Luxembourg – Protocol to amend tax treaty with France
November 26: Legislation concerning the ratification of the fourth Protocol to amend the Luxembourg-France income tax treaty is expected to be submitted in early 2015. Consequently, the Protocol (signed in September 2014) is expected to be effective—at the earliest—as from the 2016 civil or financial year.
Scope of Protocol
Provisions of the Protocol concern the tax treatment of gains derived from the alienation of shares or other rights in a company, or any other legal person, the assets of which are composed, in value, of more than 50% (directly or through the interposition of one or more other companies or legal persons) by immovable property located in one of the treaty-partner countries or by rights pertaining to such immovable property.
This amendment is intended to end potential situations of “double non-taxation” by granting France the right to tax capital gains realized by Luxembourg companies on the direct or indirect sale of shares in French real estate companies, including shares in SCIs (sociétés civiles immobilières), the value of which is composed by real estate properties located in France and of a value of more than 50%.
Read a November 2014 report [PDF 102 KB] prepared by the KPMG member firm in Luxembourg: France-Luxembourg Tax Treaty: New protocol: Entry into force not before 2016
