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Luxembourg: Double Tax Treaties

Treaty Provisions

As of March 2021, Luxembourg has signed 88 double tax treaties, as shown in the table below. Also provided is the year that the most recent treaty between Luxembourg and the other territory went into force.

Country Year Effective Country Year Effective
Albania 2009 Mauritius 1995
Andorra 2016 Mexico 2001
Armenia 2009 Moldova 2007
Austria 1962 Monaco 2009
Azerbaijan 2006 Mongolia 1998
Bahrain 2009 Morocco 1980
Barbados 2009 Netherlands 1968
Belgium 1970 North Macedonia 2012
Brazil 1978 Norway 1983
Brunei 2017 Panama 2010
Bulgaria 1992 Poland 1995
Canada 1999 Portugal 1999
China 1994 Qatar 2009
Cyprus 2018 Romania 1993
Czech Republic 1991 Russia 1993
Denmark 1980 San Marino 2006
Estonia 2006 Saudi Arabia 2013
Finland 1982 Senegal 2018
France 2006 Serbia 2017
Georgia 2007 Seychelles 2012
Germany 2012 Sierra Leone 2013
Greece 1991 Singapore 1993
Guernsey 2013 Slovakia 1991
Hong Kong 2007 Slovenia 2001
Hungary 1990 South Africa 1998
Iceland 1999 South Korea 1984
India 2008 Spain 1986
Indonesia 1993 Sri Lanka 2013
Ireland 1972 Sweden 1996
Isle of Man 2013 Switzerland 1993
Israel 2004 Taiwan 2011
Italy 1981 Tajikistan 2011
Japan 1992 Thailand 1996
Jersey 2013 Trinidad & Tobago 2001
Kazakhstan 2008 Tunisia 1996
Kosovo 2019 Turkey 2003
Kuwait 2007 Ukraine 1997
Laos 2012 United Arab Emirates 2005
Latvia 2004 United Kingdom 1967
Liechtenstein 2009 United States 1996
Lithuania 2004 Uruguay 2015
Malaysia 2002 Uzbekistan 1997
Malta 1994 Vietnam 1996

Broadly speaking, tax treaties stipulate that corporate entities must be charged tax in the country they are resident in (the treaties contain 'tie-breaker' clauses to resolve cases in which both countries assert residence). This holds true except when an entity which is resident in one country has a permanent establishment in the other country, in which case the income from that permanent establishment is taxed in the second country.

Individual taxation likewise follows 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 on the same income, although the treaty with the US contains 'savings' and 'limitation of benefits' clauses which can negate the purpose of the treaty in some circumstances.

Tax treaties normally provide that withholding tax on dividends is at a lower rate than usual (15% rather than 25% for instance), and that when there is a substantial participation (usually 25% or greater) an even lower or even zero rate is applied. Likewise, reduced rates of withholding tax are applied to interest and royalty payments (Luxembourg doesn't 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. Income from property is usually taxed in the country in which it is situated.

NB: This section gives some brief and general details about double tax treaties; it is essential to refer to the individual treaties with respect to any particular case or situation.

In the last few years, many treaties have been updated to reflect the BEPS MLI. This involves one of the signatory countries publishing a synthesised text of the tax treaty with new BEPS MLI provisions inserted.

Luxembourg is currently negotiating a double tax treaty with Kyrgyzstan and a treaty with Botswana  has been approved but not yet signed.

On 18 February 2021, a protocol to the tax treaty with France entered into force. It enables the elimination of double taxation with respect to employment income. A protocols to the treaty with Tunisia also went into force in 2020, and protocols have also been signed with Albania, Kazakhstan and Russia.




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