Bilateral tax treaties in Luxembourg
Over 80 treaties to avoid double taxation
Luxembourg has an exceptional network of bilateral tax treaties (DTTs) with most commercial partner countries. These agreements reduce or eliminate withholding tax on cross-border flows (dividends, interest, royalties).
Key metrics
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Talk to a tax expertKey advantages
- Significant reduction of withholding taxes (dividends, interest, royalties)
- Elimination of juridical double taxation risk
- Access to mutual agreement procedure in case of international tax dispute
- Coverage of 80+ main Luxembourg partner countries
- Natural complement to the SOPARFI regime
- Base compliant with OECD model (BEPS MLI)
Qualifying conditions
- Be Luxembourg tax resident under the treaty definition
- Be beneficial owner of income
- Comply with anti-abuse clauses (PPT, LOB since MLI)
- Provide residence certificate to foreign administration
- Real economic substance (principal purpose test)
- Transfer pricing documentation for intra-group flows
Who this regime is for
Royalties received from an Indian subsidiary
A Luxembourg company receives EUR 2M in annual royalties from an operating subsidiary in India. Standard local withholding: 20%.
EUR 400,000 withheld at source
EUR 200,000 withheld
EUR 200,000
The tax treaty between Luxembourg and India reduces withholding tax on royalties from 20% to 10%. The Luxembourg tax residence certificate and proof of beneficial ownership must be provided to Indian authorities.
Legal basis and OECD compliance
OECD Model and Multilateral Instrument
Luxembourg signed the BEPS Multilateral Instrument (MLI), which automatically amends its tax treaties to integrate anti-abuse clauses (Principal Purpose Test, Limitation on Benefits). Access to treaty benefits now requires a real economic substance test.
REGIONAL OVERVIEW
Tax treaty details by geographic region
Country-by-country analysis of Luxembourg's tax treaties. Each region has its own specifics regarding withholding tax, applicable directives and anti-abuse mechanisms.
Region 1 of 4
Europe
Luxembourg covers the entire European Union through its bilateral tax treaties, complemented by the Parent-Subsidiary Directive and the Interest-Royalties Directive. Nearly all dividend and royalty flows between a Luxembourg group and its EU subsidiaries are taxed at 0 % withholding.
- Parent-Subsidiary Directive: 0 % dividend WHT (participation ≥ 10 % or €1.2M)
- Interest-Royalties Directive: 0 % WHT between EU associated companies
- Extended network to Switzerland, United Kingdom and Norway via bilateral agreements
- Access to mutual agreement and mandatory arbitration under EU Directive 2017/1852
Representative countries
- FRFrance0 %
- DEGermany0 %
- BEBelgium0 %
- NLNetherlands0 %
- CHSwitzerland5 %
+30 European countries
Region 2 of 4
Middle East & Africa
Luxembourg has signed treaties with most Gulf and North African countries, offering a unique fiscal bridge between Europe and these markets. Luxembourg holdings regularly serve as investment vehicles for regional sovereign wealth funds and industrial groups.
- Preferred financial hub for Gulf sovereign wealth funds
- Dividend withholding capped at 0 % or 5 % in most DTTs
- Luxembourg-UAE DTT signed in 2005: 0 % WHT on qualifying dividends
- Access to free zones (DIFC, ADGM, Qatar Financial Centre) via LU structures
Representative countries
- AEUAE0 %
- QAQatar0 %
- SASaudi Arabia5 %
- MAMorocco10 %
- TNTunisia5 %
+12 treaties
Region 3 of 4
Asia-Pacific
Treaties with China, Japan, Singapore and Hong Kong position Luxembourg as Europe's gateway for Asian investments. Luxembourg funds (SICAV, UCITS) enjoy extensive recognition across the region.
- Luxembourg-China DTT: 5 % WHT on qualifying dividends, 10 % on royalties
- Hong Kong: no dividend WHT, complemented by the LU-HK DTT
- Luxembourg UCITS widely distributed in Singapore, Taiwan and Japan
- South Korea: MLI BEPS clauses reinforcing required economic substance
Representative countries
- CNChina5 %
- JPJapan5 %
- SGSingapore5 %
- HKHong Kong0 %
- KRSouth Korea5 %
+15 treaties
Region 4 of 4
Americas
Luxembourg has treaties with the main economies of the Americas, including the United States, Canada, Brazil and Mexico. These agreements facilitate transatlantic flows of dividends, interest and royalties for groups structured through a SOPARFI.
- Luxembourg-USA DTT: 5 % dividend WHT with limitation on benefits (LOB) clause
- Treaties modernised via the OECD BEPS Multilateral Instrument (MLI)
- Brazil: 15 % dividend WHT, with application of the treaty rate
- Canada and Mexico: preferred platform to structure NAFTA-Europe flows
Representative countries
- USUSA5 %
- CACanada5 %
- BRBrazil15 %
- MXMexico5 %
- ARArgentina10 %
+8 treaties
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Frequently asked questions
Where can I find the list of Luxembourg tax treaties?
The official list is published by the Luxembourg tax authority (ACD) on impotsdirects.public.lu. It covers more than 80 jurisdictions, including all EU countries, the US, China, Japan, Switzerland and major African and Latin American countries.
How do I prove beneficial ownership?
The beneficial owner must demonstrate that income is held for their own account (not as agent or conduit). In practice: economic substance, local governance, decision-making autonomy, no automatic redistribution obligation.
What is the impact of the Principal Purpose Test (PPT)?
Since the MLI, treaty access can be denied if obtaining treaty benefit was one of the main objects of the arrangement. Solid economic substance and valid commercial reasons are essential.
Do tax treaties apply to investment funds?
It depends on the country and vehicle. Some treaties recognize Luxembourg funds (SICAV, FCP) as eligible, others do not. RAIF and SIF have variable status depending on partner jurisdictions. Case-by-case analysis required.
Other optimization regimes
Explore the other Luxembourg tax mechanisms available.
SOPARFI
Most usedArt. 166 LIRThe most widely used Luxembourg holding vehicle in Europe
IP Box
Art. 50ter LIREffective rate of about 5% on intellectual property income
Fiscal unity
Art. 164bis LIRConsolidate a group fiscally and offset losses between entities
RAIF
Law of 23 July 2016Fast and flexible structuring for well-informed investors
Tax ruling
§ 29a AO (procedure)Fully secure the tax treatment of your operations
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