Luxembourg and the United States of America have agreed upon and signed a double taxation treaty for taxes on income and property
. This convention entered into force in January 1964 and it is useful for the prevention of double taxation of individuals
doing business and earning income in the two countries as well as for the protection against fiscal evasion.
The convention sets forth the manner of taxation, taxes covered, it refers to multiple types of income and it also describes the rules for exchange of information and mutual collection. Our Luxembourg company registration agents
can help you understand the implications of this convention, if you are a US foreign investor in Luxembourg
The taxes covered by the agreement
The taxes covered by the double taxation treaty between the US and Luxembourg are as follows:
for Luxembourg: the income taxes
on individuals and companies, the taxes on the director’s fees, the communal tax on commercial profits, the wealth tax and the communal tax on invested capital and land;
- for the United States: the federal income tax, including surtax.
The treaty also applies to similar taxes or taxes imposed in addition to or in place of the aforementioned taxes. The two countries must notify one another, if any changes occur in their taxation laws.
Definitions used in the treaty
For the purpose of the convention, an enterprise in one of the two states is a legal entity created in that state and organized under the laws of the state. The term “permanent establishment” can refer to a branch in Luxembourg
or in the U.S., a place of management, an office, factory or workshop. A resident or company in one of the contracting states is taxed as per the income produced in that state.
The treaty for the avoidance of double taxation
on income is an effort not only to eliminate the unnecessary payment of the same type of taxes, but also an agreement that encourages international trade and investment in Luxembourg
and establishes a series of procedures for the mutual assistance of the tax authorities of the two countries.
The convention is similar to those signed by Luxembourg with more than 70 other countries worldwide. For a comprehensive list of these double taxation agreements,
you can contact our company formation team in Luxembourg.