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Luxembourg-Singapore

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Update - New Tax Treaty between Luxembourg and Singapore

On 2 April 2015, Luxembourg approved for ratification the pending income and capital tax treaty with Singapore. The treaty, signed 9 October 2013, will replace the 1993 income and capital tax treaty between the two countries, which is currently force.

Taxes Covered

The treaty covers Luxembourg income tax on individuals, corporation tax, capital tax and the communal trade tax. It covers Singapore income tax.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted if an enterprise from one Contracting State furnishes services in the other State through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 365 days in any 15 month period.

Withholding Tax Rates

  • Dividends - 0%
  • Interest - 0%
  • Royalties - 7%
  • Capital gains - generally exempt, except for gains from the alienation of immovable property and gains from the alienation of movable property forming part of the business property of a permanent establishment

Double Taxation Relief

Singapore applies the credit method for the elimination of double taxation while Luxembourg generally applies the exemption method. However, in the case of royalty income, entertainer and sportspersons income, and other items of income not dealt with in the treaty, Luxembourg generally applies the credit method.

Entry into Force and Effect

The treaty will enter into force once the ratification instruments are exchanged. It will apply in Luxembourg from 1 January of the year following its entry into force. It will apply in Singapore in respect of withholding taxes from 1 January of the year following its entry into force, and for other taxes from 1 January of second year following its entry into force.

The provisions of the 1993 income and capital gains treaty between Luxembourg and Singapore will terminate and cease to have effect for the relevant taxes on the dates the new treaty applies.

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