Luxembourg eases bank secrecy from 2015

Luxembourg, home to a prized financial centre, changed tack Wednesday in the face of growing international pressure over tax evasion, agreeing to the automatic exchange of bank account information with its EU partners from 2015.

«We can introduce the automatic exchange of (bank account) information without any danger from January 2015,» Prime Minister Jean-Claude Juncker told Parliament.

The country’s financial services industry — which critics say has benefited from a strong tradition of bank secrecy to attract wealthy foreign clients — was ready for the change, he said.

«The financial sector does not depend totally on bank secrecy,» Juncker said, insisting that Luxembourg did not make its living «off dirty money or tax evasion.»

A Luxembourg government statement said increased calls for change, especially from the United States, meant it had to review the current system which levies a withholding tax on the interest earned on bank saving accounts.

While the withholding tax, levied at 35 percent, was «a most effective instrument to ensure tax compliance and guarantee data protection,» the government had to adapt to the times.

Accordingly, it would report «all interest payments made» to individuals resident in another EU member state so as to ensure they paid the proper tax due there.

Significantly, the statement did not mention other accounts such as for life insurance or property investment — major parts of the Luxembourg financial sector — which are also supposed to be covered from 2015.

In addition, «the exchange of information will be based strictly on the EU’s 2003 directive on savings accounts … Companies are not involved,» one source close to the government said.