We present gamma–ray and X-ray analysis of GRB040223 observed by INTEGRAL and XMM-Newton. GRB 040223 has a peak flux of $(1.6 \pm 0.1) \times 10^{-8}$ ergs cm$^{-2}$ s$^{-1}$, a fluence of (4.4 $\pm$ 0.4) $\times$ 10$^{-7}$ ergs cm$^{-2}$ and a steep photon power law index of −2.3 $\pm$ 0.2, in the energy range 20–200 keV. The steep spectrum implies that it is an X-ray rich GRB with emission up to 200 keV and $E_{\rm peak}<20$ keV. The luminosity-lag relationship was used to obtain a redshift $z=0.10^{+0.04}_{-0.02}$. The isotropic energy radiated in $\gamma$-rays and X-ray luminosity after 10 hours are both orders of magnitude less than classical GRBs.