Tax

Banks are facing multiple challenges from a VAT perspective, since most of their activities are VAT exempt. They have to determine the VAT treatment applicable to their income and expenses in a context where some rules remain uncertain and subject to interpretation. In addition, the current VAT rules are not necessarily aligned with the complex and innovative products banks have developed for their clients. Lastly, the outsourcing of certain activities within the group or to third parties can also trigger VAT inefficiencies and complexities (in particular transactions between head office and branches).

Another significant challenge relates to the fact that banks have to determine an appropriate methodology to recover input VAT incurred on their costs. The increasing amount of litigations at the EU Court of Justice are an evidence of this complexity and of the tax authorities’ activities.

The European Commission is also working on a reform in relation to the VAT rules applicable to financial services which may come into effect in the foreseeable future. More than ever, it is important for banks to review their existing VAT position and to anticipate the expected future developments.

Our VAT department has a strong expertise in the banking industry and closely follows the latest developments at national or EU level. We’re ready to turn your VAT challenges into business efficiency.

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• VAT

Contacts

David Schaefer
Partner
Tel: +352 49 48 48 3202
Email

Frédéric Wersand
Partner
Tel: +352 49 48 48 3111
Email

You need, as any taxpayer, to manage cross border situations. At the same time, international structuring has to be carefully managed to make sure tax opportunities don't entail regulatory issues. Our in-depth knowledge of banking industry enables us to help you keep an international presence while complying with new tax requirements linked to substance, transfer pricing and tax reporting. We tailor our solutions according to your business needs and have the support of a worldwide network of experts in your industry.

Contact

Murielle Filipucci
Partner
Tel: +352 49 48 48 3118
Email

As a banking player, you want to acquire new business, new entities or to perform reorganisations to remain competitive. We help you through tax due diligences (comprising classical disclosure of corporate tax and VAT risks, but also covering CRS/FATCA status, transfer pricing health check or BEPS impact analysis). We also assist you in finding efficient reorganisation structuring schemes that comply with new requirements linked to the international tax system’s revamping.

Contact

Murielle Filipucci
Partner
Tel: +352 49 48 48 3118
Email

PwC Personal Tax department has a broad experience in providing personal / employment tax consulting services to executives. Assisting such clients with a diverse range of HR tax services - compliance, advice and optimisation - we collaborate with regulatory and HR specialists for the provision of benchmark services and implementation of remuneration policies and in providing a variety of innovative and client focused solutions to clients.

Our Personal Tax department also has an extensive experience in assisting clients with questions and challenges in connection with X-border employment. Our expertise extends to tax compliance services as well as value added advice regarding international taxation and social security. We also advise on the application of the special tax regimes for employees recruited from abroad and relocating to Luxembourg.

Contacts

Michiel Roumieux
Partner
Tel: +352 49 48 48 3055
Email

Julien Treffort
Partner
Tel: +352 49 48 48 3349
Email

Your private clients (U)HNWI and wealthy families are looking for suitable solutions in order to preserve, manage, organise and transfer their wealth, which can be invested internationally  in several classes of assets (listed securities, bonds, private equity, real estate, pieces of art, etc.).  We help them to structure these assets according to their personal needs.

Our Private Wealth Service helps your private clients deal with new challenges (i.e. international mobility of people and assets, transfer of residence, estate planning, tax liability, etc.) and provides them and their families with a tailor-made solution.

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• Wealth Management

Contacts

Nicolas Sansonnet
Tax Director, Alternative Investment Funds & Wealth Management
Tel: +352 49 48 48 2025
Email

Estelle Gille
Tax Senior Manager, Wealth Management
Tel: +352 49 48 48 3423
Email

The current tax climate is threatening the balance of taxation powers, originally set through double tax treaties and international tax standards. The need for public resources, the claim for tax fairness, the challenge of tax standards, the transparency requirement and the explosion of data exchange are contributing to the turmoil.

At the global level, these converging factors lead to an increase in the number and size of tax disputes. Aggressive positions taken by some foreign tax authorities affect cross-border transactions. Access to double tax treaties, tax deductions related to intra-group transactions and transfer pricing are particularly under pressure.

In this shifting complex tax environment, it's crucial for international groups to measure their risks and use defensive technics and mechanisms, in a preventive or responsive manner. PwC's Tax Controversy and Dispute Resolution network can help you:

• Gain a better understanding of your company's risks and exposures
• Develop sound policies and processes to help safeguard your organisation against audits and disputes
• Implement consistent and defensible practices and policies
• Manage your tax disputes, audits, and examinations worldwide

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• Tax Controversy and Dispute Resolution

Contact

Fabienne Moquet
Partner
Tel: +352 49 48 48 3179
Email

Luxembourg transfer pricing documentation requirements

Starting from 1 January 2015, a new transfer pricing regulation has entered into force, introducing normal disclosure and documentation requirements to transactions between related parties. A lack of a proper transfer pricing documentation can lead to a reversal of the burden of proof towards the taxpayer.

As a consequence of the changes in the Luxembourg transfer pricing regime, appropriate transfer pricing documentation has become an important focus area for banks and financial institutions that engage in intercompany transactions. The importance of the transfer pricing documentation is further magnified as, in case of a tax reassessment, Luxembourg tax authorities can reassess up to generally five years. Thus, the potential tax impact can be significant.

For the banking sector, the following transactions are usually relevant in terms of transfer pricing:

• Intercompany funding;
• Credit risk transfers;
• Profit allocation to permanent establishments;
•  Support and management services (including IT services);
• Branding and IP Licensing;
• Business restructuring: transfers of portfolio of assets and/or liabilities or transfers of functions and/or business activities; and
• Any other intercompany transactions taking place between affiliates of a bank.
  

International context

Further to the outcome of the OECD BEPS actions, Luxembourg taxpayers will have to apply the "three-tiered" approach to transfer pricing documentation, which will include the Master File, Country File and Country-by-Country reporting obligations.

Consistency with regulatory (reporting) requirements

While regulatory requirements are eminent for financial institutions, the transfer pricing requirements can be different. In such cases where regulatory requirements have to be met, additional requirements may add to comply with transfer pricing rules.

Discover more:

• Transfer pricing

Contacts

Marc Rasch
Partner
Tel: +352 49 48 48 3712
Email

Pavel Wroblewski
Partner
Tel: +352 49 48 48 4541
Email

Following the financial crisis, we've entered a new era of transparency and reporting, overpowered by the OECD Base Erosion Profit Shifting ("BEPS") and exchange of information. Your clients will expect robust and efficient tax infrastructure and will have a minimal tolerance for tax uncertainty. Tax will become key to operational and business performance, requiring specialised resources and a new approach.

To stay informed on the latest tax updates from the most relevant countries to you, to manage operational tax risks and decrease reputational risk possible due to non-compliance (e.g. on self-assessed taxes), we invite you to subscribe to ATLAS. It's a comprehensive and user friendly database of withholding and capital gains tax rates for over 130 jurisdictions, including detailed commentary of the domestic tax treatment of income derived from various asset classes, withholding and refund procedures, domestic filing obligations, as well as commentary on a country's approach to obtaining double tax treaty relief for specific fund vehicles.

Discover more:

• Asset Management 2020 and beyond: Transforming your business for a new global tax world

Contacts

Murielle Filipucci
Partner
Tel: +352 49 48 48 3118
Email

Pierre Kirsch
Partner
Tel: +352 49 48 48 4031
Email

You classify as Financial Institution within the meaning of the automatic exchange of information regimes (US Foreign Account Tax Compliance Act - "FATCA" - and OECD Common Reporting Standards - "CRS" - implemented within Europe through the Directive on Administrative Cooperation). You therefore have some classification, documentation, and reporting obligations with respect to financial account information. In addition, the FATCA regime involves some withholding requirements. As intermediaries, you also need to consider the withholding tax impacts on the investments held on behalf of your customers, including the US Qualified Intermediary regime (withholding tax treaty relief regime) and US regime on dividend equivalent payments (so-called section 871(m) transactions) and similar regulations. We expect this tax regulatory landscape to further evolve: foreign states will also focus on enforcement of their local withholding tax provisions or reconciliation of information exchanged (within the context of the above-mentioned regimes) with taxpayers actual local tax charge.

In this context, our tax regulatory compliance service helps you address your operational challenges while implementing the above-mentioned regimes. Our services range from gap analysis and health checks to implementation assistance, and are tailored to your needs and business.

Discover more:

• CRS
• FATCA
• QI
• Section 871 (m)

Contacts

Murielle Filipucci
Partner
Tel: +352 49 48 48 3118
Email

Camille Perez
Partner
Tel: +352 49 48 48 4618
Email

Pierre Kirsch
Partner
Tel: +352 49 48 48 4031
Email

Ensuring accurate reporting to clients and tax authorities

Due to increasing demand from private clients, the Private Banking industry is delivering tailored tax articulate reports so that they can complete tax returns easily and accurately.

A few years ago, only a handful of clients sought tax assistance, whereas today most of them require it and expect the service from their bank. A growing number of banks are now willing to outsource this non-core but essential service.

PwC Luxembourg and its fully owned subsidiary PwC Tax Information Reporting ("PwC TIR") have launched their new tax reporting service for private clients of local banks. Based on the recent acquisition of one of the leading tax reporting software solution, the service allows banks to outsource the tax reporting of their clients.

A scalable tool for high-quality results

With this service, banks will benefit not only from our tax expertise, but also from our proven track record in providing major international groups with tax reporting services. They will then be able to provide their own clients with a flawless service, limit their risk exposure and focus on their core business.

Data confidentiality and IT security are the cornerstone of our service. Banks can rely on our infrastructure and expertise. The service is delivered from our fully owned subsidiary, PwC TIR, with regulated PFS status of "Client Communication Agent" and "Administrative Agent of the Financial Sector" which enables us to handle nominative client data and deliver the service on the basis of a managed service for our regulated clients in Luxembourg.

Proven tax reporting experience

Since 2010, we've been stepping up our tax reporting service offering. We help our clients define a tax reporting strategy, select appropriate software solutions, as well as implement and test the latter. We then provide an unrivalled tax watch service. Combining this expertise with the use of our new tax reporting software makes us a one-stop shop for banks to outsource their entire foreign private tax reporting operations.

Contact

Murielle Filipucci
Partner
Tel: +352 49 48 48 3118
Email

Pierre Kirsch
Partner
Tel: +352 49 48 48 4031
Email

Claire Cherpion
Partner
Tel: +352 49 48 48 2763
Email

In today’s global economic context, the actors of the Financial Sector (Banks, Insurers, Asset Managers, Family Office) are currently experiencing low return on debt and equity investment.

The withholding tax applied on the incomes derived from the investments significantly decreases the net return on income (generally from 15% to 30% for dividends) and therefore recovering the excess of tax based on the reduced double tax treaty rate will help you enhancing financial clients’ portfolio performance.

The transformation of the tax reclaim process from a cost to profit centre is an opportunity to exploit to retain existing clients and attract new ones.

With our help, you can now reclaim what’s yours!

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Contacts

Murielle Filipucci
Global Banking and Capital Markets Tax Leader
Tel: +352 49 48 48 3118
Email

Pierre Kirsch
Partner
Tel: +352 49 48 48 4031
Email

Camille Perez
Partner
Tel: +352 49 48 48 4618
Email