Second protocol to the Luxembourg-UAE income tax treaty
Posted: 2015-05-20
A second protocol to the Income Tax Convention between Luxembourg and the United Arab Emirates (UAE) has been recently approved by the UAE cabinet. The protocol has been approved by Luxembourg and signed by its Council of Ministers and has been sent to the Parliament to receive a final approval. The protocol offers reciprocal advantages for investors in Luxembourg and the United Arab Emirates and it also deals with information exchange issues.
Important provisions
The Income Tax Convention signed between the two countries offers investment opportunities for business people in both countries. The most important provisions of the protocol tackle issues like capital gains, the elimination of double taxation and international information exchange.
The protocol has brought some changes to the paragraphs that refer to capital gains. The right to impose taxes on specific gains derived from bonds, the alienation of shares or other securities will only be granted to the other contractual state (the place of residence of the seller). All other gains, other than those that are not covered by previous provisions, will only be taxable in the state of residence of the seller.
The new provisions for double taxation state that if a Luxembourg resident receives income or owns capital that is subject to tax under the rules in the UAE, the income is exempt from tax in Luxembourg. Also, if a Luxembourg resident company received dividends from the UAE, they are exempt from tax in Luxembourg under special conditions.
Our lawyers in Luxembourg can give you detailed information about these changes and more information about the double tax treaties signed by Luxembourg.
Information exchange
The protocol also includes changes to the exchange of information so that the new measures may apply the international standards for this matter. The specific requirements that need to be indicated by one party at the time a request is made are redefined in the protocol.
If you are a Luxembourg investor who wants to open a company in the UAE, our partner lawyers in Dubai can help you with the necessary company incorporation procedures.