Luxembourg announces end of bank secrecy with EU states - TrustLaw

   My Orchids. Phalaneopsis. Shining with transparency. Photo ET

http://www.trust.org/trustlaw/news/luxembourg-announces-end-of-bank-secrecy-with-eu-states/

This blog hasn't stopped talking about the necessity to get rid of tax havens. So for the principle we are getting there.

As for how things came about in Luxembourg, I'm worried about the sanity and just the timeline in which this came together:

• End of March, Luxembourg's Vice Prime Minister Asselborn lambasted Germany for treating small countries' financial centers with disrespect.

• About the same time, Luxembourg's Minister of Finance gives an interview published 2 weeks later to the German FAZ, announcing the end of Luxembourg's banking secrecy. One has to wonder if this was planned and agreed upon with the coalition partner, Mr. Asselborn's party? No member of Parliament seemed to be prepared to read that type of news in a German newspaper either. Nothing seems to have been negotiated with other member states either, a lost opportunity: you give something, get at least something. Even if it is only amnesty for your lifelong foreign tax cheaters who paid a withholding tax every year. Well after an ominous Cargolux deal, where Mr. Frieden sold a significant stake to the LOWEST bidder, negotiating seems to be his key strength.

• On Wednesday, no doubt, says Prime Minister Juncker in his speech to the state of the nation, this was a coordinated decision. Alright? And it will be effective as of January 2015. Good. I thought that the decision was an excellent thing in principle, but the public affair's issue was a blunder. I'm glad to learn that the blunder was coordinated.

Luxembourg tax-data exchange still under 'reflection': minister

My Orchids. Phalaneopsis "Evolution". Photo ET 

Luxembourg tax-data exchange still under'reflection': minister

I knew it because I know our characters: Big Talk on Sunday, backpedaling on Monday. Luxembourg Darwinism at work: there is an evolution. 

Quote: Frieden said this "evolution" abroad was something Luxembourg had to "take account of in its negotiations," but that it had yet to reach a settled view.

Oops, in the wrong direction! Now back to Saturday and let’s retry.

So you thought Luxembourg is in Wisconsin? No, that would be Luxemburg !

    My Orchids. Phalaneopsis "Tropical Haven". Photo ET, Tropical Productions Inc.

Luxembourg and Cyprus. What the HuffPost publishes.

    My Orchids. Phalaneopsis. Photo ET

Luxembourg, European Union's Wealthiest Country, Eyed As Next Ticking Bomb After Cyprus

Here is what the Huffington Post had to say about similarities between Cyprus and Luxembourg. It is a summary of information, facts or preconceived perceptions that Luxembourg has either to correct, deny or change. This article is very representative for most of similar articles in the international press. That is a fact to acknowledge. 

Wort.lu - Luxembourg ready to revise bank secrecy

My Orchids. Phalaneopsis coming out of the shadows. Photo ET

Wort.lu - Luxembourg ready to revise bank secrecy

This is a surprising interview. 

Clearly, any tax haven will have disappeared within a few years. I have advocated for that for a long time. However the timing, the place and actually the context of these news are questionable. Is this the whole government's position now? Or are we going to see backpedaling tomorrow?

Why do you do this in a German newspaper? (Germany's Frankfurter Allgemeine Sonntagszeitung). Why not debating this in Parliament?

As for the substance, I beg to differ on some points:
 

• Luxembourg should negotiate the abandoning of banking secrecy  There can be a number of legitimate interests as a quid pro quo.
• What about the foreign nationals who were hiding in the tax haven? Shouldn't Luxembourg obtain an amnesty for those? As a thank you. To my knowledge they paid 30% of withholding tax.
• Luxembourg does and will be in tax competition with others in the future.
• Luxembourg misses the point when it comes to promote private banking for foreigners even after the secrecy is gone. Being in another jurisdiction is a shelter from overbearing governments worldwide, and makes confiscation more difficult. The corollary is that the foreign account holder can trust the Luxembourg justice in case of trouble, such as with Madoff. Way to go.

Pierre Mariani and DEXIA, Parachuting in the Morning, in the Evening

My Orchids. Dendrobium "Golden Parachute". Photo ET


DEXIA's Silver Parachutes.

I know some about orchids, Belgium, France, Luxembourg and DEXIA. All combined give us a Belgian story today about Pierre Mariani, former DEXIA boss, who was denied (with much publicity) a seven figure Golden Parachute, in 2012.

What was not well known was that, as the Golden Parachute failed to open, he got instead two Silver emergency ventral parachutes, called DEXIA Asset Mangement and Denizbank totaling Euros 675,000 annually. Safe landing!

Why should we, the French, Belgian and Luxembourg taxpayers care? Because of 90 billion reasons or euros we had to vouch for.

In the meantime, I hope to settle a difference between the Flemish "De Morgen" (the Morning) and the Belgian French speaking "Le Soir"( the Evening), the first seeing a Golden Parachute, the second not seeing one.

Let's compromise on "Silver Parachute(s)".

Mariani zwaait af bij Dexia met 1,7 miljoen euro - Economie - De Morgen

http://www.lesoir.be/220850/article/economie/2013-04-06/pierre-mariani-un-salaire-13-millionet-pas-parachute-dore

ICIJ: Interactive: Gunter Sachs' Offshore Network

    My Orchids. Phalaneopsis GS Diagram. Photo ET

The International Consortium Of Investigative Journalists combed through the tax havens. To the public's delight, names are named, such as here Gunter Sachs:

Interactive: Gunter Sachs' Offshore Network

Not sure if all were tax evasion, or tax avoidance. I'll have to elaborate on the "Double Irish" and the "Dutch Sandwich".

Dolce & Gabbana slapped with fine for tax evasion

    My Orchids. Phalaneopsis dressed by Dolce & Gabbana. Photo ET

Dolce & Gabbana slapped with fine for tax evasion

http://economictimes.indiatimes.com/news/international-business/dolce-gabbana-slapped-with-fine-for-tax-evasion/articleshow/19324604.cms

Domenico Dolce and Stefano Gabbana were accused to have used a Luxembourg shell company, GADO Sarl, to control their brand and avoid taxes in the order of $450,000.

The Luxembourg company registration shows the following incorporation on March 3, 2004 and the eventual change back to an Italian corporation on May 10, 2008. (The tax probe had begun in 2007). 

No Reg. de Commerce:	B0100017
Forme juridique:	Société à responsabilité limitée de droit luxembourgeois
Date de constitution:	4.3.2004
Adresse postale:	10, VIA GOLDONI

See also:

http://www.etat.lu/memorial/2004/C/Html/0545/C029286.3.2004.html

http://www.etat.lu/memorial/2008/C/Html/1157/2008050695.html

What is the difference between tax avoidance and tax evasion? 

In the US, the short funny answer is: 5 years in jail.

But briefly, tax avoidance is using all legal means to minimize taxes, however tax evasion uses illegal means to pay no taxes.

Though the UK might even distinguish between good and bad tax avoidance, using concepts such as "artificial avoidance schemes" versus those "using ordinary sensible tax planning". And there we may find the devil in the detail, a situation that might also explain that in Italy, in a first court case the accused were found not guilty, until a "cassation" court found otherwise. Dolce and Gabbana as it seems will appeal.

For the observer, there are some unanswered questions:

1. Who advised D&G in Luxembourg, and brought them into this mess? Was the scheme tested, supported by fiscal rulings? The 2008 switch back of headquarters to Italy, was that a move to document good faith, or was it panic?

2. Those advisers, and indeed the Luxembourg government should be alarmed at the sight of activist Italian judges, if indeed a legitimate setup in Luxembourg, implemented according to the rules and regulations and European law, is negated by courts in other European jurisdictions. If it was not legitimate, which mistakes have been made, and who is liable?

3. If the whole Luxembourg setup was legitimate, were the Italian court decisions politically motivated? In which case it would become a Luxembourg-Italian bilateral issue if not a European one. The end of the free flow principles? This is one of the legitimate questions where the Luxembourg government might have to defend its turf, meaning a legitimate financial center, not the tax haven.