1. What are the key tax laws and regulations in Belgium that individuals and businesses should be familiar with?

The Belgian tax regime is essentially based on the Income Tax Code 1992 (ITC92) and the Royal Decree implementing the ITC92. Income taxes are in principle levied on (i) the total worldwide income of Belgian tax resident individuals and companies (ie, personal income tax and corporate income tax) unless domestic law or tax treaties provide for reductions or exemptions, and (ii) the Belgian sourced-income of non-resident individuals and companies (non-resident taxation). Taxation typically occurs on a net basis, ie, after the deduction of expenses.

2. Can you explain the personal income tax rates and thresholds for residents and non-residents in Belgium?

Save for certain types of specific income, the net income (real estate income, moveable income, professional income and miscellaneous income) of Belgian tax resident individuals is in principle globalised and subject to the progressive income tax rates. These progressive income tax rates apply to (yearly indexed) tax brackets, whereby a minimum tax-exempt lump sum is foreseen. For income year 2023:

• 25% is levied on a first bracket up to €15,200 (with an exempt lump sum amount of in principle €10,160);
• 40% on the bracket from €15,200 to €26,830;
• 45% on the bracket from €26,830 to €46,440; and
• 50% on the net income exceeding €46,440.

Municipalities may levy additional local taxes.

Specific exemptions or separate tax rates apply for different types of income, eg, capital gains on shares will under certain conditions be exempt, interest and dividend income will in principle be subject to a final 30% withholding tax (WHT), certain types of miscellaneous income can be taxed at 16.5% up to 33%.

Non-resident individuals are in principle, with respect to Belgian-sourced income, subject to the same tax rates as Belgian residents.

3. What are the corporate tax rates and incentives for businesses operating in Belgium?

The standard corporate income tax rate is 25%. Specific incentives are available, such as incentives for start-ups, R&D tax incentives, and tax shelters for the movie and entertainment industry. Specific tax regimes apply for holding companies, (real estate) investment companies and/or funds.

4. Are there any specific tax considerations or benefits for small or medium-sized enterprises (SMEs) in Belgium?

SMEs can benefit from a reduced 20% corporate income tax rate on the first tranche of €100,000 of net income. Other benefits are available, such as an increased investment deduction for digital fixed assets.

5. How does Belgium handle taxation of investment income, such as dividends, interest, and capital gains?

Dividends distributed by Belgian companies or by foreign companies with a Belgian paying intermediary are subject to 30% WHT subject to exemptions and reduced rates under domestic law or tax treaties. Belgian individuals are not obliged to report this dividend income; hence, the WHT would then be a final tax. Belgian companies may in principle credit the Belgian WHT against the corporate income tax and any excess is refundable; they may also benefit from an exemption for qualifying dividends (as a 100% deduction).

Interest distributed by Belgian companies or by foreign companies with a Belgian paying intermediary is subject to 30% WHT subject to exemptions and reduced rates under domestic law or tax treaties. Belgian individuals are not obliged to report this interest income; hence, the WHT would then be a final tax. Belgian corporates may in principle credit the Belgian WHT against the corporate income tax and any excess is refundable.

Capital gains realised by individuals on business assets are in principle subject to the progressive income tax rates. Specific regimes apply for capital gains on other assets, eg, capital gains on shares may be exempt provided they are realised in the normal management of one’s private estate. Capital gains realised by Belgian companies are in principle subject to the ordinary corporate income tax subject to exceptions, such as an exemption for capital gains on qualifying shares.

6. Can you provide guidance on the tax implications and compliance requirements for cross-border transactions and international tax planning in Belgium?

Foreign enterprises undertaking economic activities in Belgium could trigger a permanent establishment in Belgium under a tax treaty as a result of which profits attributable to the permanent establishment are in principle taxable in Belgium. Even in the absence of a permanent establishment under a tax treaty, these activities could still trigger a Belgian establishment under domestic law resulting in mere compliance obligations (ie, filing an income tax return, withholding salary tax and accounting obligations).

There is no general tax consolidation in Belgium although a restrictive consolidation regime applies.

Dividend, interest and royalties may benefit from domestic WHT exemptions and reduced rates under tax treaties.

The Belgian tax authorities can apply various anti-avoidance measures under domestic law, EU law and tax treaties. Transactions should have sufficient economic substance.

Taxpayers can obtain advance tax rulings confirming the tax treatment of contemplated operations.

Belgium has an extensive tax treaty network to avoid double taxation.

The Belgian tax authorities have a sound reputation in trying to avoid double taxation via dispute resolution mechanisms such as the mutual agreement procedure under tax treaties or the EU Arbitration Directive.

The Belgian tax authorities generally apply OECD guidance when interpreting and applying tax treaties, including in transfer pricing matters.

7. What are the main tax deductions and credits available to individuals and businesses in Belgium?

Individuals can benefit from tax deductions such as for long-term savings, pension savings, investments in new SMEs.

Companies can reduce their income tax base through various deductions such as, and subject to conditions and limitations, the 100% dividend received deduction, a deduction for carried-forward tax losses (no carry back), ‘innovation income’ deduction, an investment deduction.

A foreign tax credit relating to foreign-sourced interest and royalties is available for Belgian individuals and companies.

8. Are there any specific tax treaties or agreements that Belgium has with other countries to avoid double taxation?

Belgium has concluded tax treaties of which there are currently 95 in force. Belgium is also subject to EU directives such as the Parent-Subsidiary Directive, the Interest-Royalty Directive, and the Merger Directive.

9. How can I effectively structure my business or investments in Belgium to optimise tax efficiency and minimise liabilities?

There is not one single way to optimise tax efficiency and minimise tax liabilities. Depending on the type of business and investment, there are options to structure the business or investment in a tax-efficient way to avoid unnecessary tax leakage during the investment period (eg, typically interest and dividend income) or upon exit (eg, typically capital gains on shares). For companies with certain specific activities, such as holding companies, (real estate) investment companies and/or funds, beneficial tax regimes may apply. It is therefore key to consult your tax counsel prior to starting a business or making an investment.

10. Are there any recent tax developments or upcoming changes in Belgium that individuals and businesses should be aware of?

In July 2023 a tax reform has been debated at the Belgian federal level, but no agreement was reached.

1. What are the key tax laws and regulations in Bangladesh that individuals and businesses should be aware of?

Like any other advanced economy, tax legislation in Bangladesh broadly consist of three legislations, namely (a) the Customs Act 1969, (b) Supplementary Duty and Value Added Tax Act 2012 (SD&VAT Act) and (c) Income Tax Act 2023. A foreign investor which is a legal entity and intends to do business in Bangladesh should be aware of the applicable rate of tax that will be imposed for importing machineries and raw materials. The SD&VAT Act deals with indirect tax that is imposed on the goods and services sold or rendered by an entity in the local market. As far as income tax is concerned, a foreign investor should be aware of the corporate tax rate and various obligations for withholding taxes and the compliance regime that must be followed to take benefit of allowable expenditure. The National Board of Revenue (NBR) is the relevant authority responsible for managing the aforementioned three legislations. They have been vested with various extensive powers to issue statutory regulatory orders (SRO) from time to time. At times, provision of SROs can make a lot of difference between tax exemption and a higher level of tax obligation.

An individual should primarily be aware of the provisions of the Income Tax Act and the obligations involving submission of tax returns for any failure to submit the return will have penal consequences.

2. Can you explain the income tax rates and brackets for individuals and businesses in Bangladesh?

Tax is not payable by tax residents on income below Taka 350,000 for men and Taka 400,000 for women and senior citizens aged 65 years or above. The following tax rates are applicable to resident individuals, Hindu undivided families, partnership firms and non-resident Bangladeshi:

Total income Tax rate

First Taka 350,000 Nil
Next Taka 100,000 5%
Next Taka 300,000 10%
Next Taka 400,000 15%
Next Taka 500,000 20%
Balance amount 25%

With regards to the businesses in Bangladesh, the applicable tax rates depend on the sector of business and whether the company is public or private. For instance, publicly traded companies are subject to a tax rate of 20% to 22.5% depending on their listing percentage. Similarly, mobile phone operators are subject to 40%-45% tax, non-listed companies (except certain business sectors such as tobacco, jute, textile, etc) are subject to 27.5% tax and publicly listed banks are subject to 37% tax.

3. What are the common deductions and exemptions available to individuals and businesses under Bangladeshi tax laws?

The common deductions and exemption available to businesses while computing income in Bangladesh include rent, insurance premiums, interest payments, maintenance costs, machinery costs, utility bills, advertisement costs, legal fees, and any other expenses that are related to the business or profession. Generally, any expenditure that is incurred for the purpose of earning the income (not being capital expenditure or personal expenditure) shall be allowed to be deducted. The new Income Tax Act 2023 allows deduction of medical expenses and daily allowances to salaried persons while computing individual income.

4. How can I ensure compliance with tax regulations while minimising my tax liabilities?

The primary strategy for an individual or business in Bangladesh to optimise tax outcomes is to be aware of the tax law provisions. One of the ways to optimise tax outcomes for businesses is corporate restructuring which may require consultation from specialised, skilled and experienced legal consultants. As such, it would be prudent for individuals and businesses in the long run to retain skilled and experienced tax practitioners.

5. What are the tax obligations for businesses operating in multiple locations or engaging in international transactions?

In case a business is operating in multiple locations of the globe, of which Bangladesh is one, its tax obligation in Bangladesh will depend on several factors specific to the entity and the corresponding provisions of the double taxation avoidance agreement between Bangladesh and the jurisdiction in which the business primarily resides. There are agreements on avoidance of double taxation between Bangladesh and 40 countries of the world. In general, a foreign tax credit is available to a Bangladesh resident in respect of any taxes paid in a foreign jurisdiction on the same income being taxed in Bangladesh. The allowance credit is the lower of the foreign tax paid or the Bangladesh tax otherwise payable.

6. What are the potential tax benefits and incentives available for foreign investors in Bangladesh?

As part of the continuing endeavour of the governments to encourage foreign investment in Bangladesh, there are certain business sectors that enjoy tax benefits and incentives. The sectors include power plants, pharmaceuticals, biotech and chemical sector, public-private partnership projects, EPZ, EZ and hi-tech park investors and developers, exploration and extraction of mineral operations, subcontractors in petroleum operations, and industrial enterprises and physical infrastructures. It is noteworthy that a significant percentage of foreign investment in Bangladesh is made in these sectors.

7. How can I resolve tax disputes or handle tax audits with the tax authorities in Bangladesh?

The most efficacious avenue to avail a remedy against any order of an income tax authority subordinate to the Appellate Joint commissioner or the Commissioner of Taxes (Appeal) is to prefer appeals to the Appellate Joint commissioner or the Commissioner of Taxes (Appeal); appeal to the Appellate Tribunal against an order of the Appellate Joint Commissioner or the Commissioner (Appeals) and Reference application to the High Court against any order of the Appellate Tribunal.

8. Can you provide guidance on transfer pricing regulations and their implications for multinational corporations operating in Bangladesh?

The Income Tax Act 2023 provides for extensive provisions regarding responsibility and determination of the ‘arm’s length price’ of such transactions. If such a transaction is not found to be at arm’s-length price, the income tax authority may determine the pricing through the transfer pricing officer in one of the ways prescribed in the Act.

9. What are the recent changes or updates in Bangladeshi tax laws that individuals and businesses should be aware of?

The most significant update in Bangladeshi tax law is the introduction of the Income Tax Act 2023 by repealing the three-decades old Income Tax Ordinance 1984. In addition, the National Board of Revenue formulates and publishes various SROs from time to time, which may be of relevance to businesses of specific sectors.

10. Are there any specific tax planning strategies or recommendations you can offer to optimise tax outcomes for individuals or businesses in Bangladesh?

One of the most effective methods of tax structuring by foreign investors in Bangladesh is to invest through an entity which is incorporated in a tax heaven with whom Bangladesh has a double taxation treaty. This will almost certainly reduce the tax exposure against payment of a dividend by half. Currently, the dividend tax is 20%, if the foreign shareholder is incorporated in a country with which there is a double taxation treaty, then the applicable rate is 10%.

1. What is the core philosophy or guiding principle of your law firm?

We have six keywords governing the overall philosophy of our firm:

1. SUSTAINABILITY: What makes a business sustainable? In our opinion, respect and regard toward all the resources that contribute to it: the firm’s professionals, whose growth and appreciation we foster; the work environment, made up of environmentally sustainable materials; the taxpayer, with whom we want to build a trust-based relationship; the institutions, with whom we want to have transparent discussions.
2. NETWORKING: Dialogue and discussion are the basis of our ‘networking’. Earnest, transparent, and solid personal relationships to work well, fully respecting know-how and rules. We work as a team creating positive synergies to foster the growth of our profession, of the national, European, and worldwide context.
3. INNOVATION: We are on a path of continuous evolution. Keeping an open mind is the way to innovate and improve our personal and professional relationships. We keep up with technology to improve our work and our clients’.
4. GROWTH: 360-degree growth and understanding: growth for the client and for the economy around us, professional growth by focusing on continuing education and on appreciating our professionals.
5. ESG: Environmental social governance: we deal with internal relationships by appreciating from time to time whoever has the right skills for the best possible result; we support our clients’ propensity towards ESG criteria; we respect the environment with environmentally sustainable choices; we devote part of our time to socially useful endeavours.
6. COMMITMENT: It’s obvious for a tax and law firm to strive for utmost commitment. We’ve chosen this principle to remind us of this, to clearly see that commitment does not just consist in doing our job well, but in doing so by ensuring that all our inspiring principles are still valid.

2. How does your firm prioritise client satisfaction and delivering excellent legal services?

We care a lot about client satisfaction. For each matter, we create a specific team selecting only the professionals with
in-depth experience on the specific case in order to provide tax and legal advice at the highest levels of quality. It does not matter whether the professionals on the case are located in Rome or in Milan. We focus on skills.

Furthermore, in our pipeline we have a project to establish the AndAcademy. On one hand, it is aimed at ensuring our professionals are always abreast of new developments, and will turn the AndAcademy into an excellence in the tax and legal world. On the other hand, the AndAcademy will bring a new approach to teaching and continuing professional education. That stated, we are not yet in a position to share too many details about it, since the project is still in its development phase.

3. What values or ethics does your firm uphold in its approach to practising law?

Respect. In our opinion, this is the most relevant value we always need to keep in mind. In practising law, this principle can be approached as:

1. fair play with the authorities, courts, counterparties and colleagues;
2. appreciating the efforts of the staff and of the younger colleagues;
3. valuing the professionals’ talents (in, for instance, writing articles for tax law reviews and giving speeches at conferences).

4. How does your firm foster a collaborative and supportive environment among its attorneys and staff?

Our offices are designed to welcome professionals and staff in a warm and constructive environment. Everyone’s desks are set up in comfortable rooms and with the space needed to work and be focused. There are also many common areas designed for team work when necessary and to have moments of relaxation.

Our offices aim for maximum sustainability. This is represented, for example, by the fact that all the furniture is made with recycled wood; all our stationery (notepads, ballpoint pens, etc) are made by inmates at the Bollate jail.

There are food and snacks available for professionals and staff meals.

In the Rome office, meals are handled by a top-level chef, while in the Milan office we have a catering service providing food and beverage. This is also a way to bring the group together and avoid having disorganised and poorly integrated groups at lunch.
On the other hand, all professionals are equipped to work from home. Full and free choice is left to everyone as to how to proceed.

5. Can you provide examples of how your firm has made a positive impact on the community or society at large through its legal work?

Our vision is not to focus the community’s/society’s attention on what we do. What we do is obvious, we are tax experts and tax lawyers well recognised for our expertise. We are more interested, indeed, on focusing the stakeholders’ attention on HOW we work, on showcasing and spreading our philosophy and ESG values via LinkedIn, Instagram, our website, and through everything we do in general.

6. What areas of tax law does your firm specialise in, and how extensive is your experience in handling cases related to those areas?

The most relevant industries and business areas in which we are involved are energy, real estate, finance (including fintech), pharma, luxury and HNWI/UHNWI. Our most in-depth experience is in energy and real estate matters. We provide assistance to leading operators in those sectors, including institutional and non-resident investors who recognise our firm as a hub of excellence in Italy.

7. How do you stay up-to-date with the latest changes and developments in tax laws and regulations to ensure accurate and effective tax planning for your clients?

Professional training is a primary element of our work. Our professionals then interact with each other in recurring meetings on the most important innovations in practice, jurisprudence, and legislation. We have set up an early morning meeting jokingly referred to as ‘coffee and tax’. Furthermore, professionals often write technical articles and participate as speakers at various conferences (this is strongly encouraged by all partners).

Some are also members of inter-ministerial commissions, or belong to the relevant professional associations (lawyers and accountants) and to the most important associations in the energy, real estate, and CFO sectors.

8. Can you provide examples of successful tax strategies or solutions that your firm has implemented for clients in the past?

Lot of occasions. Some examples:

1. for a Spanish investment fund, we advised to create a holding company in Italy in order to benefit from the consolidation regime among all the Italian SPVs
2. we have successfully managed some of the most important tax disputes in Italy on transfer pricing, dealings with tax havens, derivative financial instruments;
3. we are assisting certain individuals who came to Italy benefiting from the ‘inpatriate regime’ or from the ‘resident not-domiciled regime’ (special tax regimes providing for advantageous schemes).

9. What approach does your firm take when representing clients in tax disputes or audits? How do you ensure the best possible outcome for your clients in such situations?

Our firm always approaches the public administration with great respect but firmness in defending the interests of its clients. We always try to find a fair solution with the customer’s mandate clearly in mind. If this is not possible, the litigation team approaches the Tax Courts with great professionalism, finding all the fundamental arguments to represent the client.

We have professionals able to defend cases before all courts (Tax Court of first and second instance, Supreme Court of Cassation, Constitutional Court, EU Court of Justice and ECHR).

Furthermore, our approach is to empower the entire team involved to be responsible for the matter and accountable toward the client. This applies especially to younger professionals, who can grow up faster if they feel very committed and accountable on the case.

10. How do you prioritise minimising tax liabilities while ensuring compliance with applicable laws and regulations? Can you describe your firm’s approach to tax planning and optimisation for individuals and businesses?

An important spirit of fairness drives our firm and professional activity.

This leads us to approach tax planning and optimisation for individuals and businesses with great responsibility, always finding solutions in full compliance with the rules.

This leads us to provide our clients with assistance that does not jeopardise their tax position and reputation, with a fully independent approach.

1. What are the most frequent tax-related problems (main types) encountered by foreign enterprises/individuals in Mainland China?

1. 1. Chinese tax resident/non-resident identification
   2. Tax treaty treatment
   3. Transfer pricing
   4. Cross-border business tax risks
   5. Tax registration administration

1. Double taxation/special tax adjustment

2. Use the most concise and clear language to explain the definition of tax residents and non-residents in China?

Resident individual vs non-resident individual

Individual resident refers to an individual who has domicile in China or who has no domicile and has resided in China for a total of 183 days in a tax year. In addition, others are non-resident individuals.

Resident enterprise vs non-resident enterprise

Resident enterprise refers to an enterprise established within the territory of China or in accordance with the laws of a foreign region, but with its actual management organ within the territory of China.

Non-resident enterprise refers to an enterprise established in accordance with a foreign law and whose actual management organ is not within the territory of China, but which has established an institution or place in the territory of China, or has income derived from the territory of China.

3.Clearly explain China’s tax system in the most concise language?

There are 18 tax categories in five categories in China, which are as follows:

1. Turnover tax (goods and services tax): value-added tax, consumption tax, customs duties.
2. Income tax (income tax): corporate income tax, individual income tax
3. Resource tax: resource tax, urban land use tax, land value-added tax
4. Property tax: property tax, deed tax, vehicle purchase tax, vehicle and vessel use tax
5. Behaviour tax: stamp duty, tobacco tax, environmental tax, ship tonnage tax, farmland occupation tax, urban maintenance and construction tax

4. What time nodes (divided into different types of taxes) should foreign-funded enterprises/individuals pay attention to in mainland China?

1. Individual income tax: the first 15 days of each month. Final settlement of individual income tax comprehensive income: 1 March-30 June 2022.Personal income tax settlement and settlement: 1 January-31 March 2022
2. VAT: 15 days before January, April, July and October of each quarter for small-scale taxpayers and 15 days before each month for general taxpayers
3. Additional tax: the 15th day before January, April, July and October of each quarter for small-scale taxpayers, and the 15th day before each month for general taxpayers
4. Corporate income tax: Small scale every quarter January, April, July, 15 October
   Annual corporate income tax report: 1 January-31 May 2022Financial statements: 15 days before January, April, July and October of each quarter; Annual statements: 1 January-31 May 2022
5. Stamp duty: 15 days before January, April, July and October of each quarter, or 15 days before each month

5. China’s major preferential tax policies for foreign-funded enterprises/individuals (including foreign-related preferential tax policies in Hainan, Zhuhai Hengqin and other places)

Main preferential policies:

1. Treatment under international tax treaties
2. Equity investment income is exempt from enterprise income tax
3. Tax deferred on the reinvestment of domestic profits by foreign investors
4. Interest income is exempt from enterprise income tax
5. Bond interest is temporarily exempted from enterprise income tax and value-added tax
6. Overseas income credit

Preferential policies for special areas:

1. Preferential individual income tax policies in the Guangdong-Hong Kong-Macau Greater Bay Area: The part of the tax calculated in excess of 15% of the taxable income shall be granted financial subsidies by the government.
2. Preferential individual income tax policy for Hong Kong and Macau residents in Nansha, Guangzhou: The individual income tax burden exceeding the Hong Kong/Macau tax burden will be exempted.
3. Hengqin high-end talents and talents in short supply/Macau residents’ personal income tax preferential policies: The part of the personal income tax burden of high-end talents in short supply will be exempted/The part of the personal income tax burden of Macau residents working in Hengqin Guangdong-Macau In-Depth Cooperation Zone will be exempted.
4. Preferential personal income tax policies for foreign talents in Hainan Free Trade Port at this stage: Before 2025, high-end talents in short supply will be exempted from the actual personal income tax burden of more than 15%.

6. Can you provide guidance on the taxation of international transactions and cross-border investments in China?

China has a complex tax system. For international trade and cross-border investment, the main types of tax to consider are corporation income tax, individual income tax, value-added tax, consumption tax, and tariff. To encourage international trade and cross-border investment, China has introduced a series of tax-incentive policies in the form of tax treaties and regulatory documents. For instance, the income of non-resident corporations may be exempt from corporation income tax or subject to a lower tax rate on certain conditions. Additionally, certain qualified business carried out by foreign invested enterprises could enjoy exemption or reduction to the value-added tax. We highly recommend seeking the advice of tax law experts and proactively designing deal structure and corporate framework in advance to ensure compliance and minimise tax burdens when engaging in international trade and cross-border investment in China.

7. How does China address tax evasion and tax avoidance? What are the penalties for
non-compliance?

China has a relatively comprehensive regulatory system for tax avoidance and tax evasion. For example, the corporation Income Tax Law empowers tax authorities with the right to impose special adjustments to tax when the business transactions between a corporation and its affiliates do not comply with the arm’s-length standard, potentially reducing the taxable income of the corporation or its affiliates. When taxpayers avoid paying taxes by illegal measures, such as forging books of account, making false declarations, etc, it may constitute tax evasion. The legal consequences of tax evasion are more serious than those of improper tax avoidance. In addition to paying the unpaid taxes, the tax payer will also bear late fee and fines ranging from 50% to five times the amount of underpaid taxes. Especially for foreign citizens, a tax prosecution can create a major plague that they may be prevented from leaving China. In more serious cases, once accused of tax evasion, individuals may also face criminal charges. The maximum criminal penalty for tax evasion in China is seven years.

8. Are there any specific tax considerations for specific industries or sectors in China?

China has implemented targeted tax policies for certain industries and sectors. For example, to encourage the development of hi-tech industries, a 15% reduced corporation income tax rate for hi-tech enterprises is one of the most widely applicable tax incentives in China. Moreover, advanced manufacturing companies may benefit from policies such as additional calculation and deduction of research and development expenses, as well as refunding of period-end uncredited VAT. China also provides special tax treatment to encourage foreign investors participating in the domestic financial industry. For instance, recently, the Hainan Free Trade Zone, which has attracted widespread attention in recent years, has implemented tax reduction policies for Qualified Foreign Limited Partner (QFLP) entities that meet the specific conditions.

9.Can you explain the tax implications for expatriates working in China, such as residency status, tax treaties, and foreign income reporting?

With the increasing number of foreign citizens employed in China, the issue of tax compliance for foreign employees has gained more attention. The main tax concern for foreign individuals is determining their residence status. Similar to most countries in the world, China adopts a mixed standard to recognise tax residence. For individuals, a person with domicile in China or even if without a domicile, dwelling in China more than 183 days (including) in a tax year, will be recognised as a resident of China. The authority imposes individual income tax on the global income of resident individuals, while only on the income sourced from China of non-resident individuals. Resident individuals are required to disclose their overseas income to tax authority for administrative purposes. It is not only a way for China to exercise its tax residence jurisdiction, but also a pre-requisite for individual residents to enjoy overseas income tax credits. To eliminate double taxation, China has signed over 100 tax treaties and tax arrangements with countries and regions around the world. These agreements play a crucial role in controlling the tax burden on foreign individuals earning income in China.

10.What are the options for resolving tax disputes in China, such as administrative appeals or legal proceedings?

When tax disputes arise between taxpayers and tax authorities, they can be resolved through various channels, including consultation, responding to tax inspection in a rational manner, or filing complaints to the tax service department. Besides that, the most important legal procedures are administrative appeal and litigation. Administrative appeal refers to the right of taxpayers to request a review of specific administrative decisions made by tax authorities by their higher administrative organs, when they are dissatisfied with the decision. The taxpayer is also entitled to initiate a litigation in court if the reconsideration decision of the higher-level tax authority is still unsatisfactory to the taxpayer’s point of view. The litigation process in China follows a ‘final after two trials’ system, which means there are two levels of trial and a final instance. There is a mandatory step of administrative appeal for some tax disputes before they were raised in the court, while others can be directly filed in court. In addition to administrative appeal and litigation, it is more economical and efficient for taxpayers to resolve disputes through consultation or behaving rationally in the early stages of administrative procedures, for example, correctly responding to tax inspections by tax authorities according to legal procedures and timely applying for hearings when tax authorities are going to make administrative penalty decisions. Overall, it is highly recommended to seek the assistance of tax law experts in the initial stages when facing tax authority inspections.

1. Can you provide an overview of the current tax laws and regulations in Bolivia?

Bolivia operates a territorial tax system based on the principle of source taxing income generated by individuals and/or legal entities arising from goods and assets located or used economically within its territory and from any activity carried out in the country, regardless of the nationality and/or residence of the parties involved or where the contracts were entered into.

A corporate income tax taxes entities incorporated or carrying businesses in its territory, including subsidiaries/branches of foreign entities. No personal income tax exists as such for individuals; thus, they are subject to a complementary tax on the value added tax on any income obtained as employees and/or as direct taxpayers.

The tax legislation has not experienced significant changes and has not evolved since its last major reform in 1986. For that matter, an integral reform is essential not only to amend existing flaws and inconsistencies in the norms, but to adapt them to new realities of industrialisation, technology, digitalisation and entrepreneurship.

2. What are the key tax obligations and requirements for businesses operating in Bolivia?

An individual and/or a legal entity that wishes to perform commercial operations in Bolivia on a habitual basis needs to obtain a tax identification number to comply with formal and material tax obligations. Monthly and annual tax returns need to be filed on different dates depending on the business’s purpose, activity, or sector (ie, industrial and oil and gas, agro-industrial, mining, and banking, insurance, services, etc). Businesses are subject to the VAT on any income resulting from imports, leases and sales made or services rendered, a transaction tax on any gross income obtained, a corporate income tax on any income obtained at the end of the fiscal year and the corporate income tax – beneficiaries abroad over any Bolivian sourced income paid, credited or remitted abroad.

3. Are there any recent or upcoming changes in tax legislation that could impact businesses or individuals in Bolivia?

Recent regulations include the creation of a tax on wealth issued in the year 2020 (tax on great fortunes). This tax not only taxes wealth accumulated in Bolivia, but it also taxes any wealth that may be kept abroad by a fiscal resident of Bolivia conflicting with the country’s source principle of taxation; residents of the country may be subject to the tax on any wealth they may have abroad.

A bill was discussed seeking to impose a VAT tax on digital services rendered by providers domiciled abroad, by either having them register as direct taxpayers or through withholding agents (banks and or financial institutions), opposing the existing source principle.

4. How does the tax system in Bolivia handle international taxation and cross-border transactions?

Bolivia has a limited double-tax treaty network and, as it is not part of the Organisation for Economic Co-operation and Development, it is not a signatory to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting.

Unless excluded by a tax treaty, payment of Bolivian sourced income to a beneficiary abroad is subject to the withholding tax. Bolivia has signed treaties with Argentina, Germany, Sweden, the United Kingdom, France, and Spain, and is part of the Andean Community.

Although treaties are deemed to be a source of tax law (pursuant to the Constitution and the tax code), authorities are not keen to apply them. The Tax Administration has gone as far as issuing specific regulations limiting their application in case taxpayers fail to comply with formal obligations with regards to the beneficiaries’ certificate of fiscal residence.

Transfer pricing regulations have been in effect since 2014 regulating the five methods plus the publicly quoted prices in transparent markets method. Although several assessments have been carried out in the country on this matter, only one judgment has been issued to this date.

5. What are the common tax incentives or exemptions available to businesses in Bolivia?

Temporary importation of goods is not subject to import IVA. Interests generated from banking operations, transfer of shares, debentures and other securities, securitisation process are VAT exempt, as well as the assignment of banking, insurance and pension fund portfolios and the importation of certain machinery. Several incentives exist for tourism activities in the country and for cultural activities rendered by Bolivian artists and some exemptions exist based on jurisdictions.

6. Are there any specific tax considerations for certain industries or sectors in Bolivia?

Mining, oil and gas and financial operations have specific tax considerations. An additional rate of corporate income tax is applied to mining operations resulting from favourable prices in minerals and metals; also, an additional percentage is applied if the mining company carries out manufacturing activities with raw minerals and value is added. Financial institutions and insurance/reinsurance companies with favourable returns must pay an additional income tax.

7. How does the tax dispute resolution process work in Bolivia, and what are the options available for taxpayers?

Taxpayers may file an administrative recourse before the administrative tax courts or a tax claim before judicial tax courts, both ending with a final judgment from the Supreme Tribunal. The election of the administrative or judicial courts may vary depending on the strategy and the merits of each case.

8. What strategies or best practices can businesses employ to optimise their tax planning and minimise tax liabilities in Bolivia?

It is encouraged to follow tax compliance guidelines based on prior tax assessments carried out by tax authorities, existing and applicable jurisprudence issued by administrative/judicial courts and their internal and/or external auditor’s experience. In case of doubt, it is advisable to create and keep defence files (which could be supported by formal tax consultations filed) as support in case assessments are notified in the future.

9. Are there any compliance issues or challenges that businesses often face when dealing with tax matters in Bolivia?

Assessments usually question tax credits as there is a system in place to offset VAT tax credits with tax debits, and those deductions registered as part of the business permitted when they are intrinsically related to the core of the business. Tax norms regulating the previous are quite broad, thus auditors reach discretional conclusions when determining what could or could not be credited or deducted based on their own interpretation.

10. Can you provide examples of successful tax cases or projects you have handled for clients in Bolivia?

Advice was rendered in two of the most important M&A deals in the mining sector which included cross-border advice involving at least three different jurisdictions, complex contractual structures to finance the purchase of the assets and specific and complex advice on Bolivian law as to the requisites to complete the sale, being the tax advice central in achieving tax-efficient structures to avoid any possible negative assessments in the future.

1. What are the key tax laws and regulations in Zambia that individuals and businesses need to be aware of?

1. The Customs and Excise Act;
2. The Income Tax Act;
3. The Value Added Tax Act;
4. The Property Transfer Tax Act;
5. The Mines and Minerals Development Act; and
6. The Skills Development Levy Act.

2. How does the Zambian tax system work, and what are the different types of taxes imposed on individuals and businesses?

The Zambian tax system requires both individuals and businesses to contribute to the government’s revenue. It encompasses a diverse array of taxes that are imposed on various economic activities. These include:

1. Value added tax (VAT): A tax levied on goods or services supplied within Zambia by registered or eligible suppliers engaged in business activities.
2. Withholding tax (WHT): A method of tax collection where a certain amount is deducted from payments made by a liable person (payer) at the time of payment or when the payee becomes entitled to the payment.
3. Property transfer tax: A tax imposed on property transfers, such as mineral processing licences, mining rights (mining licence or exploration licence), land, shares, and intellectual property.
4. Mineral royalty: A payment made as compensation for mineral extraction in Zambia, with rates varying based on the type of mineral.
5. Customs duty: A tax levied on goods imported into Zambia.
6. Excise duty: A tax levied on specific goods or products, regardless of whether they are imported or domestically produced.
7. Pay as you earn (PAYE): A system where employers deduct income tax from employees’ salaries at the source and remit it to the Zambia Revenue Authority (ZRA).
8. Skills development levy (SDL): A tax levied on employees’ gross emoluments paid by employers.
9. Turnover tax: A tax designed for small businesses, charged on their gross sales/turnover, with businesses earning up to ZMW 800,000 annually subject to this tax.
10. Corporate income tax: A tax on profits earned by companies operating in Zambia, applicable when their annual income exceeds ZMW 800,000.

3. Are there any specific tax incentives or exemptions available in Zambia that individuals or businesses can take advantage of?

Some notable tax incentives for companies include:

• Companies listed on the stock exchange receive a two percentage point reduction in the corporate tax rate during their initial year of listing. If at least one-third of the listed company is owned by Zambian nationals, the discount is further increased to seven percentage points for the first year.
• Public benefit organisations are taxed at 15%.
• 10% corporate tax on agriculture and agro-processing.
• 0% corporate income tax for ceramic products manufacturing for the tax years 2022 and 2023.
• Ten-year period carry forward of tax losses and disallowed interest for mining operations.
• 10% tax rate on income from non-traditional products from farming or agro-processing exports.
• 15% income tax on income received by a company from the manufacture of organic fertilisers, chemical fertilisers, and copper cathodes.

Tax incentives for investors in multi-facility economic zones or industrial parks:

• 0% corporate tax for the first ten years on exports.
• Zero tax on dividends for the first ten years.
• 0% corporate tax for the first ten years on profits.
• For years 11 to 13, only 50% of profits are taxed.
• For years 14 and 15, only 75% of profits are taxed.

4. What are the common tax obligations for businesses operating in Zambia, such as corporate income tax, value-added tax (VAT), and payroll taxes?

Some common tax obligations, include the following:

1. Employers must deduct PAYE from employees’ salaries. The applicable rates are 20% on earnings between ZMW 4,800 and ZMW 6,800, 30% on earnings between ZMW 6,801 and ZMW 8,900, and 37.5% on earnings above ZMW 8,900 per month.
2. Employers must pay SDL at a rate of 0.5% per month.
3. The standard VAT rate is 16%. However, certain goods and services fall under the category of zero-rated supplies, attracting a 0% VAT rate, while others are exempt from VAT.
4. The turnover tax rate is 4%.
5. The standard corporate tax rate is 30%. However, for partnerships, business names, or sole proprietorships, the tax rate applied is the same as that for individuals. The top tax rate of 37.5% is applicable to any annual income exceeding ZMW 82,800.
6. The WHT rates for income such as commission, royalties, dividends, interest, management and consultancy fees are 15% for residents, 20% for non-residents.

5. How can I ensure that my business is complying with all the necessary tax requirements in Zambia?

To ensure compliance with tax requirements in Zambia, businesses must understand taxes and rates, register for a taxpayer identification number with the ZRA, maintain accurate records, file returns and pay taxes punctually, seek advice from tax professionals, and stay informed about tax law updates.

6. Are there any recent updates or changes in Zambian tax laws that individuals or businesses should be aware of?

There are numerous updates in Zambian tax laws, some of the notable ones are:

1. Income received by public private partnerships during their first five years of profit-making is now taxed at a reduced rate of 15%, down from 35%.
2. The two-tier telecom tax has been abolished, and now all telecom income is taxed at a flat rate of 35%.
3. Previously, all mining companies were subject to corporate income tax regardless of their scale, however, artisanal mining income is now subject to turnover tax.
4. Interest earned on green bonds listed on the securities exchange with a maturity of at least three years is exempt from WHT.

7. Can you provide guidance on tax planning strategies that can help minimise tax liabilities for businesses operating in Zambia?

Effective tax planning strategies for businesses operating in Zambia to reduce their tax liabilities include selecting the appropriate business structure, utilising tax incentives and allowances, maximising deductible expenses and capital allowances, exploring investment incentives, considering tax-efficient financing and conducting regular tax reviews.

8. What are the potential consequences of non-compliance with Zambian tax laws, and how can I avoid any penalties or legal issues?

Non-compliance with tax laws can lead to penalties, fines, interest, and legal actions. To avoid these consequences, ensure timely and accurate tax filing, proper record-keeping, seeking professional advice, and compliance with tax regulations.

9. How can I resolve tax disputes or challenges with the Zambian tax authorities, such as filing an appeal or engaging in negotiations?

To resolve tax disputes, taxpayers should first engage in dialogue and negotiation with the ZRA. If unresolved, they can formally object internally, escalating to the Commissioner General’s office. If dissatisfied with the final assessment, they can appeal to the Tax Appeals Tribunal, and if still dissatisfied, to the Supreme Court for final resolution.

10. Are there any specific considerations or best practices for international businesses or individuals conducting business or earning income in Zambia?

It is crucial to adhere to legal and regulatory compliance, choose the appropriate business structure, consider local partnerships, understand taxation, obtain necessary work permits and visas and conduct thorough market research. Consulting with local experts is essential for a successful venture in Zambia.

About KPMG’s dispute resolution team

Our KPMG dispute resolution team has extensive experience assisting organisations resolving tax disputes, while maintaining an effective working relationship with tax authorities.

Tax law can be complex and uncertain and with each new development in the tax environment, the context for resolving tax disputes changes. For companies, this could result in a position of conflict that requires strategy and expertise to navigate.

Our philosophy on tax dispute resolution is rooted in our unwavering dedication to our clients and their desired outcomes. We firmly believe in positioning ourselves between our clients and their tax challenges, ensuring that their needs remain at the forefront of every action we take.

By adopting this client-centric approach, we align our strategies, actions, and expertise to best serve our clients’ interests. We recognise that each client’s situation is unique, and we take pride in our ability to provide tailored solutions to address their specific needs.

We are not simply focused on winning cases; our primary focus is on achieving the outcomes our clients seek. This dedication is reflected in everything we do and how we do it. We strive to build strong, long-lasting relationships with our clients, based on trust, transparency, and integrity.

About KPMG in Kazakhstan

KPMG in Kazakhstan has been operating in Central Asia for 25 years and was rated as one of the leading firms in 2010-18 by Expert Kazakhstan RA.

Our essential principle has always been to use the firm’s global intellectual capital, combined with the practical experience of our local professional.

We provide advisory services on tax and legal issues to a great number of the banks and financial institutions of the country, as well as to enterprises in the leading sectors of the economy such as mining, oil and gas, telecommunications, and the food industry.

In 2019 KPMG in Kazakhstan secured its position in The Legal 500 rating of the leading law firms in the categories commercial, corporate and M&A and tax and customs.

KPMG in Kazakhstan is a corporate member in several business associations in Kazakhstan. We participate in various projects and sponsor conferences and events organised by these business associations.

• Chamber of Auditors of the Republic of Kazakhstan
• European Business Association of Kazakhstan
• AmCham – The American Chamber of Commerce in Kazakhstan
• Kazakhstan Financiers Association
• Association of Kazakhstan Taxpayers
• Chamber of Tax Consultants of the Republic of Kazakhstan
• British Chamber of Commerce in Kazakhstan

Meet the Partners

1. What are the key tax laws and regulations in Iceland that individuals and businesses should be aware of?

Under the Icelandic Income Tax Act no. 90/2003, resident corporations pay tax on their worldwide income (ie, unlimited tax liability) minus operating expenses. The general corporate tax rate is 20%. As a general practice, all businesses incorporated and registered in Iceland, or which have their effective management in Iceland are considered tax resident in Iceland.

Resident individuals are liable for tax payments on their worldwide income. Non-resident employees are generally taxed on Iceland-sourced income.

VAT is charged on goods and services supplied in and imported to Iceland based on the Act on Value Added Tax no. 50/1988. The VAT rates are a standard 24% rate and a reduced 11% rate applicable to certain goods. Certain services are exempt from VAT and export of services and goods are generally zero VAT rated.

2. Can you explain the personal income tax rates and thresholds for residents and non-residents in Iceland?

Individuals that maintain a permanent residence in Iceland are generally considered residents for tax purposes in Iceland. Individuals residing in Iceland for six months in any 12-month period, are generally considered to have permanent residence in Iceland. Individuals, that do not exceed the six months stay, are generally taxed on Iceland-source income only.

Income tax is divided into state and municipal income tax. Employers withhold the tax monthly at the following progressive rates:

a. up to ISK 409,986: 31.45%

b. from ISK 409,986 to 1,151,012: 37.95%

c. more than ISK 1,151,012: 46.25%

Mandatory pension contribution amounts to 15.5% and social security tax amounts to 6.35%.

3. What are the corporate tax rates and incentives for businesses operating in Iceland?

The general corporate tax rate is currently 20%. Taxable income is determined based on generally accepted principles compared with similar tax systems within the EEA. The rate for partnerships (in Iceland they are legal persons and can be taxable as such) registered for tax purposes is 37.6%.

4. Are there any specific tax considerations or benefits for startups or innovative companies in Iceland?

Innovative companies, that have received a confirmation from the Icelandic Centre for Research, are entitled to a deduction from income tax. An increased deduction is currently in effect and applies throughout 2025. For small and medium-sized companies (with less than 250 employees and annual turnover below €50m), the deduction amounts to 35% of expenses incurred in relation to innovation projects, and 25% for large companies.

5. How does Iceland handle taxation of investment income, such as dividends, interest, and capital gains?

Limited liability companies are generally subject to 20% corporate tax. However, dividends and capital gains are effectively not subject to tax as such entities can apply full deduction (does not apply to income from entities in low tax jurisdictions). Partnerships are subject to 37.6% tax rate on all income with the exception of dividends, which are subject to 20% tax.

Investment income of individuals is generally subject to capital gains tax at a rate of 22%. Capital income from interests, dividends and sale of shares is taxed at general capital gains tax rate, with the first total ISK 300,000 of such capital gains income exempt from taxation. Rental income of individuals is generally taxed as business income (up to 46.25% rate) but can be taxed as general capital gains at 24% or, with further conditions, as low as 11%.

6. Can you provide guidance on the tax implications and compliance requirements for cross-border transactions and international tax planning in Iceland?

Iceland is a member of the European Economic Area (EEA), European Free Trade Association (EFTA) and a member state of the OECD and World Trade Organization (WTO). Through the EEA partnership, Iceland generally takes full part in the internal market of the EU. Tax matters are generally treated as core sovereign matter and Iceland is not part of the EU common system of taxation and has not implemented directives in the field of tax.

As an example, Icelandic tax law includes provisions on:

a. The Transfer Pricing rules, which are based on the arm’s length principle and are generally applied in line with guidelines issued by the OECD. The provision applies to transactions between related parties. Companies conducting cross-border transactions, and with revenue exceeding ISK 1 billion, are subject to annual documentation of all transactions with related entities.

b. Controlled Foreign Company rules, which apply when an Icelandic resident taxpayer (individual or legal entity) owns or controls, directly or indirectly, more than 50% of an entity situated in defined low tax jurisdictions. Profits distributed from such entities are taxed with its resident shareholders in Iceland at the local corporate or income/capital gains tax rate.

c. Thin capitalisation rules provide a threshold on deduction of interests on related party debt. Interests, exceeding 30% of the adjusted EBITDA cannot be deducted unless further conditions apply.

Dividends, interests, and royalties, paid to a foreign non-resident recipient, are subject to withholding taxation, at rates between 12-22%. Such taxation is generally reduced under Iceland’s tax treaties.

7. What are the main tax deductions and credits available to individuals and businesses in Iceland?

Below examples of deductions and incentives, apply in addition to generally accepted tax deductions and credit such as foreign tax credit, tax losses, depreciation etc.

Examples of tax credit and incentives for companies:

a. Increased depreciation for green assets – limited liability companies can apply for an increased depreciation (additional 25%) for certain green assets (13.3% for partnerships).

b. Tax incentives for innovation enterprises – see further Q&A no. 4 above.

c. Dividends and gains from shareholdings – see further Q&A no. 5 above.

Examples of tax credit and incentives for individuals:

a. Personal tax credit is provided annually, which is deducted from personal income tax. For 2023 the credit amounts to ISK 716,000.

b. Tax-free limit on capital gains – see Q&A 5.

c. Gains from sale of private residential property can be tax-exempt if the property is owned for two years.

d. Deduction up to 50% of taxable income, for investment in companies which fulfil certain criteria (applies until the end of 2024).

e. Foreign experts, hired for work in Iceland due to expertise and experience can apply for tax deduction, resulting in only 75% of income being subject to income taxation.

8. Are there any specific tax treaties or agreements that Iceland has with other countries to avoid double taxation?

Currently, Iceland has double taxation treaties with 48 countries, including a multilateral treaty between the Nordic countries. In recent years, emphasis has been on concluding more double taxation treaties, most recent being treaties with Australia and Andorra.

9. How can I effectively structure my business or investments in Iceland to optimise tax efficiency and minimise liabilities?

Effective structuring depends on the business sector and many other variables when investing in Iceland. The factors to be analysed are the minimisation of withholding taxes, maximisation of the use of any available incentives, optimisation of finance structure taking into account limitations of interest deduction and other factors which often can be case sensitive.

10. Are there any recent tax developments or upcoming changes in Iceland that individuals and businesses should be aware of?

A new exemption is to be implemented, providing for capital gains taxation on income from stock option in innovative companies, provided to employees, board members and experts, instead of taxation as general income (up to 46.25%). The exemption is pending EFTA Surveillance Authority’s approval.

Following the UK’s exit from the EU, dividend payments received by UK companies from Icelandic companies were subject to withholding tax in Iceland. A new temporary provision to the Icelandic Income Tax Act provides full deduction on such payments, resulting in no taxation.

 

About Zarhi Hernández Amar

Zarhi Hernández Amar welcomed 2023 by celebrating its fifth anniversary with profound changes to meet the upcoming challenges posed by the current issues that our clients need to solve with our assistance. Thus, Carolina Hernández has now joined the firm as a partner. She has been a part of the team since the start, leading corporate and real estate matters, and implementing tax solutions tailored for our clients. Her incorporation as a partner prompted the firm to change its name to Zarhi Hernández Amar, in recognition of the relevance of the event and the strength that the partners collectively exert to lead the entire team to achieve our goals, doing what we do best: solving our clients’ legal and tax issues.

Zarhi Hernández Amar is a law firm founded by lawyers with over 15 years of individual experience, specialised in providing legal and tax advice to families, individuals and companies. We provide concrete and swift solutions to issues based on multi-angle analysis, assisting our clients in making high-complexity strategic decisions. Clients enjoy preferential legal management, specially crafted to support their daily operations and business.

Our service perspective builds long-term, intimate trust relationships, with personalised treatment and permanent availability to resolve each request promptly.

Our hallmark is a unique and creative approach to tax law. We think differently and see solutions where others only see problems, thanks to the experience, specialisation and capability of our partners and associates.

1. What are the key tax laws and regulations in Luxembourg that individuals and businesses should be familiar with?

The key tax rules to be aware of are, to a large extent, contained in the Income Tax Law, the Value Added Tax Law and the Net Wealth Tax Law. Procedural elements are included in the General Income Tax Law. Additionally, the tax authorities regularly issue circular letters providing guidance on specific tax matters.

2. Can you explain the personal income tax rates and thresholds for residents and non-residents in Luxembourg?

Personal income tax rates in Luxembourg are progressive and vary based on income levels. The rates range from 0% to 45.78%. The tax thresholds depend on the marital status of the taxpayer. The marginal rate for a single individual applies on the portion in excess of €200,004.

These principles apply to non-resident individual taxpayers on the portion of their income which is taxable in Luxembourg.

3. What are the corporate tax rates and incentives for businesses operating in Luxembourg?

Corporate taxpayers are subject to corporate income tax (CIT) on their worldwide income, while non-residents are taxed only on their Luxembourg-source income (in both cases, subject to treaty relief). The standard rate is 17% for income above €200,001. A 7% solidarity surcharge applies, leading to an aggregate CIT rate of 18.19%. Slightly reduced rates apply to companies below the above threshold.

A municipal business tax (MBT) is also levied, with a rate depending on the city where the taxpayer is located. Notably, the MBT rate for companies based in Luxembourg City is 6.75%, leading to an aggregate rate of 24.94%.

Several non-tax elements support the country as a major financial centre and a leading fund jurisdiction, such as its regulatory framework and its specialised workforce. Alongside these foundations, the tax environment is welcoming
to the establishment of holding companies and group financing structures, while strictly keeping in line with
OECD standards. Some tax credits and incentive regimes are available, depending on the assets and operations
of the taxpayer.

4. Are there any specific tax considerations or benefits for holding companies or intellectual property (IP) companies in Luxembourg?

Luxembourg companies benefit from a broad and rather straightforward participation exemption regime, making
it an ideal hub for holding companies.

Companies developing IP assets in Luxembourg can benefit from a favourable tax regime in relation to patents
and copyrights on software, leading to an exemption of up to 80% on the related income, as well as a net wealth
tax exemption.

5. How does Luxembourg handle taxation of investment income, such as dividends, interest, and capital gains?

Corporate taxpayers are subject to tax on dividends and capital gains, unless the participation exemption regime applies. This is for instance the case if the participation is a taxable EU company, held for at least 12 months. The minimum holding threshold is 10% or €1.2m for dividends/ €6m for capital gain exemptions. Companies are subject to tax on interest income, after deduction of related expenses if any.

Individuals may benefit from an exemption on half of the dividend from qualifying companies. Capital gains on shares are exempt if held for at least six months and represent 10% or less of the share capital. Certain interest payments face a 20% withholding tax in full discharge of personal income tax; else they are taxed at progressive rates. Deduction of €1,500 per year on dividends and interest received applies.

Tax credit for foreign withholding taxes is available.

6. Can you provide guidance on the tax implications and compliance requirements for cross-border transactions and international tax planning in Luxembourg?

Cross-border transactions involving Luxembourg require a certain level of scrutiny and analysis to ensure local tax rules are complied with. The Luxembourg tax system has evolved over the last decade, with sophisticated rules stemming from EU initiatives, such as interest deduction limitation, anti-hybrid rules and DAC6 reporting obligations. In addition, the effects of transfer pricing regulations must be managed. Close collaboration between tax counsel of the relevant jurisdictions is key. Compliance requirements include documentation and disclosure obligations, as well as the submission of specific forms to the tax authorities.

7. What are the main tax deductions and credits available to individuals and businesses in Luxembourg?

Several of them are available. These include deductions for certain expenses such as mortgage interest, alimony payments and childcare expenses. Businesses can benefit from deduction on expenses related to their commercial activity, as well as tax incentives and tax credits for certain R&D expenses and investments.

8. Are there any specific tax treaties or agreements that Luxembourg has with other countries to avoid double taxation?

Luxembourg has an extensive network of tax treaties with other countries (86 as of 2023). These tax treaties provide rules for the allocation of taxing rights between countries and mechanisms for the elimination of double taxation. Luxembourg has entered into and ratified the OECD Multilateral Convention known as the MLI, applying alongside the relevant treaties.

9. How can I effectively structure my business or investments in Luxembourg to optimise tax efficiency and minimise liabilities?

The answer will not come as a surprise: in an ever-changing tax environment, it is advisable to seek professional advice and consider various factors to ensure compliance with relevant tax regulations. In a post-BEPS world, it is paramount for the structure to have proper capacity to support its functions in order to secure its tax benefits.

10. Are there any recent tax developments or upcoming changes in Luxembourg that individuals and businesses should be aware of?

Over the last decade, major tax changes have been implemented in Luxembourg, which has been rather co-operative in conforming to EU initiatives and OECD recommendations. These tax changes have had a noticeable influence on the structuring of investment funds, an industry which is at the heart of the Luxembourg financial centre.

Some tax reforms are expected, including a long-awaited and debated revamping of the personal income tax system.