LUXEMBOURG HAS LONG been known as a tax haven. One of the major hallmarks of tax havens is a strict policy of banking secrecy. In the Grand Duchy of Luxembourg it is illegal to disclose details of banking customers unless there is strong evidence of fraud. The Grand Duchy maintains that there is no contradiction between bank secrecy, which is intended to protect the individual's privacy, and effective crime fighting.

In January 2003, European Union (EU) finance ministers in Brussels, Belgium, agreed after 14 years of negotiation to terms that were meant to level the playing field on taxes and end tax havens. The Tax Package was formally agreed to six months later. The core of the package is the Savings Tax Directive which is intended ...