1. France
On 19 May 2014, the Luxembourg Government issued a press release stating that Luxembourg and France have agreed to continue talks to negotiate and sign an amending protocol to the France-Luxembourg double tax treaty of 1 April 1958, as amended.
2. Republic of Slovenia
On 28 April 2014, the Parliament of Slovenia ratified an amending protocol to the Luxembourg-Slovenia double tax treaty, signed on 20 June 2013. This amending protocol contains the OECD standard of exchange of information provision.
3. Ireland
On 28 May 2014, Luxembourg and Ireland signed an amending protocol to the Luxembourg-Ireland double tax treaty of 14 January 1972. This amending protocol contains the OECD standard of exchange of information provision.
4. Croatia
On 20 June 2014, a double tax treaty was signed between Luxembourg and Croatia. We will report the details of this new treaty in a later issue.
5. Andorra
On 2 June 2014, a double tax treaty was signed between Luxembourg and Andorra.
6. Czech Republic
On 5 June 2014, the Czech Republic ratified the new Income and Capital Tax Treaty signed on 5 March 2013. Once in force, this Treaty will replace the former Tax Treaty of 1991. The new treaty is broadly inspired by the OECD Model.
The following withholding tax rates apply under the new treaty:
- Dividends: The standard withholding tax rate is of 10%. However, if the beneficial owner of the dividends is a company (other than a partnership) and holds a direct holding of at least 10% of the share capital of the company paying the dividends for an uninterrupted period of at least one year, the treaty provides for a 0% rate.
- Interest: The treaty provides for a 0% rate on interest payments.
- Royalties: The treaty provides for a 10% withholding tax on royalties. The definition of royalties includes films or tapes for television or radio broadcasting, computer software or industrial, commercial or scientific equipment. However, copyright royalties are subject to a 0% rate.
7. Russia
On 7 April 2014, the Russian Minister of Finance issued a guidance letter No.03-08-05/15476 which clarifies the tax treatment of income from securities paid by a Russian depositary to a Luxembourg investment fund. According to the Luxembourg-Russia Income and Capital Tax Treaty concluded in 1993, as amended by the protocol of 21 November 2011, a reduced dividend withholding tax rate of 5% applies if the beneficial owner directly holds at least 10% of the capital of the company paying the dividends and the price of acquisition of the holding is at least €80,000 or its equivalent amount in RUB. In all other cases, a 15% dividend withholding tax applies.
It was not clear whether the Russian Tax Authorities are willing to apply the reduced treaty rates to Luxembourg investment funds deriving income from securities paid by a Russian depositary.
The guidance letter of 7 April 2014 issued by the Russian Minister of Finance now clarifies that the reduced tax rates are only available when paid to the beneficial owners of the income. For Russian tax purposes, a Luxembourg investment fund is characterised as a foreign nominee holder. For that reason, any securities income paid to a Luxembourg investment fund by a Russian depository may be subject to a withholding tax at a rate of 30%. This 30% rate will not apply, however, if the investment fund can provide evidence of the residence of its investors.
8. Taiwan
Luxembourg has ratified on 12 July 2014 the double tax treaty with Taiwan and its Protocol, which were signed in Luxembourg on 19 December 2011. Taiwan has already ratified the treaty and, provided the instruments of ratification are exchanged within the course of this year, the treaty will come into force as 1 January 2015.
The key features of the treaty have been highlighted in our Newsletter of June 2013.
