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Update - Tax Treaty between Luxembourg and Andorra

The income tax treaty between Andorra and Luxembourg was signed on 2 June 2014.The treaty is the first of its kind between the two countries.

Taxes Covered

The treaty covers Andorran income tax, tax on income from economic activities, tax on income of nonresidents and real estate capital gains tax. It covers Luxembourg individual income tax, corporation tax, wealth tax and the communal trade tax.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a company directly holding at least 10% of the paying company's capital (0% if the beneficial has held 10% of the capital for an uninterrupted period of at least 12 months, and has invested at least 1.2 million euro in the paying company), otherwise 15%
  • Interest - 0%
  • Royalties - 0%
  • Capital gains - generally exempt, except for the following gains which if derived by a resident of one Contracting State may be taxed by the other State:
    • Gains from the alienation of immovable property situated in the other State,
    • Gains from alienation of movable property forming part of the business property of a permanent establishment in the other State, and
    • Gains from the alienation of shares or other rights in a company whose assets are comprised of more than 50% of immovable property situated in the other State

Double Taxation Relief

Andorra applies the credit method for the elimination of double taxation, while Luxembourg generally applies the exemption method. However, in the case of dividend income and entertainer and sportspersons income, Luxembourg applies the credit method.

Entry into Force and Effect

The treaty will enter into force once the ratification instruments are exchange, and will apply from 1 January of the year following its entry into force.

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