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Liechtenstein-Luxembourg Double Tax Treaty

Updated on Tuesday 13th December 2016

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Liechtenstein-Luxembourg-double-tax-treatyLiechtenstein is one of the most prolific financial centers in Europe and many foreign investors set up companies in various industries here. In order to help these investors to repatriate profits as easy as possible and with the least possible impact on the taxes they pay, Liechtenstein has signed numerous double taxation treaties.

In 2009 Liechtenstein signed a double taxation agreement with Luxembourg. The treaty was enforced in stages, as it follows:

  • -          Liechtenstein enforced the agreement in 2010;
  • -          Luxembourg enforced in 2011.

Our company formation agents in Liechtenstein can offer information on all the Principality’s double taxation treaties.

What does the Liechtenstein – Luxembourg provide for?

The agreement for the avoidance of double taxation between Liechtenstein and Luxembourg provides for the following taxes:

  • -          the income, the corporate, the property and the trade taxes in Luxembourg;
  • -          the income, the corporate, the coupon, the property and the income on real estate taxes in Liechtenstein.

The tax treaty also covers similar taxes imposed in Liechtenstein and Luxembourg.

Another important provision of the Liechtenstein – Luxembourg double tax treaty covers permanent establishments of companies registered in the contracting states which carry out operations in the other country for a minimum period of 12 months. The incomes of these entities will be taxed in the country where the activities are undertaken.

You can rely on our company registration consultants in Liechtenstein if you want to open a branch office here.

Avoidance of double taxation in Liechtenstein and Luxembourg

The avoidance of double taxation in Luxembourg will occur through the tax credit and exemption methods. With respect to Liechtenstein, double taxation will be avoided through the same methods. It should be noted that the means of avoidance of double taxation will depend on the type of income.

The Liechtenstein – Luxembourg double taxation treaty also provides for the following reduced tax rates:

  • -          a 0% rate on dividend payments for which the beneficial owner holds at least 10% of the shares in the company paying the dividends;
  • -          a 5% rate on dividend payments if the beneficiary owns at least 10% of the capital of the company paying them;
  • -          a 15% rate on other dividend payments;
  • -          a 0% rate on interest payments;
  • -          a 0% rate on royalties payments.

For full information on the double tax treaty with Luxembourg, please contact our company formation representatives in Liechtenstein.

 

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