TAXATION : BURIAL OF BANK SECRECY.

Luxembourg's Prime Minister Jean-Claude Juncker announced, on 10 April, that his country will begin implementing, on 1 January 2015, the system of automatic information exchange between tax administrations. Austria and Switzerland will have to follow suit.

Speaking before his country's parliament, where he presented his annual State of the nation' address, Juncker admitted that Luxembourg had no choice but to capitulate to the United States, whose position is "radical". The failure of the Rubik agreement between Switzerland and Germany also helped tip the scales. "The United States leaves us no choice" in the framework of the FATCA negotiations (see separate article): if it fails to abolish its bank secrecy, Luxembourg will cut off its financial industry from the American financial market, which would be unthinkable given its importance. The Grand Duchy "could not refuse to give Europeans what it would agree to give the Americans," he continued. So the moral of the story is that from 1 January 2015, Luxembourg will shift from withholding at the source to automatic information exchange between tax administrations.

"Luxembourg's financial centre, which does not live off dirty money and tax fraud, is ready to do so," said Juncker, especially because Luxembourg will make fewer concessions to its EU partners than to the United States.

Luxembourg's Finance Ministry notes in a statement that the country will apply automatic information exchange "based on the scope" of EU rules on the taxation of interest earnings on...