In an increasingly changing international tax environment, banking and insurance companies are facing new challenges and must adapt to evolving tax rules. The recent legislation at local, European union and global level have now changed the financial industries landscape. In the meantime, it has forced banking and insurance companies to adapt in a quick, efficient and unprecedent way.
Our team is dedicated to providing a range of comprehensive and tailored services to help you develop your tax strategy in a competitive, responsible and sustainable way.
By drawing on KPMG’s entire network of tax professionals around the world, we provide a global and multidisciplinary perspective to address any tax challenge you may face.
Frank Stoltz
Partner, Financial Services Tax
KPMG in Luxembourg
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How we can help
KPMG’s Financial Services Tax professionals leverage their deep financial industry knowledge and their tax expertise to help you navigate and address the challenges you face.
Our specialized teams support clients across various areas within the insurance and banking sectors. Browse our services below to see how we can help you in your daily operations.
Services
1. Tax transparency and exchange of information
With the objective of increasing tax transparency and exchange of information, not only at the European level but globally as well, compliance regulations have been increasingly issued these past few years.
Luxembourg entities may be compelled to comply with a set of due diligence, withholding and reporting requirements. Complying with the FATCA, CRS and other tax transparency rules, such as DAC6/MDR, is a major compliance task due to its extended information reporting. How you execute this compliance task can have a major impact on your business strategy and the markets you serve.
Our assistance may include end-to-end support, from client onboarding to reporting, entity classification, drafting or review of procedures, training, health checks and annual reporting.
In order to improve the process by which portfolio investors may claim treaty benefits, KPMG can also assist the so-called Authorized Intermediaries with the TRACE implementation initiated by the OECD.
2. General tax compliance and corporate tax advice
In the financial services sector, our clients – banks, insurance and reinsurance companies – value the high-quality tax advice and compliance services provided by our dedicated tax team. When servicing our clients, we leverage our long-established industry knowledge and our in-depth understanding of clients’ business activities and strategic goals.
Our clients particularly appreciate our wide range of services, which include:
- Local corporate tax advice
- Tax advice with respect to (cross-border) M&A transactions
- Corporate tax compliance
- Review and computation of tax provisions
- Tax due diligence
- Insurance Premium Tax (IPT) return assistance
3. Tax reclaims
In this uncertain economic landscape, clients expect their bankers, advisers and asset servicers to mitigate withholding taxes by applying the lowest rate possible, or to help them reclaim the unduly due taxes. If you do not want to suffer a competitive disadvantage on withholding taxes, you need to have a robust, quick, cost-and-risk minimizing solution.
Acting as a European leader and competence center for withholding tax questions, KPMG Luxembourg has assisted numerous banks and insurance companies in their withholding tax processes and successfully claimed millions of euros from foreign tax authorities. KPMG Luxembourg is also a constant driver for court cases and unique jurisprudence for the benefit of our clients.
We are happy to assist you in defining the right business model and provide you with a free-of-charge cost-benefit analysis.
4. U.S. tax compliance
The U.S. withholding and tax reporting rules are challenging to comply with and subject to almost continuous change. Luxembourg entities with U.S. investments or U.S. investors must comply with U.S. tax compliance obligations. These obligations typically take the form of obligatory due diligence, withholding and/or reporting.
More specifically, QI compliance is complex considering the different requirements, complex regulations, and the challenging needs of the IRS. KPMG has developed a complete suite to make sure a QI is fully compliant throughout the QI period:
- QI Healthcheck ensures your compliance with the QI Agreement regarding documentation, withholding and reporting requirements.
- QI Consistency Check helps you to manage data consistency as an integral part of your QI compliance framework.
- Our QI e-Learning Tool trains your all QI compliance recourses in understanding and meeting the requirements of documentation, withholding and reporting.
- Assistance to RO solution is designed to help the RO complete the certification as required by the IRS.
Dealing with U.S. tax rules may be challenging and demanding for Luxembourg entities. Our U.S. tax experts remain at your disposal for guidance and assistance on any support with U.S. tax rules analysis and compliance.
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How we can help
KPMG’s tax professionals leverage their deep financial industry knowledge and their tax expertise to help you navigate through and address the challenges you face.
Acting in the asset management world, our specialized teams assist clients in various areas. Browse our services below to see how we can help you in your daily business.
Services
1. International funds’ taxation and compliance
Increasing complexity makes it difficult for custodian banks to ensure the most favorable withholding tax (WHT) rate is applied to investment income. KPMG Luxembourg performs a WHT HealthCheck in order to have a full overview of your funds’ tax situation and avoid any tax leakage by using our unique fund database covering seven countries of residence and 124 investment countries.
We can also assist you with assessing your funds’ exposure to capital gains taxation on your worldwide investments. Where required, we can file local tax returns, comply with relevant local capital gains taxation obligations, and appoint local tax representatives. This also includes the monitoring and determination of your funds’ capital gains tax accruals and advanced tax liability.
By using our tax hotline, we can provide timely responses to all your tax related questions linked to the taxation of your investment funds on a worldwide basis, tax consequences at investor level on any fund restructuring and tax compliance obligation for investment funds.
2. Withholding tax reclaims and relief at source
Investing in a worldwide market may result in the application of many different withholding tax (WHT) rates, while being confronted with a plethora of different options to potentially reduce such rates. Also, remaining tax compliant while boosting performance may be challenging, especially considering the rapid evolution of national tax legislations worldwide.
To meet this challenge, we have developed a holistic suit of automated services linked to the lifecycle of the fund which will make sure that your funds are always correctly documented to benefit from reduced tax rates at source, can reclaim WHT under all legal basis whenever needed, and are correctly handling all tax consequences linked to fund mergers and liquidations.
All our services are coordinated and managed in a fully integrated manner using a one-stop-shop approach while guaranteeing a global coverage with the support of our dedicated network and fund database covering seven countries of residence and 124 investment countries.
3. Tax transparency and exchange of information
With the objective of increasing tax transparency and exchange of information not only at the European level but more globally, compliance regulations have been increasingly issued these past few years.
Luxembourg entities may be compelled to comply with a set of due diligence, withholding and reporting requirements. Complying with the FATCA, CRS and other tax transparency rules, such as MDR (DAC6), is a major compliance task due to its extended information reporting. How you execute this compliance task can have a major impact on your business strategy and the markets you serve.
Our assistance may include end-to-end assistance (from client onboarding to reporting), entity classification, drafting or review of procedures, trainings, HealthChecks or annual reporting.
In order to improve the process by which portfolio investors may claim treaty benefits, KPMG Luxembourg can also assist the so-called Authorized Intermediaries with the TRACE implementation initiated by the OECD, and first implemented in Finland.
4. U.S. tax compliance
The U.S. withholding and tax reporting rules are challenging to comply with and frequently change. Making U.S. investments, or having U.S. investors or clients, means Luxembourg entities have to comply with U.S. tax compliance obligations. These obligations typically take the form of obligatory due diligence, withholding and/or reporting.
KPMG Luxembourg, with the support of KPMG U.S., has set up a dedicated team of experienced professionals to assist clients dealing with U.S. tax issues. Please do not hesitate to contact us for any further information you may need or to discuss the potential impacts of U.S. tax rules on your investment funds.
5. Managing tax risks in terms of AML and KYC
As per the CSSF Circulars 17/650 and 20/744, all asset management professionals under CSSF supervision, including transfer agents, AIFMs, regulated funds, depositary banks or management companies, are required to consider these 21 plus 9 indicators within their risk assessments and ensure that a robust governance is in place to enable timely identification of tax risks.
As a reminder, the Circular 20/744 was published by the CSSF in July 2020 to complement the Circular 17/650. This new circular introduced nine tax indicators designed to identify potential tax offences in the asset management industry.
We are currently observing an increase in the number of questions raised by the authorities regarding this matter. In order to avoid any risk of non-compliance together with criminal sanctions and high penalties, KPMG Luxembourg can help you to put the proper documentation in place in the event of on-site inspections.
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