1. What does automatic exchange of information mean?

Financial institutions (mostly banks) in Luxembourg will transmit the information foreseen in the EU Savings Directive 2003/48/EC to the Administration des Contributions Directes which is the Luxembourg Revenue Service for direct taxation. This administration will then confidentially transmit the information to the corresponding revenue service in the EU Member State in which the beneficial owner is a resident.

Automatic exchange of information in tax matters is limited to an exchange of information among competent government tax authorities. Professional secrecy will continue to be applicable.

2. Why does Luxembourg decide to introduce exchange of information now?

The evolution towards automatic exchange of information as an emerging international standard has been a long process. Until recently, Luxembourg insisted on the arrangement of the EU Savings Directive by which automatic exchange and the withholding tax co-existed. In 2009, right after the financial crisis erupted in 2008, exchange of information upon request according to OECD standards was internationally adopted. Luxembourg has been in this context more specifically considered to be "a jurisdiction that has substantially implemented the internationally agreed tax standard