The US and Luxembourg have negotiated a change to their tax treaty to prevent double non-taxation of income attributable to a permanent establishment in the US. Under the existing treaty, US source income paid to Luxembourg residents is treated, for purposes of Luxembourg tax law, as attributable to a permanent establishment in the US, and therefore exempt from tax in both Luxembourg and the US. Changes to be included in a protocol to the treaty will mean:
· the income that is treated as profits attributable to the permanent establishment is subject to a combined rate of tax in the two states that is less than the lower of (i) 15% or (ii) 60% of the rate of company tax of the contracting state that does not have the permanent establishment; or
· the permanent establishment is in a third state that does not have a comprehensive convention for the avoidance of double taxation in force with the contracting state from which the benefits of this convention are being claimed, unless the first-mentioned contracting state includes the income treated as profits attributable to the permanent establishment in its tax base.
The US and Luxembourg have negotiated a change to their tax treaty to prevent double non-taxation of income attributable to a permanent establishment in the US. Under the existing treaty, US source income paid to Luxembourg residents is treated, for purposes of Luxembourg tax law, as attributable to a permanent establishment in the US, and therefore exempt from tax in both Luxembourg and the US. Changes to be included in a protocol to the treaty will mean:
· the income that is treated as profits attributable to the permanent establishment is subject to a combined rate of tax in the two states that is less than the lower of (i) 15% or (ii) 60% of the rate of company tax of the contracting state that does not have the permanent establishment; or
· the permanent establishment is in a third state that does not have a comprehensive convention for the avoidance of double taxation in force with the contracting state from which the benefits of this convention are being claimed, unless the first-mentioned contracting state includes the income treated as profits attributable to the permanent establishment in its tax base.
.jpg?sfvrsn=335a554c_0 "300 x 250 (MPU)")