Luxembourg – France Double Taxation Treaty

Luxembourg and France signed on 5th of September 2014 a Protocol to the previous Double Taxation Treaty, which had been concluded in April 1958; the Protocol offers a new provision on the understanding of immovable property and on taxation of gains from disposable shares of real estate companies. The Protocol will produce its effects starting with 1st of January 2016. Our  company formation team can provide you with an in-depth presentation on the new agreement, if you are interested in setting up a company in Luxembourg. 

 

 

When opening a company in Luxembourg, you should know that the agreement between the two states covers the following taxes:

 

• in Luxembourg, the treaty applies to:

- the corporation tax;

- the special tax on director’s fee;

- the tax on capital;

- the municipal taxes on income and capital. 

 

• in France, the treaty applies to:

- the complementary tax;

- the corporation tax. 

 

One of the main amendments of the new agreement, according to the Article 3, refers to the taxation of the capital gains arising from the disposal of shares in companies whose assets constitutes/derives more than 50% of their value from immovable property which is situated in a contracting state; thi type of capital gains will be taxed only in that State.

 

The new legislation will deal with the taxation of capital gains, arising from disposal of shares of a real estate company, which will only be taxed in the country in which the real estate is situated. 

 

As such, gains arising from the disposal of shares in a company resident of France or Luxembourg, owning real estate in France, will be taxed only in France. At the moment, the applicable rule states that the gains are taxed in Luxembourg. If you are interested in company registration in Luxembourg, our company formation agents can offer you details on the new amendment. 

 

If you need further information on the double tax protocol signed by Luxembourg and France, please contact us.