The Legal 500

Double taxation avoidance treaties concluded between two states seek to prevent the taxation in both countries of income and capital. Chevalier & Sciales has created this treaty table to provide you with an accurate and updated view of Luxembourg double tax treaties in force or currently pending.

On 7 March 2013, the Court of Justice of the European Union (“CJEU”) rendered its decision in the “GfBK” case (C-275/11), dealing with the question of whether investment advisory services in the fund industry benefit from a VAT exemption.

Welcome to our quarterly tax update dedicated to the main changes which have occurred over the last 3 months with regard to Luxembourg and international tax law

On 8 November 2012, the Advocate General (“AG”) released his conclusions before the Court of Justice of the European Union (“CJEU”) in the “GfBk” case (C-275/11) which deals with the question of whether investment advisory services in the fund industry benefit from a VAT exemption.

As mentioned in our newsflash of last week, in order to support the 2013 budget, an ACIT is also introduced as from 1 January 2013 for all companies whose financial assets, transferable securities and cash deposits do not exceed 90% of their total balance sheet. The minimum ACIT due by such companies, varying from EUR 500 to EUR 20,000, depends on the closing balance sheet total of the company (lower than EUR 350,000 to higher than EUR 20,000,000).

Welcome to our quarterly tax update dedicated to the main changes which have occurred over the last 3 months with regard to Luxembourg and international tax law.

On 13 December 2012, the Luxembourg Parliament (Chambre des Députés) adopted bill No. 6497 on the new tax measures drawn up to support the 2013 budget.The main amendments affecting corporate entities relates to the introduction of a minimum advance corporate income tax, the increase of the solidarity surcharge and a 1% reduction of the investment tax credits. The new measures are applicable to companies as from 1 January 2013.

Luxembourg News - Latest Luxembourg case law on exchange of information

International News - French withholding tax on national soured dividends can be recovered by non-resident UCITS (ECJ Case C-338/11)

On 23 April 2012, the Grand Duchy of Luxembourg and the Federal Republic of Germany signed a new double tax treaty (the "New Treaty") which will replace the double tax treaty currently in force dated 23 August 1958. The New Treaty basically follows the provisions of the OECD Model Tax Convention, but certain specific provisions have been added.

Our April tax update highlights the latest important changes in Luxembourg tax law, including the enactment of the law relaxing the conditions to be met in order to benefit from the SPF tax status. Other topics include inter alia recent case law on the exemption of income deriving from the sale of preferential subscription rights and the first decisions of the Luxembourg administrative courts relating to the exchange of information upon request based on the law of 31 March 2010.

Qatar, Barbados, Panama 

In 2011, various Double Tax Treaties have entered into force or been signed by Luxembourg, complying with the OECD’s requirements. Here is a summary of these DDTs.

Russia and Luxembourg recently signed a new Protocol, which amends the Double Tax Treaty (DTT) signed on 28 June 1993. Most of the amendments are constructive and should, among others, increase the competitiveness of Luxembourg aside other European jurisdictions that are generally and currently preferred as intermediary hubs to hold investments with Russia.

THE CHINESE SILK ROAD RE-OPENS

Spicy new tax planning opportunities have been created when, on 2 November 2007, the Grand Duchy of Luxembourg and the Hong Kong Special Administrative Region of the People’s Republic of China (“Hong Kong”) signed a double tax treaty (the “Treaty”), which came into force on 20 January 2009. This Treaty applies retrospectively from 1 January 2008 in Luxembourg and from 1 April 2008 in Hong Kong

Along the same line as a number of other EU Member States, the circular letter 95/2 published by the Luxembourg tax authorities on December 31, 2010 (the “Circular”) introduces a favorable tax regime for highly skilled workers expatriated in Luxembourg as from January 1, 2011. Such a favorable tax regime became essential given the continuously increasing number of highly skilled expatriates working in Luxembourg.

As from 1st January 2011, unregulated companies or companies who do not benefi t from a specifi c tax regime investing more than 90% of their total assets in fi nancial fi xed assets, transferable securities or cash at bank will be liable to a lump sum taxation amounting to EUR 1,500 per annum.

On 20 January 2009, the bilateral treaty for the avoidance of double taxation between the Hong Kong SAR and the Grand-Duchy of Luxembourg (the Treaty) entered into force in both jurisdictions. The Treaty has retroactive effect, and is applicable as from 1 January 2008 with respect to Luxembourg and as from 1 April 2008 with respect to Hong Kong.

Luxembourg currently has 52 double tax treaties in force and 22 in the course of negotiation or ratification. An interesting addition to this is the recently ratified double tax treaty between the United Arab Emirates (UAE) and Luxembourg (the “DTT”) which aims to enhance economic cooperation between both countries.

On 16 December 2008, the Luxembourg Parliament has passed laws to enact the attractive measures already proposed by the bills number 5924 and 5913. These new measures which will be applicable as of 1 January 2009 aim at facilitating investments in and through Luxembourg. The main measures are: (i) the abolition of capital duty as of 2009, (ii) the exemption of withholding tax (under certain conditions) on dividends paid to treaty countries (in case of corporate shareholders), (iii) decrease of the combined corporate income tax to 28,59% as of 1 January 2009 and (iv) broadening the scope of the IP regime introduced by the law of December 2007.

On 9 September 2008, the Luxembourg government submitted to the Parliament (Chambre des Députés) a draft bill for discussion to abolish the Luxembourg capital duty (droit d'apport), as previously announced by the government on 22 May 2008.

On 1 October 2008, a draft bill (n°5924) introducing new favourable tax measures was submitted to the Luxembourg Parliament. We set out hereunder a brief overview of the main changes that are proposed and that relate to companies.

On 2 November 2007, Luxembourg signed a tax treaty with Hong Kong. The maximum withholding taxes that are set out are: