Luxembourg Expecting Capital Flight
by Ulrika Lomas, Lowtax.net, Brussels
04 April, 2014
Luxembourg's decision to introduce automatic exchange of information (AEI) from January 1, 2015, on the basis of the European Union (EU) Savings Tax Directive, will impact heavily on the Grand Duchy's financial sector, according to national statistics agency Statec.
Statec expects at least 5 percent, or EUR15bn (USD20.6bn), of total assets under management to be relocated away from the Luxembourg financial center as a result of the Government's April 2013 announcement to apply AEI from next year. Latest quarterly household deposit figures confirm the flight of capital abroad.
The group also believes that increased administrative costs linked to AEI will lead to 800 job losses in the banking industry, 200 of which it says will be in the private banking sector.
Statec's impact study was carried out on the basis of the current EU Savings Tax Directive, and does not take into account the extended scope of the recently agreed revised legislation, which newly includes investment funds, pensions, and innovative financial instruments.
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