Luxembourg’s corporate compliance regime is among the simplest in the world, according to a new report by TMF Group, a leading provider of high-value business services to clients operating and investing globally.
The Compliance Complexity Index ranks 84 jurisdictions based on the difficulty of adhering to local business regulations and associated issues; such as the time taken to set up companies and meet local reporting requirements. Luxembourg is ranked 78th, with Ireland at 84th being the least complex place globally for corporate compliance. At the other end of the spectrum, the UAE is at number 1, Qatar is second and China third as the most complex jurisdictions in compliance terms.
Carl Speecke, director of legal at TMF Luxembourg commented: “Luxembourg’s favourable Index ranking is not surprising when you consider we have a very well-established finance industry. The 4th AML directive (EU 2015/849) and tax compliance verifications have obliged banks and professionals of the financial sector such as TMF Luxembourg to increase requirements, but once this hurdle is successfully passed, the company can be incorporated rapidly and start its activities as of incorporation date (as long as the activity does not fall within the supervision of the regulator such as regulated funds, regulated securitisation undertakings, certain issuing vehicles and capital venture companies or does not require a business licence). Documents that require filing need to be filed in one of the three official languages in Luxembourg, but notarial deeds, merger plans, company divisions and transformations can be accompanied by an English version. Financial statements can be filed in English. Contracts, general shareholder meeting minutes and board meeting minutes can be maintained solely in English as long as these do not require any full publication.”
However, as with other countries on the easy end of TMF Group’s Index, Luxembourg is not complexity-free.
Speecke continued: “For example in the past two years CRS (common reporting standard) and FATCA (foreign account tax compliance act) have been added to local corporate secretarial workloads and have increased complexity when managing relationships with banks, but also when verifying and maintaining continuous tax compliance. The Luxembourg trade register and fiscal administration have taken a stricter approach with regard to respecting annual financial statements and corporate income tax returns filing deadlines. The Luxembourg legislator has published a draft bill of law on the implementation of art. 30 of the 4th AML Directive which relates to the UBO register for companies and legal arrangements, however no law has been voted on yet regarding implementation.”
The 10 least complex countries for corporate compliance
Bruno Bagnouls, managing director of TMF Luxembourg added: “It’s pleasing to see Luxembourg among the 10 least complex jurisdictions for compliance, but the complexity picture for foreign companies here is changing in line with global trends. International regulations require more transparency around financial data and business ownership. Companies are best placed to face these challenges if they conduct thorough internal checks, and put a scalable, compliance framework in place.”