Double tax treaty Luxembourg – Moldova I Protocol amending the double tax treaty

On 25 June 2024, Luxembourg and the Republic of Moldova signed a protocol (the “Protocol”) amending the double tax treaty originally signed on 11 July 2007 (the “DTT”). The law of 25 march 2025, approving the Protocol, was published in the Luxembourg Official Gazette on 7 April 2025.

Key amendments introduced by the Protocol 

Updated preamble

The Protocol replaces the preamble of the DTT to align it with the OECD - BEPS Action 6, emphasizing the intention of the contracting states to eliminate double taxation without creating opportunities for non-taxation or reduced taxation through tax evasion or fraud.

Expanded non-discrimination

The Protocol amends paragraph 5 of Article 23 of the DTT, specifying that Article 23 regarding the non-discrimination principle applies to all taxes, regardless of their nature or denomination.

Improved mutual agreement procedure

The Protocol replaces paragraph 1 of Article 24 to align it with the current version of the OECD Model Tax Convention on Income and Capital (“OECD Model Tax Convention”), allowing taxpayers to initiate a mutual agreement procedure with the competent authorities of a contracting state within three years of the first notification of an assessment that is inconsistent with the provisions of the Convention.

Enhanced exchange of information

The Protocol replaces Article 25, aligning it with the OECD Model Tax Convention.

Introduction of anti-abuse clause

The Protocol adds a new Article 26A concerning entitlement to treaty benefits, introducing the "principal purpose" rule. This general anti-abuse rule aims to deny treaty benefits when one of the main purposes of an arrangement or transaction is to obtain a tax benefit that would be contrary to the object and purpose of the treaty provisions.

Entry into force 

The updated DTT will take effect on 1 January of the year following the exchange of notifications between the contracting states i.e. at the earliest on 1^st January 2026 provided Moldova undergoes all domestic formalities and the exchange of notifications takes place before the end of this year.