International tax advice

Tax Treaties

Luxembourg has signed Double Tax Treaties with other countries (see the list of rates below. Click to access the treaty when available), all of which are based on the OECD Model.

Tax Conventions
In general, the Tax Treaties specify that corporate entities are liable to pay tax in their country of residence (the Treaties contain 'tie-breaker' clauses to resolve cases in which both countries assert residence). If an entity which is resident in one country has a permanent establishment in another country, then the income from the permanent establishment is taxed in the second country. Individual taxation is also calculated on the basis of residence, but in cases where income could be taxed twice, there is either a 'tie-breaker' clause or a provision offsetting tax paid in one country against tax due in the other for the same income (or an exemption).

Under Tax Treaties, withholding tax on dividends is normally calculated at a lower rate than usual (zero rate can even be applied). Likewise, reduced rates of withholding tax are applied to interest, dividend and royalty payments; Luxembourg does not apply withholding tax to interest in any case). Tax paid in one country is normally allowed as a credit against tax due on the same income in the other country. Luxembourg generally considers income earned abroad exempt.

Income from property is usually taxed in the country in which it is situated. However, real estate in France held by Luxembourg companies are taxed neither in France nor in Luxembourg : read our news.

Double Tax Treaties : list of countries
Liste des pays ayant signé un traité destiné à éviter la double imposition
South Africa – Germany – Argentina – Austria – Belgium – Brazil – Bulgaria – Canada – China – Koreae – Denmark – Spain – Finland – France – Greece – Hungria - Mauritius - Indonesia – Irland – Iceland – Italy – Japan – Malaisia – Malte – Maroc – Mexique – Mongolie – Norway – Uzbekistan - Netherland – Pologne – Portugal - Czechoslovak Republic – Roumania - United Kingdom – Russia - Swiss – Taiwan – Thaïlande – Trinidad - Tunisia – Turkey – Ukraine – USA - Vietnam

Read more

Tax Treaties in negociation as at 08/07/2008
(source Administration des Contributions Directes)

State

Project
of Treaty

Status of negociations
Albania C  S 14.01.2009 
Argentina C  L 14.07.2005 
Armenia C  s 23.06.2009 
Azerbaïdjan C  L 02.07.2009 
Bahreïn C  P 25.05.2007 
Barbuda C  P 30.05.2008 
Cyprus C  P 19.10.2007 
United Arab Emirates C  L 29.05.2009 
Georgia C  L 28-11-2009 
India C  L 5.06.2009 
Kazakhstan C  P 01.06.2007 
Kuwait S  S 11.12.2007 
Kyrgyzstan C  N 
Liban C  N 
Macedonia C  P 03.07.2008 
Moldova C  L 28.11.2009 
Monaco NC  S 27.07.2009 
Pakistan C  N 
Qatar C  C 06.11.2007 
United Kingdom NC  N 
Serbia and Montenegro C  N 
Syria C  N 
Ukraine C  N 

C = first convention; NC = new convention; AC=Additional Clause
N = negociations in course; P = paraphed ; S = signed ; L = law
Last update : 8 July 2008
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