'Real Estate Rich Companies ' Clause - Protocol To The Income Tax Treaty WIth France

Luxembourg signed a protocol to the income tax treaty with France on September 5th 2014 ("French Protocol").

The French Protocol introduces a so called "real estate rich company" clause. Under the present version of the income tax treaty with France, Luxembourg is authorized to tax capital gains realised by a Luxembourg resident upon disposal of shares held in a company holding real estate in France. Under the French Protocol, the "real estate rich company" clause shifts the right to tax such capital gains to the source state (in our case France).

Under the French Protocol, capital gains derived from the alienation of shares or other rights in a company, trust or any other legal person the assets of which are composed, in value, for more than 50% - directly or through the interposition of one or more companies or legal persons - of immovable property situated in a contracting state, are only taxable in such state...