Draft Laws 6501 And 6552: Approval Of Double Tax Treaties And Protocols With Luxembourg

Draft laws 6501 and 6552 ("Draft Law") filed with the Luxembourg Parliament on November 21st 2012 and on March 7th 2013 respectively, provide for the approval of double tax treaties recently concluded by Luxembourg with Germany, Macedonia, Seychelles, Tajikistan, Laos, Sri Lanka, Czech Republic and Taiwan.

As a result, Luxembourg has concluded 72 double tax treaties based on the OECD model tax convention.

A withholding tax rate of 15% on dividends is provided under the treaties with Macedonia, Tajikistan and Laos whereas a withholding tax rate of 10% on dividends is provided under the treaties with Seychelles, Sri Lanka and Taiwan. With respect to interest payments, Macedonia will not impose any withholding tax whilst Seychelles, Tajikistan, Laos, Sri Lanka and Taiwan are authorized to impose a withholding tax of 5%, 12%and 10% respectively (Taiwan, Laos and Sri Lanka) and 15% respectively. With respect to royalty payments, the treaties with Seychelles, Macedonia and Laos provide for a 5% withholding tax rate, the treaties with Tajikistan, Sri Lanka and Taiwan provide for a 10% withholding tax rate. Lower withholding tax rates are available where specific conditions are met. With respect to the provisions under the double tax treaty with Germany, please refer to our newsletter dated June 2012.

The Draft Law also approves modifications to existing double tax treaties in place with Korea (Rep. of) and Russia. With respect to the double tax treaty with Korea (Rep. of), the...