Share with your friends

Luxembourg: Bill to ratify multilateral instrument (MLI) into domestic law

Luxembourg: Bill to ratify MLI into domestic law

The Luxembourg government released a bill (n° 7333) for the ratification of the multilateral instrument (MLI) into Luxembourg domestic law. The bill aims to approve the text of the MLI as initially signed by Luxembourg in June 2017, including all reserves and notifications.


Related content

Luxembourg would include all its tax treaties in force in the MLI. However, out of 82 tax treaties in force in Luxembourg, only 62 are currently “covered tax agreements” (i.e., income tax treaties for which the MLI would apply) based on the choices made by the other treaty-party countries.

The bill provisions are in line with the initial choices made by Luxembourg upon signature of the MLI in June 2017—including the minimum standards on treaty abuse (specific preamble text and the insertion of a “principal purpose test”) and the minimum standards for making dispute resolution mechanisms more effective. Luxembourg also decided to add other provisions in line with Luxembourg’s current treaty policy, such as relating to the permanent establishment provisions and application of methods for elimination of double taxation. The application of these provisions to each covered tax agreement would depend on the corresponding choices made by the other treaty-partner countries and would be determined on a case-by-case approach.

The timeline for the ratification process in Luxembourg is not known, but could be completed before year-end. Once Luxembourg has completed the ratification process of the MLI, application per covered tax agreement would depend on the ratification date by the other treaty partner and on the type of tax concerned (withholding tax or other taxes). The MLI provisions could possibly apply to covered tax treaties beginning 2019 and to other treaties beginning in 2020.


Read a July 2018 report prepared by the KPMG member firm in Luxembourg

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor 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. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal