New tax treaty between Luxembourg and Taiwan

On 19 December 2011, a new double tax treaty and protocol on double taxation were signed by Luxembourg and Taiwan.

After going through the necessary approval procedures, the new double tax treaty (DTA) has finally entered into force on July 25th, 2014 (Mémorial 2014, A, n° 123, p. 1770 - 1780).

The new treaty has replaced the old DTA, which has been signed on March 4th, 1985.

Below we elaborate briefly on some key features.

•    Dividends

The new DTA provides that the maximum withholding tax (WHT) rate 15% on dividends, if the beneficial owner is a collective investment vehicle as a body corporate for tax purposes (e.g. SICAV, SICAF).

In all other cases, the WHT rate will remain at 10%.

•    Royalties

The withholding tax rate of royalties is limited to 10% of the gross amount of the royalties.

Normally, Luxembourg does not levy withholding tax on royalties paid to non-residents under its domestic law.

•    Interest

The withholding tax rate of interest payment should be subject to a minimum 10%, 15% if the beneficial owner is a collective investment vehicle as a body corporate for tax purposes (e.g. SICAV, SICAF).

In principle, Luxembourg does not levy withholding tax on interest paid to non-residents under its domestic law.

•    Capital Gains on immovable property

In general, capital gains from the alienation of immovable property should be taxed in the state in which the immovable property is situated. However, the alienation of shares in a real estate company should be taxed in the state of which the seller is a resident.

Please feel free to contact us if you have any questions.

New tax treaty between Luxembourg and Taiwan (499.44Kb)