PDF 77 KB] also prepared by the KPMG member firm in Luxembourg

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