FATCA e-alert issue 2015-11

FATCA e-alert issue 2015-11

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Luxembourg FATCA Law voted

The law implementing FATCA in Luxembourg (“the FATCA law”) was voted unanimously by the Luxembourg Parliament during the session of 1 July 2015 (first vote but a motion to dispense with second vote has been filed). Following the draft version published on 30 March 2015 by the Luxembourg Parliament (we kindly refer you to our previous FATCA e-alert - Issue 2015-09 - April 2015), the ratification of the FATCA law finally came through after having been delayed mostly for the concerns raised by the National Commission for Data Protection about questions relative to data privacy and protection.

In fact, while the provisions laid down in the draft version of the text have mostly not suffered any change (for a more detailed analysis of these provisions we kindly refer you again to our previous FATCA e-alert aforementioned), it is mainly data privacy and protection concerns that lead to the amendment of article 3. This article, referring to the Luxembourg law on data privacy and protection, has been modified to insist on the information obligations that Luxembourg financial institutions have towards each individual concerned prior to any reporting to the Luxembourg Tax Authorities.

In particular, Luxembourg financial institutions have to inform each individual to be reported under FATCA that:

  • The Financial Institution is responsible for the processing of the individual personal data;

  • The personal data is intended to be used within the provision of the IGA;

  • The personal data might be communicated to the Luxembourg Tax Authorities as well as to the authorities in charge in the US;

  • Responding to the questions of the Financial Institution is mandatory for the individual, and what the consequences in the event of no response are;

  • The individual has the right to access and rectify the personal data to be reported to the Luxembourg Tax Authorities.
     

Now that the FATCA law has been voted and will enter into force, next steps would be for the “Administration des Contributions Directes”, Luxembourg Tax Authorities, to release the final version of their draft administrative circulars issued earlier and which provide essential guidelines to Luxembourg financial institutions on FATCA implementation in Luxembourg (in this regards please see below our comments on the second draft of the IT circular ECHA - n° 3 issued on 30 June 2015). As for the Luxembourg financial institutions, the FATCA law provides a legal basis enabling them to proceed with the filing of their FATCA returns before the end of July extended deadline.

Updated Circular on the Luxembourg FATCA reporting file format

On 30 June 2015, the Luxembourg Tax Authorities issued an updated version of the circular which provides specifications of the XML file used to file FATCA returns (also known as ECHA - n° 3). As such, the structure of the XML file has not been altered. However, the Luxembourg Tax Authorities provided the following clarifications:

  • Definition: The definition of “Declarer” (“filer”) has been modified to mean “an entity in charge of the reporting, from a business point of view, for the Reporting Luxembourg Financial Institution (FI)”
  • GIIN: To address the issue of sponsored FIs without a GIIN, it has been specified that the field GIINDeclarer – which contains the GIIN of the filing entity - should contain the GIIN of the Reporting Luxembourg Financial Institution or the GIIN of the sponsoring entity of sponsored entities not having their own GIIN.
  • Nil return: As a general rule, in absence of US Reportable Accounts, a Luxembourg Reporting FI is required to file a nil return. In the updated circular an exception/clarification has been added, i.e. a sponsoring FI is not required to file a nil return if - after conducting an appropriate due diligence on behalf of its sponsored entities - it did not find any US Reportable Accounts. This exception should apply as long as the sponsored entity or sponsored FFI does not have its own GIIN.
  • Technical features: A new list of forbidden characters have been added to the circular and additional guidelines with regard to the structure of Reference IDs used in the file are provided.

As a reminder, please note that the deadline for the FATCA reporting with respect to Financial Accounts as at 31 December 2014 was exceptionally extended to 31 July 2015 (instead of 30 June).

On a separate note, please be informed that the Luxembourg Investment Fund Association ALFI has issued a second Q&A document (PDF, 252 KB) on FATCA reporting and withholding.

 

For further information, please do not hesitate to contact us.

 

 

 

 

 

 

Any tax advice in this communication is not intended or written by KPMG to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing, or recommending to another party any matters addressed herein.The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
 

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