Luxembourg has announced that the country plans to exchange bank account information with EU countries, following international pressure to curb tax evasion.
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The decision follows mounting international pressure on Luxembourg to end its policy of banking secrecy which critics argue has helped people hide money in the country from tax authorities.
Jean-Claude Juncker, Prime Minister of Luxembourg said in the parliament: "If today we change our position, it is not because of European pressure, although 25 countries are strongly in favour of the automatic exchange of information, but because the Americans do not leave us a choice. If we refuse to do so, there will be more financial business with the United States, which is inconceivable for an international financial center such as Luxembourg. "
"To this end, it was a good choice of the Luxembourg financial center to focus on a strategy of white money. The financial sector saw no black money or tax evasion.This is why we can safely apply the automatic exchange of information from 1 January 2015."
Starting in 2015, the government said it will set up an automatic exchange of information about interest payments made to European Union citizens with bank accounts in Luxembourg in order "to ensure taxation according to the laws" of the customer’s home country.
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By GlobalDataThe growth of Luxembourg’s financial sector was initially fueled by lax regulation, banking secrecy and low taxes, a cocktail that made it a popular tax haven and money-laundering spot.
Though the country later changed many of its laws following pressure by its European partners, its critics have continued to argue that the financial industry still lacks the necessary transparency.
