Henri Prijot

The Luxembourg treaty network is in constant development as a result of political and economic objectives. And now, the multilateral instrument is part of the tax treaties bringing additional complexity to the topic.

83 Luxembourg tax treaties – 69 Covered Tax Agreements*

  • Americas
  • Europe / Eurasia
  • APAC
  • Africa / Middle-East
  • Not in force / negotiations
  1. Barbados
  2. Brazil
  3. Canada
  4. Mexico
  5. Panama
  6. Trinidad and Tobago
  7. Uruguay
  8. US
  1. Andorra
  2. Armenia
  3. Austria
  4. Azerbaijan
  5. Belgium
  6. Bulgaria
  7. Croatia
  8. Cyprus
  9. Czech Rep.
  10. Denmark
  11. Estonia
  12. Finland
  13. France
  14. Georgia
  15. Germany
  16. Greece
  17. Guernsey
  1. Hungary
  2. Iceland
  3. Ireland
  4. Isle of Man
  5. Italy
  6. Jersey
  7. Kazakhstan
  8. Kosovo
  9. Latvia
  10. Liechtenstein
  11. Lithuania
  12. Macedonia
  13. Malta
  14. Moldova
  15. Monaco
    (Mongolia*)
  16. Netherlands
  17. Norway
  1. Poland
  2. Portugal
  3. Romania
  4. Russia****
  5. San Marino
  6. Serbia
  7. Slovak
  8. Rep.Slovenia
  9. Spain
  10. Sweden
  11. Switzerland
  12. Tajikistan
  13. Turkey
  14. Ukraine
  15. UK
  16. Uzbekistan
  1. China
  2. Hong Kong
  3. India
  4. Indonesia
  5. Japan
  6. Korea
  7. Laos
  8. Malaysia
  9. Mauritius
  10. Singapore
  11. Sri Lanka
  12. Taiwan
  13. Thailand***
  14. Vietnam
  1. Bahrain**
  2. Brunei
  3. Israel
  4. Morocco
  5. Qatar
  6. Saudi Arabia
  7. Seychelles
  8. Senegal
  9. South Africa
  10. Tunisia
  11. United Arab Emirates
  1. Albania
  2. Argentina
  3. Botswana
  4. Cape Verde
  5. Chile
  6. Egypt
  7. Ethiopia
  8. Ghana
  9. Kyrgyzstan
  10. Kuwait
  11. Lebanon
  12. Mali
  13. New Zealand
  14. Oman
  15. Pakistan

Covered tax agreements Non-covered tax agreements

* As at 15 January 2021: 69 CTAs / 83 tax treaties (treaty with Mongolia terminated by Mongolia with effect as from 1.1.2014

** Bahrain signed the MLI on 27.11.2020

*** Jurisdiction having expressed its intent to sign the MLI

**** New Protocol ratified

The latest developments on MLI – timing aspects

The Luxembourg tax authorities published synthesized texts of the MLI-affected treaties. Different types of taxes mean different timing of application. Below we break down the timing application in Luxembourg* of certain key MLI-affected treaties.

  • Belgium: WHT: 1 January 2020 / All other taxes: taxable period starting as from 1 April 2020
  • Canada: WHT: 1 January 2020 / All other taxes: taxable period starting as from 1 June 2020
  • Ireland: WHT: 1 January 2020 / All other taxes: taxable period starting as from 1 February 2020
  • India: WHT: 1 January 2020 / All other taxes: taxable period starting as from 1 April 2020
  • Malta: WHT: 1 January 2020 / All other taxes: taxable period starting as from 1 February 2020
  • Netherlands: WHT: 1 January 2020 / All other taxes: taxable period starting as from 1 February 2020
  • United Kingdom: WHT: 1 January 2020 / All other taxes: taxable period starting as from 1 February 2020


Note that some of the provisions of the MLI take effect on different dates for the other jurisdiction, depending on the type of taxes involved and the choice made by the jurisdiction.

Luxembourg and Russia: what’s the new protocol?

Signed on 6 November 2020 and ratified by both Russia and Luxembourg, the protocol will entry into effect for taxable periods starting as from 1 January following the exchange of ratification instruments, i.e. 1 January 2022

Main features:

Dividends WHT reduction to 5% only applicable to:

  • an insurance institution or a pension fund;
  • a publicly listed company*;
  • a government, its political subdivision or local authorities or the Central Bank.

Interest WHT full exemption only applicable to:

  • entities listed above, except publicly listed companies* (the latest could benefit from reduction to 5%) 
  • Banks;
  • government bonds, corporate bonds and external loan bonds (Eurobonds).

Beneficial ownership requirement for the recipients:

The concept of beneficial owner is a topic of high interest in recent case law and tax authorities’ practice, with different interpretations and approaches followed. A case by case analysis is necessary.

* The definition of publicly listed companies applies if at least 15% of company shares are in the free float on registered stock exchange and if the company’s stake in a dividend payer is at least 15% and the period of ownership has been at least one year.

Contact

Olivier Schneider

Henri Prijot

Partner
KPMG Luxembourg
+352 22 51 51 5389
E-mail