It’s FATCA time in Luxembourg

A year after the signing of the intergovernmental agreement regarding FATCA (Foreign Account Tax Compliance Act) between Luxembourg and the United States, the bill of law was finally introduced on 27 March 2015 to the Luxembourg Parliament.

The bill of law relates to the exchange of tax information between the two countries and comprises just six articles.

It provides that the Direct Tax Administration (Administration des contributions directes) in Luxembourg is competent to (i) collect relevant tax information and (ii) transmit this information to the US Treasury.

Interestingly enough, the draft bill of law imposes different tax penalties, ranging from EUR 1,500 to EUR 250,000, in case of non-compliance with the provisions of the future law.

For instance, in case of non-compliance with the due diligence procedures for identifying and reporting US accounts or if tax information transmission processes are not implemented, the financial entity may be liable for a tax penalty of up to EUR 250,000.

Late or incomplete transmission of information to the Direct Tax Administration may incur a maximum tax penalty of 0.5% of the amounts due to be transmitted (floored at EUR 1,500).