As of 1 January 2020, Luxembourg’s already comprehensive double tax treaty network has been expanded, by the entry into force of a new double tax treaty with Kosovo.
The double tax treaty between Kosovo and Luxembourg foresees a nil withholding tax rate on dividends on qualifying shareholdings held by corporations, a 5% withholding tax on interest, with the possibility of a nil withholding tax for interest payments made under loans granted by banks and a nil withholding tax on royalties. This double tax treaty does not contain a "real-estate rich clause".
Other changes to the tax treaty network, which took place recently are most notably, the amendment to the double tax treaty entered into between France and Luxembourg, the main impacts of which we described in our previous newsletter, the new protocol concerning information exchange between Luxembourg and the United States of America, as covered in our previous newsletter and the amendment of the double tax treaty entered into with Uzbekistan to include customary exchange of information and mutual assistance provisions as well as a specific provision for the assistance for tax collection and a limitation of benefits clause.
Finally, please note that as covered previously and in addition to the changes listed above, several of the existing double tax treaties will be affected by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting ("MLI"). In order to see how the MLI could affect the various tax treaties, which will mostly depend on the ratification by the other countries as well as the options notified by both jurisdictions, the OECD prepared a helpful tool that can be found on their website.
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