Luxembourg: Offshore Legal and Tax Regimes
The EU's Parent/Subsidiary Directive
Changes to the parent/subsidiary directive in 2004 have reduced the holding requirement to 20% for 2005-06; to 15% for 2007-08; and to 10% for 2009 onward. Under the EU's Directive on Interest and Royalties, which also came into effect in 2004, both types of payment will be exempt from withholding tax if they are between associated companies (rules as for the participation exemption).
Luxembourg has actually gone even further, meaning that there is no withholding tax on royalties paid to non-resident companies.