EU daagt Luxemburg voor Hof vanwege belastingregelingen (en)
The European Commission said on Thursday (25 June) it was taking Luxembourg to court over concerns the Grand Duchy is breaching EU rules on savings revenues and using a so-called non-domiciled status for tax avoidance.
The commission is accusing Luxembourg of using the status in order to get around the EU Savings Tax Directive on savings interest payments.
Under the EU directive, member states must exchange information on non-resident savings revenues. Those countries who have not signed up to it – namely Belgium, Luxembourg and Austria – can tax the income at source.
But the commission considers Luxembourg to be breaching that rule as well by not applying the directive to people who benefit from the "non-domiciled resident" status in their country of residence.
Under Luxembourgish law, if investors are exempt from income tax in their state of residence for tax purposes or if the interest payments are not subject to tax in that particular state, they benefit from the "non-domiciled resident" status. That way, UK, Irish and Maltese fortunes are often escaping tax at source without their residence countries being informed.
"Luxembourg refuses to apply the directive to beneficial owners who benefit from the so-called non-domiciled resident status in their country of residence. Consequently, Luxembourg paying agents do not levy withholding tax on interest payments to such beneficial owners," Brussels explained.
The commission had already asked the Grand Duchy last year to change its law in order to prevent other member states' nationals to escape paying tax on their capital investments in their countries. But Luxembourg failed to comply.
"Given that the above Luxembourg tax rules were not amended following the reasoned opinion sent by the commission in November 2008, the commission has decided to refer the case to the European Court of Justice," the commission said.
Luxembourg has previously been under fire for its banking secrecy practices and was in April placed on the OECD's tax havens "grey list," together with Bermuda, Monaco and Singapore.
Meanwhile, the UK and Belgium might also be referred to the EU court because of their failure to disclose financial information about large public organisations, notably in the manufacturing sector, the Financial Times reports.
Competition officials from the EU commission said on Thursday that these were the two only member states that had failed to comply with an EU directive from 2005 on financial transparency, according to the newspaper.
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