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Luxembourg Corporate - Withholding taxes

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Dividends paid by a Luxembourg fully taxable company to its ‘corporate’ shareholders resident in a treaty country, which hold or commit themselves to hold a participation of at least 10% in the Luxembourg company (or shares with an acquisition price of at least EUR 1.2 million) for an uninterrupted period of at least 12 months, may be exempt from WHT (see Note 1 below for more details).

The following taxes are withheld on payments made. The WHT due on dividends paid to residents of a treaty country cannot exceed the non-treaty rate.

Recipient WHT (%)
Dividends Interest (2) Royalties (3)
Portfolio Substantial holdings (1)
Resident corporations 15 0 0 0
Resident individuals 15 15 20 (4) 0
         
Non-resident corporations and individuals:        
Non-treaty 15 0/15 0 0
Treaty (1, 5):        
Andorra 15 0/5 (25) 0 0
Armenia 15 0/5 (6) 0 0
Austria 15 0/5 (7) 0 0
Azerbaijan 10 0/5 (8) 0 0
Bahrain 10 0 (6) 0 0
Barbados 15 0 (9) 0 0
Belgium 15 0/10 (10) 0 0
Brazil 25 0/15 (6) 0 0
Brunei (26) 10 0 (6) 0 0
Bulgaria 15 0/5 (7) 0 0
Canada 15 0/5 (6) 0 0
China, People’s Republic of 10 0/5 (7) 0 0
Croatia 15 0/5 (6) 0 0
Cyprus (27) 5 0 (6) 0 0
Czech Republic 10 0 (11) 0 0
Denmark 15 0/5 (7) 0 0
Estonia 10 0 (6) 0 0
Finland 15 0/5 (7) 0 0
France (28) 15 0/5 (7) 0 0
Georgia 10 0/5 (12) 0 0
Germany 15 0/5 (6) 0 0
Greece 7.5 0 0 0
Guernsey 15 0/5 (6) 0 0
Hong Kong 10 0 (13) 0 0
Hungary 15 0/5 (7) 0 0
Iceland 15 0/5 (7) 0 0
India 10 0 0 0
Indonesia 15 0/10 (7) 0 0
Ireland, Republic of 15 0/5 (7) 0 0
Isle of Man 15 0/5 (6) 0 0
Israel 15 0/5 (6) 0 0
Italy 15 0 0 0
Japan 15 0/5 (14) 0 0
Jersey 15 0/5 (6) 0 0
Kazakhstan 15 0/5 (15) 0 0
Korea, Republic of 15 0/10 (6) 0 0
Laos 15 0/5 (6) 0 0
Latvia 10 0/5 (7) 0 0
Liechtenstein 15 0/5 (16) 0 0
Lithuania 15 0/5 (7) 0 0
Macedonia 15 0/5 (7) 0 0
Malaysia 10 0/5 (6) 0 0
Malta 15 0/5 (7) 0 0
Mauritius 10 0/5 (6) 0 0
Mexico 15 0/5 (6) 0 0
Moldova 10 0/5 (17) 0 0
Monaco 15 0/5 (6) 0 0
Morocco 15 0/10 (7) 0 0
Netherlands 15 0/2.5 (7) 0 0
Norway 15 0/5 (7) 0 0
Panama, Republic of 15 0/5 (6) 0 0
Poland 15 0 (18) 0 0
Portugal 15 0 0 0
Qatar 10 0/5 (25) 0 0
Romania 15 0/5 (7) 0 0
Russia 15 0/5 (19) 0 0
San Marino 15 0 (9) 0 0
Saudi Arabia 5 0 0 0
Serbia 10 0/5 (7) 0 0
Seychelles 10 0 (6) 0 0
Singapore 15 0 0 0
Slovak Republic 15 0/5 (7) 0 0
Slovenia 15 0/5 (7) 0 0
South Africa 15 0/5 (7) 0 0
Spain 15 0/5 (20) 0 0
Sri Lanka 10 0/7.5 (7) 0 0
Sweden 15 0 (9) 0 0
Switzerland 15 0/5 (21) 0 0
Tajikistan 15 0 (9) 0 0
Taiwan 10/15 (24) 0 0 0
Thailand 15 0/5 (7) 0 0
Trinidad and Tobago 10 0/5 (6) 0 0
Tunisia 10 0 0 0
Turkey 20 0/5 (7) 0 0
Ukraine (26) 15 0/5 (17) 0 0
United Arab Emirates 10 0/5 (6) 0 0
United Kingdom 15 0/5 (7) 0 0
United States 15 0/5 (22) 0 0
Uruguay (26) 15 0/5 (6) 0 0
Uzbekistan 15 0/5 (7) 0 0
Vietnam 15 0/5/10 (23) 0 0

Notes

These notes are not extensive. The full text of the DTT should be checked for a comprehensive view on the conditions of application of reduced rates.

  1. Under Luxembourg domestic law, no WHT is levied on dividends paid by a Luxembourg qualifying subsidiary to an entity that is:
    1. a collective entity falling within the scope of the Parent Subsidiary Directive
    2. a Luxembourg resident joint-stock company, which is fully taxable and does not take one of the forms listed in the LITL
    3. a PE of a collective entity falling under the previous categories
    4. a collective entity that is resident in a country with which Luxembourg has concluded a DTT and is fully liable to a tax corresponding to the Luxembourg CIT, or a domestic PE of such an entity
    5. a Swiss resident joint-stock company that is subject to Swiss CIT without benefiting from any exemption
    6. a joint-stock company or a cooperative company that is resident in an EEA member state (other than an EU member state) and is fully liable to a tax corresponding to the Luxembourg CIT, or
    7. a PE of a joint-stock company or of a cooperative company that is resident in an EEA member state (other than an EU member state), and
    8. at the date on which the income is made available, the beneficiary has been holding or undertakes to hold, directly, for an uninterrupted period of at least 12 months, a participation of at least 10%, or with an acquisition price of at least EUR 1.2 million in the share capital of the income debtor.


    Qualifying shareholders under (b) to (g) above need to be fully taxable collective entities subject in their country of residence to a tax similar to that imposed by Luxembourg. As a general rule, this requirement is met if the foreign tax is compulsorily levied at an effective rate of at least 9%, on a basis similar to the Luxembourg one.

  2. Interest paid to non-residents generally is not subject to WHT in Luxembourg. However, interest that represents a right to profit participation on a bond may be assimilated to a dividend and subject to WHT. Further analysis should be made to determine the applicable reduced rate on the basis of the treaty (i.e. pursuant to dividend or interest clause).
  3. Royalties paid to non-residents are not subject to WHT in Luxembourg, whether the companies are associated or not.
  4. A WHT of 20% is withheld on defined interest income paid by a Luxembourg paying agent to resident individuals. Interest indirectly cashed through investment funds are out of the scope of this WHT.
  5. DTTs have been concluded with Albania, Botswana, Cyprus, Kuwait, Kyrgyzstan, Oman, and Senegal, but are not yet in force. A new DTT with Hungary was signed, but domestic transposition procedures are still pending.
  6. The recipient company (other than a partnership, as the case may be) holds (beneficially; for the DTT with Mauritius, directly) at least 10% of the Luxembourg company’s capital (or at least 10% of the voting power in the Luxembourg company, as the case may be).
  7. The recipient company (other than a partnership, as the case may be) holds (beneficially; for the DTT with Finland and the United Kingdom, directly or indirectly) at least 25% of the Luxembourg company’s capital (or at least 25% of the voting power in the Luxembourg company, as the case may be).
  8. The recipient company holds (beneficially), directly or indirectly, at least 30% of the Luxembourg company’s capital and with an investment equivalent to at least 300,000 United States dollars (USD).
  9. The recipient company (other than a partnership, as the case may be) directly holds (beneficially) at least 10% of the Luxembourg company’s capital for an uninterrupted period of at least 12 months prior to the decision to distribute the dividends.
  10. The recipient is a company (with the exception of general partnerships, limited partnerships, and cooperative societies) whose direct participation, held since the beginning of its financial year, in the capital of the company (with the exception of general partnerships, limited partnerships, and cooperative societies) paying the dividends is at least 25% or has an acquisition price of at least 250 million francs. The provisions of paragraph 1 (a) shall also apply where the dividends are paid to two or more companies (with the exception of general partnerships, limited partnerships, and co-operative societies) the sum of whose participations, held since the beginning of their respective financial years, in the capital of the company (with the exception of general partnerships, limited partnerships, and co-operative societies) paying the dividends is at least 25% or has an acquisition price of at least 250 million francs and where one of the recipient companies owns more than 50% of the registered capital of each of the other recipient companies.
  11. The recipient company (other than a partnership, as the case may be) has held (beneficially) a participation of at least 10% in the distributing company’s capital for an uninterrupted period of at least 12 months.
  12. The rate of WHT is 5% if the beneficial owner is a company that directly or indirectly owns at least 10% of the capital of the company paying the dividends and made an investment in the capital of the paying company of more than EUR 100,000, or the equivalent in Georgian currency. No WHT is levied when the beneficiary company directly or indirectly owns at least 50% of the capital of the company paying the dividends and made an investment in the capital of the paying company of more than EUR 2 million, or the equivalent in Georgian currency.
  13. No WHT is levied if the recipient company (other than a partnership) holds (beneficially) at least 10% of the Luxembourg company’s capital or a participation with an acquisition price of at least EUR 1.2 million.
  14. The recipient company holds at least 25% of the Luxembourg company’s voting shares during the period of six months immediately before the end of the accounting period in which the distribution of profits takes place.
  15. The beneficial owner is a company (other than a partnership) that holds at least 15% of the Luxembourg company’s capital.
  16. No WHT is levied when the beneficiary of the dividend is a company (other than a partnership) that has directly held a participation of at least 10% (or with an acquisition price of at least EUR 1.2 million) of the distributing company’s share capital for an uninterrupted period of at least 12 months. The rate of 5% of WHT applies if said participation has been held for less than 12 months.
  17. The beneficial owner is a company (other than a partnership) that holds at least 20% of the Luxembourg company’s capital.
  18. The beneficial owner of the dividends is a company (other than a partnership) that has directly held a participation of at least 10% of the distributing company’s capital for an uninterrupted period of at least 24 months preceding the payment date of the dividend.
  19. The recipient company holds at least 10% of the Luxembourg company’s capital and made an investment in the capital of the paying company of more than EUR 80,000, or the equivalent in roubles.
  20. The recipient company (other than a partnership) holds at least 25% of the Luxembourg company’s capital for an uninterrupted period of at least one year preceding the payment date of the dividend.
  21. The 5% WHT applies if the beneficial owner is a company (other than a partnership) that directly holds at least 10% of the Luxembourg company’s capital. No WHT is levied if the beneficial owner is a company that is a resident of the other contracting state and that directly holds, for an uninterrupted period of two years, at least 10% of the capital of the company paying the dividends, or if the beneficial owner is a pension fund.
  22. A 5% WHT is levied on dividend distributions where the beneficial owner is a company that holds at least 10% of the voting power of the paying company. No WHT is levied when the US company has directly held, during an uninterrupted period of two years preceding the payment date of the dividend, at least 25% of the voting rights of the paying company and certain conditions regarding the nature of activities performed by the distributing company are met.
  23. The rate of 5% of WHT applies where the recipient company directly or indirectly owns at least 50% of the share capital of the paying company or has contributed more than USD 10 million, or the equivalent in Luxembourg or in Vietnamese currency, in the capital of the company paying the dividends. The rate of 10% of WHT applies where the beneficial owner is a company that directly or indirectly holds at least 25% but less than 50% of the capital of the company paying the dividends and has contributed not more than USD 10 million, or the equivalent in Luxembourg or Vietnamese currency, in the capital of the company paying the dividends.
  24. The 15% WHT applies if the beneficial owner is a collective investment vehicle treated as a body corporate in Taiwan. The 10% WHT applies in all other cases.
  25. The 5% WHT applies if the beneficial owner is an individual who directly holds at least 10% of the Luxembourg company’s capital and who has been resident in Qatar for a period of 48 months immediately preceding the year within which the dividends are paid. The 0% WHT applies if the beneficial owner is a company that directly holds at least 10% of the Luxembourg company’s capital.
  26. The DTT is applicable as of 1 January 2018.
  27. The DTT entered into force as of 1 January 2019.
  28. On 20 March 2018, the Luxembourg and French governments signed a new DTT with France, together with an accompanying Protocol. The ratification of the new DTT by both France and Luxembourg is likely to occur in the course of 2019. The provisions of the new DTT should therefore be applicable as from 1 January 2020. Under the new DTT, the WHT on dividend distributions made by a company resident in a contracting state should be 0%, provided that the effective beneficiary of the dividends is a company resident in the other contracting state that holds at least 5% of the share capital in the distributing company for at least 365 days. The WHT rate on dividend distributions should be 15% in any other cases.

Last Reviewed - 06 December 2018

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