A change in business attitudes and work philosophy is ongoing in Luxembourg. This process has had its developments over time and cannot be linked to a date or event. It even continues to develop with the growing regulations for taxation issues and more generally in order to comply with AML/KYC rules.
Anybody saying that the LuxLeaks or the Panama papers have changed the approach, has been blind for the developments of many years. It has indeed been a continuous increase of international requirements. Within these changes, the need for economic substance, an increasing verification of the control over Luxembourg corporations and the loosening of the banking secrecy which are elements of the developments, still, none of them are the only (or even determining) trigger of the changes.
In a first place, I would like to show some of these changes for the corporate services sector.
Indeed, corporate services have become a more and more complex business. Anybody looking at Luxembourg Directors of companies which perform the same activity for a multitude of companies, may think of unrealistic practice. But, be ensured, I want to perform this services in a correct manner and I do not want to be called a Dummy-Director (indeed, I am not a dummy).
As a consequence, I want to be involved in the business of my clients if I am a Director. This attitude is time consuming and requires more than some simple signatures on documents provided for. My feeling (confirmed by the feedback from our clients) is, that this approach is positive. Especially private clients (but also some corporate investors) feel more comfortable with their economic situation in Luxembourg.
It is understood, that most companies asking a service provider to become a Director, do have a low level of managerial work to be performed. Or, would you expect an intermediate holding company of Siemens in France, created to control and consolidate 5 or 6 group companies, to have 20 employees? Sure, the service will be provided from the group or third parties. Anyway, nobody would ask the question whether there is sufficient substance in such an intermediate holding company, while this immediately changes if the holding company is tax resident in Luxembourg.
Looking at the time required to fulfil the individual job, why not perform it for several companies or groups?
By the way: did anybody have a look at this type of intermediate holding companies in other countries? What about the Netherlands, Belgium, Portugal (especially Madeira), the United Kingdom and Ireland? Why is everybody looking at Luxembourg only? Such intermediate holding companies exist at least in these listed European countries in a comparable dimension and it seems as if nobody cares.
Anyway, looking at the impact on the corporate service providers, what we see in practice, is a decreasing number of newly formed companies. At the same time, the ones which are incorporated have a larger activity than this has been in the past (e.g. more shareholdings under one holding), so that the reduction in business on the one side is compensated on the other side. I consider this to be a positive outlook for the services offered.