Confidentiality of assets and anonymity of beneficiaries

Luxembourg currently offers a degree of public confidentiality for beneficial owners, but not complete anonymity. A Luxembourg SOPARFI – the simplest and most common legal structure for asset management companies established in Luxembourg – offers its beneficial owners considerable public discretion. However, it does not allow them to be anonymous. Confidentiality protects against scrutiny, not against regulatory transparency obligations.

A Luxembourg SOPARFI is required to identify and declare its beneficial owners to the Luxembourg Register of Beneficial Owners (RBE). Failure to declare or filing inaccurate, incomplete, or outdated information can result in significant fines. Guichet.lu mentions a range of €1,250 to €1,250,000 for the entities concerned and their defaulting beneficial owners.Guichet.lu)

Confidentiality exists primarily with regard to the general public. Following the ruling of the Court of Justice of the European Union of 22 November 2022, Luxembourg restricted general public access to the Register of Business Entities (RBE). The Luxembourg reform, which came into force on 1 February 2025, now limits access to national authorities, professionals subject to AML/CFT obligations, self-regulatory bodies, certain public administrations, and persons demonstrating a legitimate interest in the fight against money laundering and terrorist financing.Elvinger Hoss)

In other words, any third party can no longer freely consult the RBE as a simple open public register. This is a significant change. Before the CJEU ruling, broad public access was permitted under the 5th^e anti-money laundering directive. Since then, the balance has shifted towards increased protection of the privacy of beneficial owners.InsightPlus)

This confidentiality, however, does not apply to compliance actors. Banks, auditors, notaries, lawyers, financial sector professionals, real estate professionals, and other obligated entities can access the information when required to fulfill their AML/KYC obligations. Authorities, on the other hand, have broad access.A&O Shearman)

There is also a specific procedure for requesting the restriction of access to the personal data of a beneficial owner in certain particular circumstances, for example, in cases of disproportionate risk of fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation, or when the owner is a minor or legally incapacitated. If the restriction is accepted, access nevertheless remains possible for certain authorities and regulated professions.Guichet.lu)

In conclusion, Luxembourg allows for public confidentiality, but not legal concealment. Beneficial owners must be identified and declared. They are no longer freely accessible to the general public, but remain accessible to authorities and authorized professionals for the purposes of their AML/KYC checks.

For a Luxembourg SOPARFI, a competent public authority of a third country generally does not have a direct, automatic, and unlimited right of access to the Luxembourg Register of Beneficial Owners, except where a specific, previously negotiated, and formalized mechanism applies. Direct access is provided for under Luxembourg law. is primarily organized for the benefit of the Luxembourg national authorities, AML/KYC professionals, self-regulatory bodies, certain public services and individuals who can demonstrate a legitimate interest in the fight against AML/CFT.

The Luxembourg authorities, for their part, have access to all information relating to beneficial owners. For a SOPARFI, this includes in particular: surname, first names, nationality(ies), day, month and year of birth, place of birth, country of residence, precise private or professional address, Luxembourg or foreign identification number, as well as the nature and extent of the beneficial interests held.

A public authority in a third country can only access this information indirectly, through a cooperation mechanism established with the competent Luxembourg authorities. This typically involves mutual legal assistance in criminal matters, cooperation between financial intelligence units, international tax cooperation, prudential cooperation, or specific international agreements. In practice, the foreign authority does not simply "consult" the RBE (Register of Foreign Enforcement) as if it were a Luxembourg authority. It submits a request through the appropriate legal channel; the competent Luxembourg authority then assesses the legal basis, purpose, proportionality, and conditions of transmission.

The information that may be transmitted, if the request is admissible, is generally that listed in Article 3 of the Luxembourg law on the Registered Beneficial Ownership (RBE): the full identity of the beneficial owner, nationality, date and place of birth, country of residence, address, identification number, and a description of the beneficial interests held. The law also requires the registered entity to keep this information and supporting documents at its registered office; it must provide them to the Luxembourg national authorities upon request, within three days.

It is also important to distinguish between information obtained through the Register of Enterprises (REE) and that obtained through regulated intermediaries. A Luxembourg bank, a financial sector professional, an auditor, a notary, or another professional subject to AML/KYC obligations may hold a more comprehensive file than just the REE extract: organizational chart, identity documents, proof of address, sources of funds and assets, articles of incorporation, contracts, tax returns, or banking documents. Not all of this information is included in the REE. However, it may be accessible to the Luxembourg authorities within the scope of their own powers and, if necessary, communicated to a foreign authority through applicable cooperation channels.

Luxembourg law also stipulates that consultations of the Register of Beneficial Owners (RBE) by certain categories of actors must not be disclosed to registered entities or beneficial owners. In other words, when access occurs within an authorized AML/CFT framework, the SOPARFI or its beneficial owner is not necessarily informed of the consultation.

En revanche, une autorité publique d’un pays tiers qui agirait en tant que demandeur ordinaire, sans canal institutionnel spécifique, ne disposerait que d’un accès limité : nom, prénoms, nationalité, date et lieu de naissance, pays de résidence, nature et étendue des intérêts effectifs, mais pas nécessairement l’adresse précise ni le numéro d’identification.

In conclusion, a competent public authority of a third country may, within the framework of established cooperation, obtain information on the beneficial owners of a SOPARFI. However, it does not, in principle, have direct public access comparable to that of the Luxembourg national authorities. Access is obtained indirectly through the Luxembourg authorities, in accordance with applicable international mechanisms. Public confidentiality exists; it does not shield legitimate official requests.

As a general rule, regulated Luxembourg financial institutions do not transmit this information directly to the authorities of third countries. They transmit it to the Luxembourg Direct Tax Administration (ACD). The ACD then automatically exchanges information with the tax authorities of the jurisdictions concerned, when these are subject to reporting under the CRS/NCD. The ACD specifies that Luxembourg financial institutions must provide this information annually, no later than June 30 of the relevant calendar year.Direct Taxes)

The reference mechanism is the Common Reporting Standard (CRS/NCD). It applies to financial accounts held with Luxembourg financial institutions by individuals who are tax residents of participating jurisdictions. The CRS summarizes the information exchanged, including details of identity, account, account balance, and financial income related to each individual who is a tax resident of a reportable jurisdiction.Direct Taxes)

For a company resident in Luxembourg, the transmission to the authorities of the country of residence of its beneficial owners depends on its qualification in the CRS.

• If the Luxembourg company is an active NFE (No-Financial Entity)—that is, a commercial or industrial company engaged in actual business operations—foreign beneficial owners are not automatically subject to CRS reporting. The account is analyzed at the level of the parent company. The mere fact that its shareholders or beneficial owners reside abroad is not sufficient to trigger a CRS report to their country of residence.
• If the Luxembourg company is a passive NFE—a common occurrence for certain asset-holding companies, financial asset holding companies, or entities primarily receiving passive income—the financial institution must identify the individuals who control it. If one or more of these controlling individuals are tax residents of a reporting jurisdiction, the account becomes reportable with respect to them. The CRS expressly stipulates that an account held by a passive entity, with one or more reportable controlling individuals, must be treated as a reportable account.OECD)

Dans ce deuxième cas, les informations transmises relèvent des catégories suivantes :

1. The identification information of the Luxembourg entity: name, address, jurisdiction of tax residence and tax identification number of the company.
2. The identifying information of reportable controlling persons includes: name, address, tax residence jurisdiction, tax identification number, date and place of birth, and the role under which the person is considered a controlling person. The OECD Consolidated CRS specifies this information for entities with one or more reportable controlling persons.OECD)
3. Account information: account number or functional equivalent, account type, identification of the reporting financial institution, account balance or value at the end of the relevant calendar year, or indication of closure if the account was closed during the year.OECD)
4. Financial income related to the account may be declared. For a custody account, this includes, in particular, the gross amounts of interest, dividends, and other income generated by the assets held in the account, as well as the gross proceeds from the sale or redemption of financial assets when the financial institution acts as custodian, broker, nominee, or agent. For a deposit account, this mainly refers to the gross interest paid or credited.OECD)

It is important to emphasize that the declaration does not necessarily cover all of the Luxembourg company's financial assets. It only applies to reportable financial accounts held with the reporting financial institution. Real estate held directly by the company, a shareholding not held in a securities account, an asset held with another intermediary, or internal asset management documents are not automatically included in this CRS report by the Luxembourg bank.

It is also important to avoid any confusion between the beneficial owner (AML) and the controlling person (CRS). The two concepts often overlap, but they are not strictly identical in their purpose. AML/KYC is used to identify who actually owns or controls the client. The CRS is used to determine whether financial information must be exchanged with a foreign tax authority. The CRS allows the information collected during AML/KYC to be used to identify controlling persons, but the triggering of the declaration remains a tax matter and depends on the classification of the entity and the tax residence of the individuals concerned.OECD)

In the case of the United States, the applicable regime is FATCA, which is separate from the CRS. Luxembourg indicates that FATCA requires reporting financial institutions to identify account holders in accordance with their due diligence obligations and to file an annual FATCA report with the ACD. The regime covers reportable US accounts and, in certain cases, passive No-financial foreign entities whose controlling persons are specified US persons.Direct Taxes)

In summary, for a Luxembourg holding company, such as a SOPARFI, the tax authorities of the beneficial owners' country of residence do not automatically receive all information relating to the company's assets. They may receive, via CRS, information relating to Luxembourg financial accounts if the company qualifies as a passive No-financial entity (NFE) and if its controlling persons are tax residents of a reportable jurisdiction. The information transmitted then concerns the entity's identity, the identity of the reportable controlling persons, the account details, its balance or value, and the gross financial income associated with the account.

This distinction is fundamental in Luxembourg tax law to determine whether the tax is borne by the company itself or directly by its partners.

• A No-transparent company is treated as a separate taxpayer. It is taxed on its own profits. This is typically the case for Luxembourg capital companies, such as the SA, Sàrl, SCA, or SAS. A SOPARFI incorporated as an SA or Sàrl is fiscally opaque. It may be subject to corporate income tax, municipal business tax, and net wealth tax, depending on the applicable rules. PwC estimates the overall corporate tax rate in Luxembourg City at 23.87% for companies with taxable income exceeding €200,000.PwC Tax Summaries)
• A fiscally transparent company, on the other hand, is not taxed as a capital company for corporate income tax purposes. Its profits are allocated to its partners, who are taxed according to their own tax regime. This is notably the case for Luxembourg partnership forms such as the SCS and the SCSp, which are generally treated as transparent for corporate income tax and net wealth tax.ITR)

The distinction is not, however, absolute in all its effects. A limited partnership (SCS) or a limited partnership (SCSp) may be considered as carrying on a commercial activity and become subject to municipal business tax, for example, if it actually carries on a commercial activity or if it is commercially "contaminated" by a limited partner constituted as a capital company holding at least 5% of the interests.Chambers Practice Guides)

There are also anti-hybrid rules. An entity considered transparent in Luxembourg may be treated as opaque by the jurisdiction of its partners. In certain "reverse hybrid" situations, it may then be subject to corporate income tax in Luxembourg on the portion of its income not taxed elsewhere. The 2023 Luxembourg budget law specifically clarified that this taxation applies to corporate income tax, but not to municipal business tax or net wealth tax.EY)

In summary:

• A public limited company (SA), a limited liability company (Sàrl), a simplified joint-stock company (SAS) or a limited partnership with shares (SCA) is normally No-transparent: the company is itself a taxpayer.
• A SCS or an SCSp is normally transparent: the results are allocated to the partners for tax purposes.

However, this transparency can be qualified by commercial activity, commercial contamination, fund regime, anti-hybrid rules and tax treatment in the countries of the partners.

In the case of a SOPARFI, the answer therefore depends on its legal form. A SOPARFI constituted as a public limited company (SA) or a private limited company (Sàrl) is, in principle, an opaque company. A Luxembourg asset management structure constituted as a limited partnership (SCS) or a limited partnership (SCSp), on the other hand, can be fiscally transparent.

Yes, but not in all cases. For a No-transparent Luxembourg company — for example a SOPARFI constituted as a SA or Sàrl — Luxembourg financial institutions do not automatically transmit all the company's assets or income to the countries of residence of the beneficial owners.

The answer depends on the CRS/FATCA classification of the company: active NFE, passive NFE or financial institution.

Under the CRS/NCD, reporting Luxembourg financial institutions transmit information to the Luxembourg Direct Tax Administration. Only then, within the Luxembourg tax administration, is the automatic exchange of information carried out with the relevant foreign jurisdictions. The ACD indicates that Luxembourg financial institutions must file these declarations annually, generally no later than June 30 of the relevant calendar year.Direct Taxes)

• For a No-transparent Luxembourg company classified as an active NFE, The Luxembourg bank is generally not required to transfer the assets or income of a company to the tax residence countries of its beneficial owners solely because those owners reside abroad. The company is treated as the account holder. If it is a tax resident of Luxembourg, it is not, in itself, a foreign entity subject to reporting in the country of its shareholders or beneficial owners.
• For a No-transparent Luxembourg company classified as a passive NFE, The situation is changing. The CRS stipulates that a financial account held by a passive NFE becomes reportable when one or more of its controlling persons are residents of a reportable jurisdiction. In this case, the financial institution must identify these controlling persons and their tax residence. The OECD confirms that the CRS specifically targets accounts held by a passive entity with one or more reportable controlling persons.OECDIn this case, the information that may be transmitted does not constitute "all the assets" of the company in the broad sense. It relates to reportable financial accounts held with the reporting financial institution. This includes, in particular, the identity of the entity, the identity of the reportable controlling persons, the account number, the name of the reporting financial institution, the balance or value of the account at the end of the year, as well as certain financial income credited or paid into that account: interest, dividends, other income generated by financial assets, and gross proceeds from sale or redemption when the institution acts as custodian, broker, nominee, or agent.OECD)

In other words, if a No-transparent Luxembourg SOPARFI is a passive ENF and its beneficial owner is a tax resident, for example, in Belgium, France, or Germany, the Luxembourg bank may have to report information relating to the SOPARFI's account and this controlling person to the ACD. The ACD can then communicate this information to the tax authorities of the person's country of residence if that country is a reportable jurisdiction as a CRS.Direct TaxesBelgium, France, and Germany are reportable CRS jurisdictions. In fact, all jurisdictions subject to reporting in Luxembourg are EU Member States, as well as certain No-EU partner jurisdictions with which Luxembourg is required to exchange information under the CRS/NCD. The Luxembourg Data Protection Authority (ACD) also points out that Luxembourg law introduces the automatic exchange of information relating to financial accounts with EU Member States and other Luxembourg partner jurisdictions.

Therefore, if a No-transparent Luxembourg company is classified as a passive NFE, and if its controlling persons are tax residents in Belgium, France, or Germany, a Luxembourg financial institution may be required to report the relevant CRS information to the ACD. The ACD then forwards this information to the tax authorities of the country in question.

In summary, for a No-transparent Luxembourg company, the foreign beneficial owner does not automatically trigger the transfer of all company assets to their country of residence. The CRS/FATCA transfer primarily applies when the company is a passive entity and its controlling persons are reportable. In such cases, it applies to reportable financial accounts, not to the company's entire assets.

In this case, the Luxembourg financial institution does not present a complete accounting of the company. It reports CRS information relating to the reportable financial accounts held with it.

Therefore, for a No-transparent Luxembourg company classified as a passive NFE, controlled by persons who are tax residents in Belgium, France, or Germany, the reporting mainly concerns:

1. the identity of the Luxembourg company holding the account;
2. the identity of the reporting controlling persons;
3. the financial account identification information;
4. the balance or value of the account at the end of the calendar year;
5. certain gross financial income credited or paid into this account during the year;
6. certain gross proceeds from the sale or repurchase of financial assets when the financial institution acts as custodian, broker, nominee or agent.

The CRS stipulates that an account held by a passive NFE is reportable when one or more of its Controlling Persons are reportable persons. This is precisely the case when the controlling persons are tax residents of Belgium, France, or Germany, CRS jurisdictions reportable in Luxembourg.OECD)

Specifically, the Luxembourg financial institution declares to the ACD:

For the Luxembourg company: its name, address, jurisdiction(s) of tax residence, tax identification number where applicable, and data enabling identification of the financial account.

For reportable controlling persons: name, address, jurisdiction of tax residence, tax identification number, date and place of birth. The OECD specifies that, for a passive NFE with reportable controlling persons, the identification information of these persons must be reported with that of the account.OECD)

For the financial account: the account number, or its functional equivalent, the name and identification number of the reporting financial institution, and the balance or value of the account at the end of the relevant calendar year. If the account was closed during the year, the closure is reported.OECD)

For financial income related to the account: gross interest, gross dividends, other gross income generated by assets held in the account, as well as gross proceeds from the sale or redemption of financial assets, when such sales or redemptions are processed through the reporting financial institution.OECD)

The ACD then transmits to the tax authorities of the country concerned, for example Belgium, France or Germany, the CRS information it has received relating to the controlling persons who are tax residents of that country. The Luxembourg ACD specifies that the reporting financial institutions communicate the reportable accounts to the ACD, which then intervenes within the framework of the automatic exchange of information (CRS/NCD).impotsdirects.public.lu)

The declaration, therefore, does not, as such, relate to the company's assets at the close of its financial year. It relates to the balance or value of the reportable financial accounts at the end of the calendar year. This is an important distinction. The CRS does not necessarily transmit the SOPARFI's complete balance sheet, nor the total value of its real estate, undeclared investments, private receivables, or assets held elsewhere.

It also does not cover all income received by the company during the fiscal year. It focuses on deferred financial income related to financial accounts held with the reporting institution: interest, dividends, certain other financial income, and gross proceeds from the sale or repurchase of financial assets. Rental income received directly by the company, business income, debt repayments, or internal flows not classified as deferred financial income are not automatically reported by the bank for CRS purposes, unless they fall within a reportable CRS category linked to the financial account.

The status of directors' current accounts is not, in itself, a standard CRS item automatically transmitted. If these current accounts only appear in the company's internal accounting records, they are not reported as such. However, if transactions pass through a reportable bank account, they can influence the balance of that account at the end of the year. The CRS does not, however, transmit the internal accounting description "director's current account" or the legal details of this receivable or payable, except within a separate legal framework.

Finally, the CRS does not transmit all financial transactions. It is neither a complete bank statement nor a detailed journal of transactions. Reporting is aggregated by account and by revenue category. Foreign administrations receive the account balance or value, certain gross revenues, and certain gross proceeds from sales, but not automatically every transfer, every security purchase, every invoice payment, or every cash transaction.

The practical summary is therefore as follows:

In summary, in the case of a passive Luxembourg-based No-financial corporation (NFC), the CRS conducts a "look-through" to the controlling persons, but it does not transform the Luxembourg bank into an automatic transmitter of the company's entire accounting records. What is transmitted are the standardized data relating to reportable financial accounts: identity, tax residence, account, balance or value, gross financial income, and gross proceeds from disposals.