LUXEMBOURG: TAX TREATY UPDATE, STATUS REPORT

Luxembourg currently has 76 income tax treaties in force, and there are 29 treaties under negotiation. Tax treaties can provide a legal framework not only for the avoidance of double taxation and fiscal evasion, but also for international administrative cooperation between Luxembourg and its treaty partners in terms of mutual assistance and procedures, as well as in terms of exchange of information. Also, the policy of Luxembourg officials has been to negotiate access to tax treaty protection for investment funds defined as collective investment vehicles or UCIs.

In June 2015, the Luxembourg Minister of Finance submitted to the Parliament a bill of law on the ratification of four income tax treaties—Singapore, Andorra, Croatia, and Estonia—and six protocols amending existing tax treaties—Mauritius, Ireland, Lithuania, Tunisia, France, and the United Arab Emirates. In general, these tax treaties and treaty protocols follow the OECD Model Convention.

In general (except for the protocol amending the income tax treaty with France), the protocols were concluded in order to bring the articles on exchange of information in line with OECD standards. The protocol to the Luxembourg-France income tax treaty includes measures to change the rules applicable to the taxation of capital gains realized on the sale of shares or other rights in real estate companies and to allocate the right to tax these gains to the country where the real estate is located (i.e., the situs principle).

Read an August 2015 report [PDF 378 KB] prepared by the KPMG member firm in Luxembourg: Tax Treaty Update