Luxembourg and Switzerland have signed a double tax treaty
which protects investors in the two countries from overlapping taxes. The treaty applies to individuals who are residents of one or both countries and the taxes concerned are those that apply on income and on capital. This protection against double taxation
along with other provisions regarding the distributions of dividends for branches in Luxembourg or in Switzerland are advantageous for foreign investors
The taxes covered by the treaty
The convention for the avoidance of double taxation with respect to taxes on income and capital applies to the taxes imposed on behalf of one of the contracting states or its local authorities, irrespective of the manner in which they are levied.
The taxes to which the convention applies, in case of Luxembourg, are:
- the income tax on individuals;
- the corporate tax;
- the tax on fees of company directors;
- the capital tax;
- the communal trade tax.
Our company formation firm in Luxembourg
can give you detailed information about each of these taxes and the general taxation system in Luxembourg
The taxes to which the treaty applies, in case of Switzerland, are: the federal, cantonal and communal taxes on income and capital. If you are a Luxembourg investor in Switzerland, our partner company formation agents in Switzerland
can help you with information about taxes.
Other provisions included in the agreement
The convention also applies for other similar or identical taxes imposed in place of or in addition to the existing taxes after the signature date of the treaty. The two states have the obligation to notify one another if any changes occur in their taxation laws.
The double tax agreement between Luxembourg and Switzerland sets a preferential withholding tax rate for dividends paid by a company of one contracting states to a company incorporated in the other contracting state. According to the treaty, the withholding tax rate for dividends is 15% or 5% in certain cases.
For the purpose of the treaty, a permanent establishment in one of the two states is a place of management, branch in Luxembourg
or Switzerland, office, factory, workshop.