Double Tax Treaty between Luxembourg and Serbia
On 15 December 2015, the Republic of Serbia and the Grand Duchy of Luxembourg concluded a convention for the avoidance of double taxation with respect to taxes on income and on capital. The double tax treaty (“DTT”) became effective on 1 January 2017.
The DTT grants a reduction of the domestic withholding tax rate of 20% to 10% for outbound dividend and interest income.
Based on the protocol of the DTT, fiscally non-transparent persons should have access to the treaty benefits. The notion of “persons” in the sense of the protocol includes Collective Investment Vehicles (“CIVs”). In order to benefit from the DTT rules, CIVs should present a Certificate of Tax Residency (“COTR”) to the Serbian tax authorities.
However, for the time being, there is no guidance provided in the Serbian tax legislation as regards foreign CIVs. For this reason, there is no certainty about how the Serbian authorities would treat a request of a CIV in respect of the application of the DTT rules.
The perception of the Serbian tax authorities towards the application of the favorable DTT provisions will be monitored closely in the coming months.
KPMG can help your funds benefit from the reduced DTT rate. Please contact us if you wish for further information.
Any tax advice in this communication is not intended or written by KPMG to be used, and cannot be used, by a client or any other person or entity for the purpose of (I) avoiding penalties that may be imposed on any taxpayer or (II) promoting, marketing, or recommending to another party any matters addressed herein.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.