Luxembourg: quality, trust and stability
Minister Luc Frieden believes that in two years we will have complete tax transparency in Europe and other places around the world. Luxembourg’s minister of finance said in an interview with a Norwegian business newspaper in Oslo that a level playing field is important to keep jobs in Europe.
During Luxembourg for Finance’s financial mission to Scandinavia, Finance Minister Luc Frieden spoke in Oslo to Kenneth Lund from Dagens Naeringsliv, Norway’s largest business newspaper. Asked why Luxembourg has decided to shift towards the automatic exchange as of January 2015, Minister Frieden replied that there is an international trend towards the automatic exchange of information, which means that information will be collected from the administration of one country and given to the administration of the country of residence of international investors and depositors.
“Although in the past we had a system that made people comply with taxes, we did not exactly have the same system as other countries. We decided that as we are an international financial services centre, we will henceforth apply exactly the same rules on exactly the same products as other European countries".
The Luxembourg government shares the view of the international community that the fight against tax fraud and tax evasion is very important but also believes that such a fight can only be efficient if all major financial centres around the world share the same standards because otherwise there would be a real risk of activities shifting away from Europe to other continents.
“We want to keep activities and jobs in Europe that is why we strongly insist that those rules are also applied outside of the European Union, namely in other jurisdictions in Europe, in the US and also in Asia. Transparency must therefore also apply to Hong Kong, Delaware and the British Channel Islands; that is part of our request – that the same rules must be applied everywhere in order to have a level playing field”.
Minister Frieden stressed that the Luxembourg government was neither put under pressure by the local banking community nor by other countries in the EU or elsewhere. “It has been our decision to do so because there is a trend towards automatic exchange of information. The fact is that the United States introduced FATCA legislation, and the US is a very important economic partner to us, so we believed it was important to share information with US authorities and therefore share the same information with European tax administrations”.
Luxembourg is much more international than other financial centres. Therefore a lot of international companies and entrepreneurs need to have a place where their money is managed in a stable, internationally-oriented environment with services of the highest quality. “Most financial centres in Europe have the domestic market as their prime market and that is why their products are much more nationally minded. Our products, services and structures are aimed at an international clientele and that is one of the major differences; we have been developing know-how in this area which most other competitors don’t have”.
If you take for instance the area of investment funds; Luxembourg is number one in Europe and second in the world behind the US when it comes to assets under management. This know-how has been developed over years and even decades and that is why investors from all around the world trust Luxembourg domiciled products and they have continued to do so during the financial crisis, the Minister insists.
In that context he reminded everyone that Luxembourg cannot be compared with Cyprus like it has been done in the press. Though both countries are small in size, there are major differences between both financial centres. Cyprus has very few banks with few products and clients coming from two or three jurisdictions. “Luxembourg has a very diversified financial sector from many different countries; our clients come from all over the world and the activities of the financial services sector are quite broad”.
Minister Frieden has cited the recent analyses of the rating agency Moody’s, which does not see any risk in Luxembourg stemming from the financial sector. The same comments were made by the International Monetary Fund (IMF) which said that Luxembourg-based banks are very solid and highly capitalised. “That is why the issue of Cyprus is not the issue of Luxembourg”.
Minister Frieden finished the interview with the Norwegian business newspaper Dagens Naeringsliv by highlighting that Luxembourg is an ideal place for customers looking for international wealth management solutions for entering the European or world market. High quality, trust and stability are the main features of the Luxembourg financial centre. Investors want to make sure that their money is managed in a competent manner in a trustworthy environment. CW
(© photo: Morten Brakestad)