Luxembourg and the United Arab Emirates signed a double tax treaty
for the avoidance of double taxation of individuals and companies and the prevention of fiscal evasion. The treaty was followed by two protocols and the last of them was published in February 2015.
Luxembourg has more than 50 double tax treaties
with countries worldwide. Our company formation agents in Luxembourg
can provide you with a complete list of these treaties and explain how they influence your business, if you are a foreign investor from a country with which Luxembourg has bilateral agreements.
The provisions of the Luxembourg-UAE treaty
The double tax treaty between Luxembourg and the United Arab Emirates aims to encourage and enhance economic cooperation. The treaty concerns individuals who are residents of one or both countries, as well as companies which are incorporated in one of the states.
The types of taxes for which the convention applies, in case of Luxembourg, are the following:
- the income tax for individuals;
- the corporate tax;
- the wealth tax;
- the communal tax on commercial profits.
For the United Arab Emirates, the taxes covered by the treaty are the personal income tax and the corporate tax.
Our company registration agents in Luxembourg
can tell you more about the types of taxes covered by the double tax treaty as well as give you information about the taxation system in Luxembourg
Taxation according to the Luxembourg-UAE treaty
The United Arab Emirates does not have a withholding tax on dividends, royalties or interests. Luxembourg does not impose the withholding tax on interest or royalties and, according to the treaty, the 15% withholding tax on dividends does not apply in this country if:
- the parent company owns, at the time of the distribution of dividends, a direct shareholding of at least 10% of the share capital of the company that distributes the dividends during a 12 month period;
- the parent company is a resident in the UAE.
If the aforementioned conditions are not fulfilled, the double tax treaty
reduces the withholding tax on dividends paid by a Luxembourg company
to a UAE company by 5% or by 10%, if certain conditions are met. This taxation method favours branches in Luxembourg
belonging to UAE companies and vice versa.