The second blog on the “wind of change” relates to the challenge in the profession for tax advisers in Luxembourg.
One of the big challenges of a Luxembourg tax adviser is the knowledge of national and international tax laws. The underlying demand is growing permanently. Also, the Luxembourg tax advice environment has changed over the last years.
In the light of increasing formalisms and a significantly reduced number of formal advance confirmations of the Luxembourg tax authorities, today the tax adviser does not only need to provide for tailor-made advice, he will also need to take the responsibility for the advice given. Knowing that responsibility for tax advice could easily be avoided in the past by asking written confirmations of the tax authorities (if needed or not), this is a new challenge.
The market share of so-called tax specialists, who have limited their advice to the tax exempted Luxembourg vehicles, and have offered these vehicles without analyzing the effect in the home-countries of the investors will be significantly declining.
Despite this change in the life of Luxembourg tax advisers, the international tax competence is a major plus for Luxembourg. Indeed, looking at tax advisers in most countries around the world, I would expect that at least 90% of tax advisers have a good (or even extremely good) knowledge of their national tax laws, with their competence limited by their countries’ border.
However, we are living in a more and more globalized world, and this requires the tax adviser to look beyond his borders (so-called in-bound and out-bound investments). With a rich experience in international tax issues, a colleague from Luxembourg may be able to help tax advisers in the home-country of the investor to find the most appropriate solution for the cross-border solution.
I am sure that Luxembourg still has its advantages in the international tax environment, but it has become more and more important to look cross-border, as there may be issues arising – either at incorporation, during lifetime or when exiting a Luxembourg structure. Apart from the industrial and trading activities, Luxembourg will remain the location of choice for the investment fund industry, whether for the highly regulated quoted and big public investment funds or for the less regulated fund vehicles for smaller groups of qualified investors.
This increasing demand for international tax expertise lets me believe in the future of Luxembourg as the place to be for qualified tax advisers.