Taxes

Common reporting standard in Luxembourg

This article introduces the necessity of CRS in Luxembourg, the process by which it functions, and the relevant parties responsible for its implementation.

Table of content

The Common Reporting Standard (CRS) in Luxembourg is a requirement for certain individuals and entities. It specifies the data that must be provided, the parties that are obliged to comply, and the reporting procedure in Luxembourg.

What is the Common Reporting Standard in Luxembourg

The Common Reporting Standard (CRS) is a global standard for the automatic exchange of tax information about financial accounts. It was developed by the Organisation for Economic Cooperation and Development (OECD) to combat tax evasion at the request of the G20. The standard is based on the Foreign Account Tax Compliance Act (FATCA) in force in the United States.

CRS requires all financial institutions in participating countries to annually collect and provide information about a reportable account to local tax authorities. And they, in turn, are obliged to transmit this information to other relevant tax authorities in the countries participating in the agreement.

A reportable account is an account that belongs to one or more reporting entities. A reporting entity is a legal entity or an individual that is identified as resident for tax purposes in a participating jurisdiction. According to the CRS, all those opening new accounts must be certified by indicating their tax residency during the application process and, if necessary, their Tax Identification Numbers (TINs).

What information must be reported?

For individuals name, address, jurisdiction of residence, TIN(s) and date of birth (if available), account number and account balance or value at the end of the year.
For legal entities: name, address, jurisdiction of residence, TIN(s), account number and account balance or value at the end of the year.

According to the data protection law and regulations, each interested person must be informed that a financial institution begins to process their data for the purposes of the CRS and the jurisdiction with which the data will be exchanged.

History, key dates, and laws on CRS

The CRS law Luxembourg is not very old, according to the timeline, the standard was introduced in 2014 and Luxembourg was one of the early adopters.

Important dates for the CRS LAW

21 July 2014

The OECD released the Standard for Automatic Exchange of Financial Account Information in Tax Matters, including the Commentary on the CRS.

9 December 2014

The CRS is included in the Directive on Administrative Cooperation.

24 December 2015

Luxembourg published the CRS Act of 18 December 2015.

1 January 2016

The CRS entered into force for early adopters: Ireland, Luxembourg and the UK; The first reporting was done in 2017.

1 January 2017

The law entered into force for all other jurisdictions; the first reporting was done in 2018.

4 April 2022

The tax authorities (ACD) released an update of their frequently asked questions (FAQ) on the CRS. The two added questions (2.3 and 2.4) provide a list of Investment Entities for CRS purposes and clarify that unregulated entities cannot benefit from the exempt Collective Investment Vehicle (CIV) status.

The jurisdictions with which data is exchanged under the CRS are listed in the Grand-Ducal Decree, which is updated annually.

There are many countries that joined the CRS, among them are:

Germany

Belgium

Australia

Canada

Denmark

Spain

Greece

France

Austria

Italy

The full list of current jurisdictions can be found here.

This list does not include the United States, since reporting on accounts of citizens and residents of this country is regulated by the Foreign Account Tax Compliance Act (FATCA).

CRS reporting procedure in Luxembourg

The CRS Luxembourg reporting procedure may vary depending on whether the financial institution has reporting accounts. If there are no accounts, a zero declaration NIL must be submitted, this rule was introduced in January 2021.

Procedure how to file a CRS report

Go to MyGuichet.lu.
Select the appropriate declaration procedure: ACD or NCD (Submitting a NIL return).
Applicants must submit their NIL returns electronically via their business space on the MyGuichet.lu platform. New applicants have to create their business space first.
After filling in and signing, the data has to be returned digitally via LuxTrust. To do this, you must have a LuxTrust product or an electronic ID.
If the financial institution has CRS reporting accounts, then the report can be submitted via one of the two systems
FUNDSQUARE, a subsidiary of the Luxembourg Stock Exchange, using their e-File tool. A detailed CRS Manual can be found here.
WORLDLINE FINANCIAL SERVICES using their SOFIE tool.

When should a CRS report be submitted

Financial institutions in Luxembourg must submit CRS reports by 30 June each year (for accounts held in the corresponding reporting year). By 30 September, the tax authorities of the Grand Duchy automatically exchange data with the authorities in other jurisdictions.

It should be remembered that CRS reports are mandatory. The penalties for non-compliance are quite high. For example, for complete failure to provide data or late filing of a declaration with zero income the fine will be 10,000 euros. In addition, a financial institution may be fined up to 250,000 euros if the ACD finds, during an audit, that the institution has not complied with their obligations.