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.
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.
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.
Last Reviewed - 06 December 2018