US, Luxembourg Agree Interpretation Of Tax Treaty Rules

by Leroy Baker, Tax-News.com, Washington

13 November 2001

The Internal Revenue Service (IRS) has confirmed that the authorities of the United States and Luxembourg have entered into a mutual agreement concerning the interpretation of the transition rules of a convention for the avoidance of double taxation and the 'prevention of fiscal evasion with respect to taxes on income and capital' that was signed in Luxembourg in April 1996 and entered into force on December 2000.

The agreement covers issues such as taxes withheld at source, tax relief on income and property. The IRS states that it has laid out the transition rules in order to resolve potential ambiguities and to fulfill the need to provide certainty to taxpayers.

It adds: 'Taxpayers that did not exist prior to the date of entry into force of the 1996 Treaty, and taxpayers that were in existence but did not qualify for benefits under the 1962 Treaty, will not be entitled to claim the benefits of the 1962 Treaty.'

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