Tax
Taxation is a key focus area for the ABBL, reflecting its deep relevance to Luxembourg’s financial sector—both from a business operations and regulatory compliance perspective.
The financial sector is one of the largest contributors to public revenues in Luxembourg, and tax-related issues directly affect the sector’s sustainability, competitiveness, and international standing. For this reason, fiscal affairs are a core component of the ABBL’s advocacy, technical work, and stakeholder engagement.
The Role of Financial Institutions in Tax Systems
Over the past decade, banks and financial institutions have become key actors in tax collection and compliance processes. Their responsibilities extend far beyond paying corporate tax—they also:
- Contribute to the automatic exchange of information (AEOI) with global tax authorities.
- Manage withholding, collection, and declaration of taxes on interest, dividends, and other investment income.
This shift has turned banks into key operational arms of the tax system, with significant obligations under frameworks such as:
- FATCA (Foreign Account Tax Compliance Act).
- CRS (OECD Common Reporting Standard) / DAC2
- QI (Qualified Intermediary).
- DAC6 / DAC7 (EU tax transparency directives).
- EU Financial Transaction Tax (FTT) and
- Pillar Two / DAC9 developments.
“Banks have become key players in tax systems—ensuring compliance, facilitating transparency, and supporting the integrity of global finance.”
Laétitia Carroz
Senior Tax Adviser, ABBL
Promoting Fairness and Global Tax Transparency
The ABBL strongly supports global tax transparency as a matter of principle—but insists it must be implemented in a balanced and fair manner. In particular, the ABBL advocates for:
- A level playing field where Luxembourg-based institutions are not disadvantaged.
- International consistency in reporting requirements and enforcement.
- Transparent but non-discriminatory frameworks that do not penalise early adopters or smaller institutions.
By doing so, the ABBL ensures that transparency enhances trust—without becoming a source of regulatory asymmetry or competitive distortion.
Advocating for Proportional, Implementable Tax Regulation
The ABBL’s goal is to ensure that tax regulations:
- Remain clear, proportionate, and practical to implement.
- Do not unnecessarily burden financial institutions with administrative costs.
- Maintain technological and operational feasibility, especially in a cross-border context.
The ABBL works closely with national and European authorities to provide feedback on new proposals, and to shape implementation guidelines to help its members to comply with their respective tax obligations.
Supporting Members on Tax Compliance and Reporting
The ABBL helps its members navigate the growing complexity of tax compliance through:
- Expert working groups on tax reporting standards, VAT, Human Resources taxation, Investment income and Corporate.
- Technical guidance and interpretation of new fiscal laws and obligations.
- Representation in dialogues with the Luxembourg tax administration, the Ministry of Finance, and European institutions.
As regulation evolves, the ABBL also promotes the adoption of digital tax tools and RegTech partnerships to streamline compliance workflows.
