Luxembourg: constructive non-compliance
June 29th, 2009
The European Commission has decided to refer Luxembourg to the European Court of Justice over its incorrect application of certain provisions of the Savings Tax Directive as regards interest payments made to beneficial owners who benefit from so-called “non-domiciled resident” status in their country of residence.
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.
This will be the next problem in secrecy jurisdictions: constructive non-compliance.
By the by, this is also the way the Channel Islands and the IOM apply the ESD. It will be good to see how this pans out, because JSY, GSY and IOM will have to follow….