On 7 June 2022, the UK and Luxembourg signed a new double tax treaty and protocol that, among other changes, removes withholding tax on most dividends and all royalties and extends source taxation of capital gains.
The document introduces exemptions from withholding tax on most dividends and all royalties.
Following the end of the benefits granted by the EU Parent/Subsidiary Directive and the Interest and Royalties Directive these amendments are very positive for corporate investors.
On the other end, among other changes, the new art.13 will grant the UK taxing rights on gains made by a Luxembourg resident person on the disposal of shares in companies that derive more than 50% of their value, directly or indirectly, from UK real estate.
The new treaty will enter into force after both countries have completed their necessary domestic legislative procedures and exchanged diplomatic notes.