With an area of almost 22.000 m², the Luxembourg Freeport is ready to play host to highly valuable goods such as works of art, fine wines, precious metals, jewels and diamonds, etc.
In the article below, find a recap of the founding principles which make the Luxembourg Freeport so attractive and the main legal aspects that one envisaging to take up business in the Freeport should know.
On Friday 5 September 2014, the Luxembourg and French Finance Ministers signed a 4th amendment to the Luxembourg-France Double Tax Treaty (“Treaty”) dated 1 April 1958. According to the amendment, capital gains derived from the alienation of shares, units or other rights in a company, fiduciary or any other institution or entity whose assets consist for more than 50% of their value – directly or indirectly through one or more companies, fiduciaries, institutions or other entities - of real estate situated in the other contracting State are taxable only in that other State. The same treatment applies to rights on said real estate.
The current version of the Treaty does not cover capital gains derived by a resident on an indirect alienation of real estate held through one or more interposed entities. Accordingly, capital gains derived by a resident through the alienation of shares in a company owning real estate in the other Contracting State do not currently qualify as real estate income and are hence not taxable in the source State (location of the real estate) but in the residence State (residence of the alienator).
The amendment is in line with the current OECD Model Tax Convention on Income and Capital and puts an end to a potential double non-taxation in cases where the capital gain realised on the disposal of the interposed entity was exclusively taxable in Luxembourg and benefited from an exemption. The amendment of the Treaty had been expected for some time since a first protocol dated 24 November 2006 clarified the taxation rights on real estate between source and residence State but omitted to cover indirect transfers of real estate through interposed entities.
The amendment enters into force on the first day of the month following the reciprocal notifications of its ratification in both States. The new provisions will apply (a) as regards income taxes levied as a withholding tax, to capital gains taxable in the year following the civil year in the course of which the amendment entered into force, (b) as regards income taxes not levied as a withholding tax, to income realised during the entire civil year or any financial year that had commenced after the civil year in the course of which the amendment entered into force and (c) as regards any other taxes, to taxation triggered after the civil year in the course of which the amendment entered into force. Accordingly, the new provisions may possibly be applied as from 1 January 2015 at the earliest.
Our tax team remains at your disposal to assist you with any queries related to these changes.
Founded in 1928, the Luxembourg Stock Exchange is the global leader in international bond listings and largest in Europe. The Luxembourg Stock Exchange was the first European stock exchange to issue a Eurobond in 1963, a sukuk in 2002 and a "Dim Sum Bond" in May 2011, due to its recognition as the listing place of choice in Europe. It is the largest global Eurobond listing platform and has the highest number of RMB bond listings.
To watch the video, please follow this link: http://www.luxembourgforfinance.com/ringing-bell-luxembourg-stock-exchange-0
Our quarterly tax update is dedicated to the main changes which have occurred over the last 3 months with regard to Luxembourg and international tax law.
The topics of this update are:
- New rules for exit tax on capital gains upon migration
- Ratification of the Convention on Mutual Administrative Assistance in Tax Matters
- Introduction of the new procedure for the exchange of information upon request
- Introduction of the new Mini-One Stop Shop regime
- Direct taxes – Transfer of losses within groups and consortium – Case C-80/12
- Indirect taxes – Reduced VAT rate only applicable to printed books – Case C-219/13
- Indirect taxes – Does the use of a customer’s infrastructure create a fixed establishment for VAT purposes? –
- Tax treaty network
- The European Union Commission adopts communication on transfer pricing
- Law of 2 April 2014 transposing directives 2009/133/EC, 2011/96/EU and 2013/13/EU
- OECD Declaration on Automatic Exchange of Information in Tax Matters
- OECD / BEPS - Comments on discussion draft on “Neutralise the effects of hybrid mismatch arrangements”
Discover our brochure on Corporate Taxation in Luxembourg
Table of contents of the brochure:
Overview of relevant taxes
- Corporate income tax
- Municipal business tax
- Net worth tax
- Withholding taxes
- Liquidation proceeds
- Directors’ fees
- Value added tax
- Registration duties
- Customs and excise duties
- Tax authorities
- Tax courts
- Tax compliance
- Tax advances
- VAT registration process
- Participation exemption regime
- Intellectual property rights
- Intra-group financing activities
- Fiscal consolidation
- Other tax incentives
- Securisation undertakings
- Investment funds
- Types of investment funds
- Tax considerations
- Banks and financial institutions
- Insurance and reinsurance companies
- Pension fund regimes
- The Luxembourg maritime flag
- Identification of the most appropriate investment vehicle
- Luxembourg tax residence
- Permanent establishment
- Double taxation elimination method
- Double tax treaty network
- Taxation on highly-skilled workers
- EU Savings Directive
- AIFM and Taxes
- Lux GAAP
- Lux GAAP with IFRS option
Summary table - Luxembourg vehicles
Arendt & Medernach Tax team
About Arendt & Medernach
our quarterly tax update is dedicated to the main changes which have occurred over the last 3 months with regard to Luxembourg and international tax law.
Discover our latest tax update.
The topics of this update are:
- Introduction of a bill of law approving the Convention on Mutual Administrative Assistance in Tax Matters
- Introduction of a bill of law abolishing the withholding tax system under the EU Savings Directive
- New circular letter on the tax regime for highly skilled impatriates
- New circular letter on Luxembourg tax treatment of supplementary pension schemes
- Case law on the exchange of information - the foreign request must relate to defined taxpayers and cannot be extended to third parties (Cases No. 33272a & 33273a)
- Luxembourg concludes intergovernmental agreement with the US on FATCA
- Enlargement of the scope of the Savings Directive
- VAT exemption for management of defined contribution pension schemes
- Loss of right to deduct VAT unduly paid
- Increase of VAT rates
- Notion of special investment fund in the real estate sector
- Independent groups of persons ("IGP"): Luxembourg's VAT regime challenged by the EU Commission
- Tax treaty network
On 28 March 2014, the governments of Luxembourg and the United States have signed an intergovernmental agreement ("IGA") on the implementation of the Foreign Account Tax Compliance Act ("FATCA") in Luxembourg.
The IGA aims at facilitating the exchange of information on Specified US Persons, as defined by FATCA, by Luxembourg to the United States, while at the same time easing the compliance obligations for, amongst others, Luxembourg financial institutions by specifying local exemptions and deemed compliant classifications with no reporting duties.
As Luxembourg has opted for and has negotiated a so-called Model 1 IGA with the United States, the exchange of information by Luxembourg financial institutions ("FIs") to the United States Internal Revenue Service ("IRS") will take place indirectly via the Luxembourg tax authorities, who will in a first step gather the relevant FATCA information on the identity of, as well as, the amounts owned and the income received by US Persons from Luxembourg financial institutions and will then pass such information on in an automatic manner to the IRS. There will be no duty for Luxembourg FIs to directly communicate information on their clients to the IRS.
This Newsflash outlines the main features and mechanisms of the IGA, explains the requirements for relying on the deemed-compliant categories, in particular for investment funds, and indicates the next steps to be taken by Luxembourg FIs in order to prepare for the entry into force of FATCA.
To download the document click on the link below
On 13 March 2014, the Court of Justice of the EU ("ECJ") delivered a judgment in the ATP Pension Service A/S case (C-464/12) ruling that the management and administration charges of defined contribution ("DC") pension schemes may be exempted from VAT. Should you need further information, please click on the link below.
Luxembourg has been widely hailed as an international investment center for years.
The Association of the Luxembourg Fund Industry (ALFI) provides a number of reasons underlying the country’s designation as a top fund-industry choice.
Its legal and regulatory framework for investment funds is recognized for its excellence by the global asset-management community. Luxembourg boasts a AAA economy as well as political and social stability.
The country features a concentration of investment fund experts specializing in many different areas.
To gain further insight into the realities of investment funds, RAPSI consulted experts from Arendt & Medernach: Alain Goebel and Alexander Sokolov.
Read the full interview by cliking on the document below.
In this Article, read Thierry Lesage's answer to Linda Cortey concerning the notional interest bill expected in Luxembourg.
Please find attached the full French article.
Le Luxembourg a-t-il besoin d'introduire un mécanisme d'intérêt notionnel pour les entreprises? Face à l'attentisme de la coalition au gouvernement, les défenseurs de ce dispositif fiscal peaufinent leurs arguments: les intérêts notionnels sont un outil utile pour inciter les grands groupes à installer de nouvelles activités dans le pays.
Découvrez le nouvel article de Bruno Gasparotto "Lignes directrices des principes de TVA régissant les services se rattachant à un immeuble". Cet article a été publié dans le magazine Kluwer ACE de février 2014.
Les dispositions TVA connaissent des règles spécifiques en matière de localisation des prestations de services se rattachant à un immeuble.
Ces règles divergent des principes en place depuis 2010 sous le Paquet TVA puisque, sous le couvert de règles dérogaoires, les services se rattachant à un immeuble ne sont pas taxables au lieu du preneur de service mais plutôt au lieu de l'immeuble.
Dans un contexte transfrontalier, il est extrêmement courant que ces deux lieux ne coincident pas. il est donc essentiel, pour éviter des phénomènes de double taxation ou de risques non couverts, d'appréhender correctement les aspects de ces régimes de TVA spécifiques.
Cependant l'application de ces règles spécifiques au secteur immobilier n'est pas toujours chose aisée en pratique. Le contexte légal, administratif et jurisprudentiel n'apporte pas beaucoup d'éléments d'informations à cet égard.
Face à ce déficit d'informations, l'affaire récente traitée par la Cour de Justice de l'Union européenne (C155/12 du 27 juin 2013) apporte un éclairage intéressant donc il faut necessairement s'inspirer.
Dans l'article ci-dessous, ladite affaire sera abordée en détail et un état des lieux sera dressé avec les informations disponibles à ce jour pour aider le lecteur et le praticien dans les méandres de cette problèmatique non encore suffisamment appréhendée aujourd'hui.
Le Luxembourg, bénéficiant d'une grande ouverture à l'international et d'un environment juridique, réglementaire et fiscal favorable, est incontestablement un acteur incontournable sur la place financière mondiale.
Cependant, les finances du pays ne sont pas épargnées par l'actuelle crise de la dette. Parmis les leviers disponibles figure la TVA.
Discover the full article in the document attached.
Discover our latest tax update.
The topics of this document are:
- Introduction of the bill regarding the automatic exchange of information
- New circular letter of 31 December 2013 on the exchange of information upon request procedure
- New circular letter on reduction of net worth tax
- New VAT circular letter on fund management VAT exemption - risk management services included
- Case No. 27380a dated 1 October 2013 – incompatibility of 5-year requirement for Luxembourg net wealth tax exemption with freedom of establishment
- Sales made by retailers subject to VAT where a customer fraudulently uses a credit card (case C-494/12)
- Inclusion of VAT in the sales price in the absence of VAT provisions in the sales contract (joined cases C-249/12 and C-250/12)
- Exemption of the management of special investment funds (case C-464/12)
On 7 November 2013, the Luxembourg VAT authorities published a circular (Circular n° 723ter) on the VAT treatment applicable to risk management for investment funds. The VAT authorities confirmed that risk management functions are to be considered as forming part of VAT exempt fund management services.
Discover our latest tax update.
The topics of this document are:
- Introduction of the bill creating the private foundation,
- New circular letter on minimal lump-sum corporate income tax,
- Participation exemption regime not applicable to French SCI companies (Case No. 31981C),
- Concept of intellectual property rights constitution (Case No. 30215),
- Crédit Lyonnais VAT case (C-388/11): no worldwide prorata of deduction for head offices,
- Tax treaty network,
- Exchange of information - Peer review report - Phase 2,
- Recent tax treaties applicable to Luxembourg SICAVs and SICAFs
The Tax Partners of Arendt & Medernach were pleased to hold to a tax seminar dedicated to examining the practical impacts of the recent Luxembourg and international tax developments in Luxembourg on 19 June 2014.>
Arendt & Medernach is a sponsor of the ABA Tax conference 2014.
Our partners, Eric Fort and Thierry Lesage will be speakers. You can meet them during the conference which will be held from 9-11 April 2014 in Geneva, Switzerland.>
Further to our Tax Seminar in Luxembourg on 21 October 2013, please find attached the conference slides.>>
Further to our AIFMD Seminar in London on 10 October 2013, please find attached the conference slides.>
Further to our conference "Get up to speed with recent international tax and VAT developments affecting Luxembourg" held in Luxembourg on 20 September 2012, please find attached the conference slides.>
Jan Neugebauer was a speaker at the 5th Annual Worldwide Tax Update on "Luxembourg Tax Law Developments " on 15 May 2012 in Boston and on 16 May 2012 in New-York.>
Jan Neugebauer was a speaker at the European Direct Taxation seminar on "Cross border payments of interest and royalty" on 8 May 2012 in Treves.>