Double Taxation Treaties in Luxembourg

Luxembourg is one of the most reputable financial centers in the world and the most successful in Europe with many foreign investors opening companies or investment funds here. With a great number of foreign enterprisers who seek to repatriate profits to their home countries, the Government had to establish various conditions which would make the country advantageous from a taxation point of view which is how Luxembourg came to have about 80 double tax treaties in the present.

Our lawyers in Luxembourg can offer detailed information on the taxation of foreign companies in the Grand Duchy.

What do Luxembourg's double tax agreements contain?

Luxembourg followed the Organization for Economic Co-operation and Development (OECD) Model when it comes to drafting its double taxation agreements.  Most of the treaties provide for the avoidance of double taxation of the income and its elements which usually refer to:

• -          the corporate tax;
• -          the taxation of immovable property;
• -          capital gains;
• -          salaries;
• -          director’s wages.

Also, all Luxembourg double taxation treaties cover individuals and companies resident in the Grand Duchy. With respect to the avoidance of double taxation, Luxembourg will usually grant its residents, companies or individuals, a credit or an exemption against the tax they paid, respectively they are bound to pay in the other contracting country.  Where no tax exemption or credits are granted, such as the case or permanent establishments of foreign companies in Luxembourg, their incomes will only be taxed in the Grand Duchy. The same convention applies to Luxembourg companies with permanent establishments in other countries.

With what countries did Luxembourg sign double tax treaties?

Luxembourg has signed double taxation treaties with countries all over the world in order to offer fair treatment to all foreign investors. Among these countries are: Austria, Belgium, France, Bulgaria, Denmark, France and Germany in Europe, China, Brazil, Hong Kong, Saudi Arabia, South Africa, Thailand, The UAE, the USA and Canada. These are just a few of the countries Luxembourg signed double tax treaties with. It should also be noted that Luxembourg recently amended a significant number of its double taxation agreements which will be enabled in the near future.

For full information on the Grand Duchy’s list of double taxation treaties, please feel free to contact our law firm in Luxembourg.