Luxembourg ready to restructure bank secrecy

Luxembourg ready to restructure bank secrecy

Luxembourg ready to restructure bank secrecy

A general view of the city of Luxembourg. Secrecy controversies have put Luxembourg under the spotlight. REUTERS photo

Luxembourg is prepared to lift the lid slightly on its controversial bank secrecy in an effort to help curb tax evasion by foreign depositors, its finance minister told a yesterday’s newspaper.

Following intense criticism by eurozone partners of Luxembourg’s insular banking practices, Luc Frieden told Germany’s Frankfurter Allgemeine Sonntagszeitung it would now consider moves toward greater transparency.

“We want to strengthen cooperation with foreign tax authorities,” he said.

“The international trend is going toward an automatic exchange of bank deposit information. We no longer strictly oppose that.” He cited interest payments to foreign clients as an example of data that could be given to home countries as a matter of course.

“Luxembourg does not rely on clients who want to save on their taxes.” One of six founding members of the EU, Luxembourg has increasingly come under the microscope in post-global financial crisis legislative clean-up action, primarily for its culture of banking secrecy.

Frieden said recently he wants finance clients to come to Luxembourg “not to escape taxation... but because our products and services are better geared to international needs.” The Luxembourg government said the sector includes 141 banks from 26 countries and 3,840 investment funds sold in 70 other countries.

Offshore accounts crisis

The issue gained fresh prominence this month when a vast trove of emails and leaked records from offshore tax havens exposed the identities of thousands of account-holders.

The ICIJ report, that revealed on April 4, contained part of a hard drive with the details of 2.5 million digital files, a treasure trove that would ultimately yield information on 120,000 offshore companies and nearly 130,000 individuals. The release prompted fresh calls to crack down on banking systems that facilitate tax dodging.

Germany’s finance ministry on April 6 urged German media to hand over information on suspected tax evaders to authorities. Focus magazine reported it had information on 100,000 individuals in Germany to have used tax havens and 260 million financial transactions to and from such zones.

Compiled from Reuters and Agence France-Presse stories by Daily News staff.