LUXEMBOURG DOUBLE TAX TREATIES

DOUBLE TAX TREATY NETWORK

Luxembourg has signed double tax treaty agreements with 62 countries as follows:

Armenia, Austria, Azerbaijan, Bahrain, Belgium, Brazil, Bulgaria, Canada, China, Czech Republic, Denmark, Estonia, Finland, France, Germany, Georgia, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, South Korea, Latvia, Liechtenstein, Lithuania, Malaysia, Malta, Mauritius, Mexico, Moldavia, Monaco, Mongolia, Morocco, The Netherlands, Norway, Poland, Portugal, Qatar, Roumania, Russia, San Marino, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Thailand, Trinidad & Tobago, Tunisia, Turkey, United Arab Emirates, United Kingdom, United States, Uzbekistan, Vietnam

DOUBLE TAX TREATY WITH QATAR

The Luxembourg Parliament has voted the first Double Tax Treaty between Luxembourg and Qatar. The Treaty entered into force on 3 April 2010 and is generally effective as from 1 January 2011.

The Treaty introduces an attractive regime for dividend distributions, providing for the following reduced withholding tax rates:

· 0% on dividends distributed to a company holding directly at least 10% of the share capital of the distributing company;

· 5% where a 10% direct participation is held by an individual who resided in the relevant state for a period of at least 48 months preceding the year in which the distribution is made and;

· 10% in all other cases.

Interest may be taxed only in the state of residence.

Royalties may be subject to withholding tax in the source state. However, the withholding tax may not exceed 5%.

AVOIDANCE OF DOUBLE TAXATION

Luxembourg provides for the exemption-with-progression method to avoid double taxation and the credit method with respect to dividends, royalties, and income earned by artists and sportsmen.

LIMITATION ON BENEFITS

The treaty includes a limitation on benefits (“LOB”) clause according to which it will not apply to an entity if the entity’s main objective, or one of its main objectives, is to benefit from provisions of the tax treaty which otherwise would not have applied. Since the wording of this clause is not specific, it leaves considerable room for interpretation and may create legal uncertainty for taxpayers.

DOUBLE TAX TREATY NEWS

Luxembourg has recently signed tax treaties with Albania, Argentina, Barbados, Cyprus, Kazakhstan, Kuwait, Kyrgyzstan, Lebanon, Macedonia, Pakistan, Panama, Serbia and Montenegro, Syria and Ukraine. These treaties will enter into force as soon as they are ratified by both countries.