Driving transformation in tax, compliance, and regulation through digitalization, transparency, and strategic alignment

In May 2025, EY Luxembourg gathered professionals from across the asset servicing industry to share critical insights into regulatory developments, technology adoption, and tax policy. This article provides a comprehensive summary of the event’s key contributions. The panelists’ interventions revealed not only the state of the market but also the pressing risks and opportunities shaping the industry in the year ahead.

Digitalization in Asset Servicing 2025

Highlights from Akash Sharma, EY Luxembourg Senior Manager, Technology Consulting

Akash  initiated the discussion by presenting the results of the annual EY digitalization survey, 2025 edition, which drew responses from 48 companies across fund administrators, ManCos, and other stakeholders. The findings reflect the sector’s growing maturity in terms of digital ambition, but also its persistent execution gaps.

Key figures to remember: 

Over 91% of surveyed firms claim to have a digitalization strategy, yet only a subset have achieved full alignment with their enterprise-wide objectives. Larger firms tend to lead in this area, often appointing dedicated digital officers (CBOs/CDOs) empowered to execute strategies, and push toward SaaS models with productization of services. These mature actors report up to 25% greater operational efficiency, proving that strategy alone is insufficient; execution is everything.

On funding, more than 90% have allocated budgets to digital initiatives, though full funding is slightly declining. Many companies underestimate ROI timeframes; only 5% expect returns in under 18 months, while most accept a 2–3 year horizon. Without a clear business case, funding remains volatile, especially under private equity-backed pressures for fast results.

When it comes to operating models, most firms favor internal digital teams, supplemented by selective partnerships. Larger and medium-sized companies leverage structured collaborations, while smaller actors still rely on ad hoc approaches. The key lies in balancing in-house development with external tech solutions and integration.

Customer centricity, surprisingly, emerged as the top driver of digitalization in 2025, surpassing operational efficiency. Yet only 45% of firms consider themselves truly customer-centric. Most interactions remain driven by emails, ad hoc workflows, and manual client engagement methods. A disconnect persists between how firms perceive their own customer centricity, and how their clients actually experience it.

Akash highlighted several high-value use cases for GenAI adoption, such as end-to-end onboarding, board pack automation, risk scoring, and document generation. Despite these possibilities, only 3% of firms report more than 90% operational digitalization, and just 20% exceed the 70% mark. Fragmentation, lack of standardization, and legacy workflows remain barriers.

Tool fatigue is also a concern. Companies report integration hurdles, poor customization, and opaque licensing models. Akash advises a triad approach: align tools with business needs, ensure technical scalability, and monitor total cost of ownership. The risk of duplicated investment across disconnected applications is real.

Finally, the digital skills gap looms large. With 25% of jobs expected to be impacted by GenAI and 10% of roles potentially redundant — especially in data entry — the need for reskilling is crucial. Investment in internal talent, university partnerships, and e-learning is becoming critical.

Digital Survey Results & Investment Tax Credits

Highlights from Nicolas Volfart, EY Luxembourg Senior Manager, Business Tax Services (BTS)

Nicolas delivered practical updates on the Luxembourg investment tax credit's procedure. While the underlying framework remains unchanged, significant procedural reforms were introduced. Notably, the request for the attestation of eligibility must now be submitted via a MyGuichet digital form, replacing the "paper" process and formalizing the digital workflow. Although the "paper" form still exists, it no longer requires a signature, as legal validation now rests with the digital submission, however it still needs to be appended to the digital request.

A key update also concerns the new “financial annex,” which breaks down HR, training, and technical costs of the project. Finally, Nicolas warned of increased scrutiny from the Ministry, which has revamped its team and started raising more detailed questions. The message is clear: eligibility no longer hinges on superficial filings. Robust, coherent documentation is now essential

Navigating TP: Transfer Pricing for Asset Servicers 

Highlights from Susana Romero, Senior Manager, Transfer Pricing and Eduardo Medina, EY Partner, Consumer Products and Services and Transfer Pricing 

Susana and Eduardo highlighted common intercompany transactions carried out by the asset management clients served by asset servicers and shared some recent local and international transfer pricing (TP) developments relevant to the asset management industry. In particular, they presented the main takeaways from the new German Administrative Principles for Transfer Pricing and Luxembourg court case n° 50.602C where the Court confirmed the judgment of the Administrative Tribunal on the reclassification as equity made by the tax authorities on an Interest-Free Loan granted to a Luxembourg company based on the substance over form principle.

Finally, Susana and Eduardo touched base on the impact of TP compliance across the key risk management functions carried out by asset servicers (onboarding, compliance, legal, accounting, tax, directorship mandates) and the trends seen across Luxembourg players in the asset servicing industry and their asset management clients to tackle Luxembourg TP compliance functions. 

Key Considerations in US Tax Policy

Highlights from Alexandre Pouchard, EY Luxembourg Partner, International Tax and Transaction Services 

In the wake of the recent elections, the US tax policy outlook is poised for significant transformation, particularly for multinational enterprises navigating the complexities of international taxation. Alexandre outlined critical U.S. tax developments in the draft US tax legislation, often referred to as the “big beautiful tax bill,” emphasizing that while this bill has the potential to reshape the tax landscape, it still requires Senate approval, leaving room for potential amendments. 

Recent changes in US domestic tax law further complicate the landscape, impacting global business operations and compliance strategies. As policymakers deliberate, multinational companies must remain vigilant, as the implications of these changes could affect their operational strategies, compliance obligations, and overall tax liabilities. The evolving tax framework presents both challenges and opportunities, urging businesses to adapt proactively to the shifting regulatory environment.

FATCA and CRS Regulatory Updates 

Highlights from Dan Zandona, EY Luxembourg Partner, Tax, Business Tax Services

Dan Zandona provided a comprehensive and compliance-focused update on the latest developments regarding FATCA and CRS during the roundtable discussion. He began by highlighting a crucial 2023 regulation that mandates formal notification to individual account holders and controlling persons reported under CRS prior to CRS report submission to tax authorities. This requirement necessitates that operational workflows integrate this essential communication step to ensure compliance.

Additionally, Dan addressed the potential expansion of reportable jurisdictions under CRS. As of the date of the roundtable, the list was not updated.

Recently, on 11 June 2025, Luxembourg's Official Gazette published Grand-Ducal Regulation of 6 June 2025 amending Grand-Ducal Regulation of 15 March 2016, as amended, implementing Article 2, paragraph 4 of the Law of 18 December 2015 on the CRS, updating its CRS Reportable and Participating Jurisdictions lists, as follows:

• Armenia, Georgia, Moldova and Ukraine have been added to the Participating Jurisdictions list; and
• Armenia, Rwanda and Senegal have been added to the Reportable Jurisdictions list.

As consequence, these lists come into force on 15 June 2025 and is applicable for the 2024 reporting year.

Turning to DAC8 and the forthcoming amendments to DAC2, Dan discussed the significant challenges that asset servicers will face, particularly concerning reporting requirements. Key reporting fields will include the roles of controlling persons, account status (whether new or pre-existing), self-certification details, and account types. These updates are set to take effect in 2026, and it is imperative for organizations to begin preparations, as they will involve comprehensive changes to systems, data management, processes, and people.

In conclusion, Dan issued a critical reminder: the ACD and CSSF are now coordinating audits, and on-site inspections may involve joint visits. As a result, maintaining robust internal controls, aligning with AML regulations, and ensuring audit readiness have become essential practices rather than optional considerations.

Regulatory Convergence: DAC6, AML-Tax, and the Rise of AMLA 

Highlights from Hakim Arrez, Manager, Business Tax Services (BTS)

Hakim wrapped up the roundtable with a forward-looking view on regulatory convergence. He emphasized that tax, regulatory, and AML authorities now cooperate routinely, and minor lapses (e.g., onboarding inconsistencies) can trigger multi-regime exposure.

He illustrated how inconsistencies in policies or training can escalate quickly under today’s inspection standards. Even minor gaps — like outdated AML logs — can trigger reputational and financial consequences. He urged firms to unify governance, reinforce staff training, and document compliance efforts.

Hakim also introduced AMLA, the upcoming EU Anti-Money Laundering Authority, which will eventually oversee national regulators (including the CSSF) and harmonize risk scoring. Though still in development, its operational consequences are already foreseeable. 

Hakim’s closing message was clear: compliance is no longer a matter of ticking boxes, it must be coordinated, documented, and defensible under scrutiny.

Conclusion

The 2025 EY Asset Servicers Tax Roundtable laid bare the dual imperatives facing the industry: to embrace digital transformation and to stay ahead of an increasingly integrated regulatory environment. Across all interventions, the same themes recurred: execution, documentation, cross-functional collaboration, and technological agility. Whether navigating CRS reform, US policy, or transfer pricing complexity, asset servicers must combine tax insight with operational excellence and digital strategy. As regulatory scrutiny rises and client expectations grow, success in 2025 and beyond will hinge on preparedness, adaptability, and vision.