Luxembourg Approves Multiple Tax Treaties

by Ulrika Lomas, Tax-News.com, Brussels

08 February 2011

During a recent meeting, Luxembourg’s governing council adopted the bill providing for the approval of bilateral tax agreements with Barbados and Panama, as well as for the approval of amendments to multiple existing bilateral tax treaties. The agreements and amendments provide for information exchange upon request.

The bill is designed to pursue the government’s policy of modifying a certain number of double tax agreements (DTAs), to ensure that they comply with the Organization for Economic Cooperation and Development’s (OECD) international standards on tax information exchange. In this context the bill approves modifications to the existing fiscal agreements in place with San Marino, Japan, Sweden, Portugal, and Hong Kong Special Administrative Region.

The bill also responds to the government’s commitment to extending its network of DTAs to increase the competitiveness of Luxembourg. As a result, the text approves the tax treaties with Barbados and Panama.

Members of the government also approved the bill supplementing the modified law of February 12, 1979 (la loi modifiée du 12 février 1979) concerning value-added tax (VAT).

The bill implements the decision taken by the governing council in July 2010 to establish in the Grand Duchy a free zone for storing valuable goods. The introduction of free zones is set within the context of measures necessary for the development of the country as a logistics site.

The bill introduces a particular system of suspending VAT in accordance with directive 2006/112/CE providing for exemptions relating to operations realized in, for example, customs depots and other such depots. The system grants exemption from VAT, excise and customs duties for goods stored, sold or serviced in a specific location.

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