CONVENTION

between the Government of the Grand Duchy of Luxembourg and the Government of the Republic of Moldova for the avoidance of double taxation and the prevention of fiscal fraud with regard to taxes

on income and on capital

 

The Government of the Grand Duchy of Luxembourg and the Government of the Republic of Moldova, desirous of concluding a Convention for the avoidance of double taxation and the prevention of fiscal fraud with regard to taxes on income and on capital, have agreed to what follows:

Article 1 

Personal scope

This Convention applies to persons who are residents of a Contracting State or of both Contracting States.

 

Article 2

Taxes covered

1. This Convention shall apply to taxes on income and on capital imposed on behalf of a Contracting State or of its territorial administrative units or of its local authorities, regardless of the system of levy.

2. Taxes on income and on capital shall be regarded as taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, taxes on the aggregate amount of wages paid by companies, as well as taxes on capital gains.

3. The current taxes to which the Convention applies are in particular:

To)	in Moldova: (i) income tax (impozitul pe venit), and (ii) property tax (impozitul pe bunurile imobiliare);
b)	in Luxembourg: (i) personal income tax; (ii) corporate income tax; (iii) wealth tax; and (iv) municipal business tax.

4. The Convention shall also apply to taxes of an identical or similar nature which are established after the date of signature of the Convention and which are in addition to the existing taxes or which replace them. The competent authorities of the Contracting States shall notify each other of any significant changes made to their respective tax laws.

 

Article 3

General definitions

1. For the purposes of this Convention, unless the context requires a different interpretation:

a)	the expressions “a Contracting State” and “the other Contracting State” mean, as the context requires, the Grand Duchy of Luxembourg or the Republic of Moldova;
b)	the term “Moldova” designates the Republic of Moldova, and, used in a geographical sense, it designates the territory within the borders of Moldova, composed of the land, the subsoil, the water and the airspace above. above those waters and land, over which the Republic of Moldova exercises its absolute and exclusive sovereignty and judicial authority, in accordance with its domestic legislation and international law;
c)	the term “Luxembourg” designates the Grand Duchy of Luxembourg, and, used in a geographical sense, it designates the territory of the Grand Duchy of Luxembourg;
d)	the term “person” includes an individual, a company and any other body of persons;
e)	the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;
f)	the term “business” applies to the exercise of any activity or business;
g)	the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
h)	the expression “international traffic” means any transport carried out by a ship or an aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated only between points situated in the other State. contractor;
i)	the expression “competent authority” means:   (i) in Moldova, the Minister of Finance or his authorized representative, (ii) in Luxembourg, the Minister of Finance or his authorized representative;
j)	the term “national” means: (i) any natural person who has the nationality of a Contracting State, (ii) any legal person, partnership or association constituted in accordance with the legislation in force in a Contracting State;
k)	the terms “activity” in relation to an enterprise, and “business” include the exercise of liberal professions or other activities of an independent character.

2. For the application of the Convention at a given time by a Contracting State, any term or expression which is not defined therein has, unless the context requires a different interpretation, the meaning assigned to it at that time. the law of that State relating to the taxes to which the Convention applies, the meaning attributed to this term or expression by the fiscal law of that State prevailing over the meaning attributed to it by other branches of the law of that State.

 

 

Article 4

Resident

1. For the purposes of this Convention, the expression “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax in that State by reason of his domicile, of its residence, its place of registration, its place of management or any other criterion of a similar nature, and also applies to that State as well as to all its territorial administrative units or its local communities. However, this expression does not include persons who are subject to tax in that State only on income from sources situated in that State or on capital situated there.

2. Where, in accordance with the provisions of paragraph 1, a natural person is a resident of both Contracting States, his situation shall be settled as follows:

a)	this person is considered to be a resident only of the State in which he has a permanent home; if he has a permanent home in both states, he is considered a resident only of the state with which his personal and economic ties are closest (center of vital interests);
b)	if the State in which that person has the center of his vital interests cannot be determined, or if he does not have a permanent home in any of the States, he shall be regarded as a resident only of the State where she stays in the usual way;
c)	if this person is habitually resident in the two States or if he does not habitually reside in either of them, he shall be considered as a resident only of the State of which he is a national;
d)	if this person possesses the nationality of both States or if he does not possess the nationality of either of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, it shall be deemed to be a resident only of the State in which its place of effective management is situated.

 

Article 5

Permanent establishment

1. For the purposes of this Convention, the expression “permanent establishment” means a fixed place of business through which an enterprise carries out all or part of its activity.

2. The term “permanent establishment” includes especially:

a)	an executive seat,
b)	branch,
c))	a desk,
d)	factory,
e)	a workshop and
f)	a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

3. The term “permanent establishment” also includes:

a)	a construction or assembly site or surveillance activities carried out therein, but only when this site or these activities last more than nine months within any period of twelve months;
b)	the provision of services, including consultancy services, by a company acting through employees or other personnel engaged by the company for this purpose, but only when activities of this nature are continued (for the same project or related project) in the territory of a Contracting State for a period or periods totaling more than three months within any twelve month period.

4. Notwithstanding the preceding provisions of this article, it is considered that there is no “permanent establishment” if:

a)	facilities are used for the storage, display or delivery of goods belonging to the company;
b)	goods belonging to the company are stored for the sole purpose of storage, display or delivery;
c)	goods belonging to the company are stored for the sole purpose of processing by another company;
d)	a fixed place of business is used for the sole purpose of purchasing goods or gathering information, for the business;
e)	the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;
f)	a fixed place of business is used solely for the purposes of the cumulative exercise of the activities mentioned in subparagraphs a) to e), provided that the overall activity of the fixed place of business resulting from this combination keeps a preparatory or auxiliary character.

5. Notwithstanding the provisions of paragraphs 1 and 2, when a person – other than an agent enjoying an independent status to which the provisions of paragraph 6 apply – acts on behalf of an enterprise and has in a State contracting powers that it usually exercises there, enabling it to conclude contracts on behalf of the enterprise, this enterprise is considered to have a permanent establishment in that State for all the activities that this person carries out for the enterprise, unless that the activities of this person are not limited to those mentioned in paragraph 4 and which, if they were carried on through a fixed place of business, would not allow this place to be considered as a permanent establishment according to the provisions of this paragraph.

6. An enterprise shall not be considered as having a permanent establishment in a Contracting State by the sole fact that it carries on its activity there through a broker, a commissioner general or any other agent enjoying an independent status, provided that these persons act within the ordinary framework of their activity.

7. Notwithstanding the foregoing provisions of this article, an insurance company of a Contracting State is considered, except in matters of reinsurance, as having a permanent establishment in the other Contracting State, if it collects premiums in the territory of that other State or insures risks incurred therein, through a person other than an agent enjoying an independent status to whom the provisions of paragraph 6 apply.

8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State or which carries on business there (whether through (a permanent establishment or not) is not in itself sufficient to make any one of these companies a permanent establishment of the other.

 

Article 6

Income from immovable property

1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State

2. The expression “immovable property” has the meaning assigned to it by the law of the Contracting State in which the property in question is situated. The expression includes in all cases the accessories, the dead or alive livestock of agricultural and forestry operations, the rights to which the provisions of private law concerning land ownership, the usufruct of immovable property and the rights to variable payments apply. or fixed for the exploitation or concession of the exploitation of mineral deposits, sources and other natural resources; ships and aircraft are not considered real property.

3. The provisions of paragraph 1 shall apply to income derived from the direct exploitation, rental or leasing, as well as from any other form of exploitation of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to income from the immovable property of an enterprise.

 

Article 7 

Business Profits

1. The profits of an enterprise of a Contracting State may be taxed only in that State, unless the enterprise carries on its activity in the other Contracting State through a permanent establishment therein. located. If the enterprise carries on business in such a manner, the profits of the enterprise may be taxed in the other State, but only to the extent that they are attributable to that permanent establishment.

2. Subject to the provisions of paragraph 3, when an enterprise of a Contracting State carries on its activity in the other Contracting State through a permanent establishment situated there, it shall be charged, in each Contracting State. , to this permanent establishment the profits which it could have made if it had set up a separate enterprise carrying out identical or similar activities under identical or similar conditions and dealing in complete independence with the enterprise of which it constitutes a permanent establishment.

3. In order to determine the profits of a permanent establishment, the expenses incurred for the purposes pursued by this permanent establishment are allowed as deduction, including the management expenses and general administrative expenses thus incurred, either in the State where it is located at that permanent establishment or elsewhere. However, no deduction is allowed for the sums which would be, if applicable, paid (for other purposes than the reimbursement of costs incurred) by the permanent establishment at the head office of the company or at any one from its other offices, as royalties, fees or other similar payments, for the use of patents or other rights, or as commission for specific services rendered or for management activity or, except in the case of a banking enterprise , as interest on amounts loaned to the permanent establishment. Likewise, in calculating the profits of a permanent establishment, sums (other than the reimbursement of costs incurred) charged by the permanent establishment to the debit of the head office of the enterprise or of any of its other offices, as royalties, fees or other similar payments, for the use of patents or other rights, or as commission for specific services rendered or for management activity or, except as of a banking enterprise, as interest on sums loaned to the central office of the enterprise or to any of its other offices.

4. While it is customary in a Contracting State to determine the profits attributable to a permanent establishment on the basis of an allocation of the total profits of the enterprise among its various parts, nothing in paragraph 2 shall be prevent that Contracting State from determining the taxable profits according to the distribution in use; the distribution method adopted must, however, be such that the result obtained complies with the principles contained in this article.

5. No profit is attributed to a permanent establishment simply because it has purchased goods for the enterprise.

6. For the purposes of the preceding paragraphs of this article, the profits to be attributed to the permanent establishment shall be determined each year using the same method, unless there are valid and sufficient reasons for proceeding otherwise.

7. Where profits include items of income treated separately in other articles of this Convention, the provisions of those articles shall not be affected by the provisions of this article.

Article 8

Maritime and air navigation

1. The profits of an enterprise of a Contracting State arising from the operation in international traffic of ships or aircraft shall be taxable only in that State.

2. For the purposes of this article, profits from the operation, in international traffic, of ships or aircraft include:

To)	profits from the bareboat rental of ships or aircraft; and
b)	profits from the use, maintenance or rental of containers (including trailers and equipment relating to the transport of containers) used for the transport of goods;

when, as the case may be, such hire or use, maintenance or hire is incidental to the operation of ships or aircraft in international traffic.

3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency, but only to the fraction of the profits thus realized which accrue to each participant in proportion to the amount. its share in the joint venture.

Article 9

Associated enterprises

1. When

a)	an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or
b)	the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State.

and of an enterprise of the other Contracting State, and that, in either case, the two enterprises are, in their commercial or financial relations, bound by conditions agreed or imposed, which differ from those which would be agreed between independent companies, profits which, without these conditions, would have been made by one of the companies, but could not in fact be realized because of these conditions, can be included in the profits of that company and taxed accordingly.

2. When a Contracting State includes in the profits of an enterprise of that State – and taxes accordingly – profits on which an enterprise of the other Contracting State has been taxed in that other State, and the profits so included are profits which would have been realized by the enterprise of the first State if the conditions agreed between the two enterprises had been those which would have been agreed between independent enterprises, the other State makes an appropriate adjustment of the amount of tax which y was levied on these profits, when the other State considers the adjustment justified. In determining this adjustment, account shall be taken of the other provisions of this Convention and, if necessary, the competent authorities of the Contracting States shall consult each other.

 

Article 10

Dividends

1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax thus established may not exceed:

a)	5 per cent of the gross amount of the dividends, if the beneficial owner is a company (other than a partnership) which directly owns at least 20 per cent of the capital of the company paying the dividends;
b)	10 per cent of the gross amount of the dividends, in all other cases. The provisions of this paragraph do not affect the taxation of the company in respect of the profits which are used for the payment of dividends.

3. The term “dividends” used in this article designates income from shares or other profit shares with the exception of claims, as well as income from other shares subject to the same tax regime as income from shares. ‘actions by the law of the State of which the distributing company is a resident.

5. The provisions of paragraphs 1 and 2 shall not apply, where the beneficial owner of the dividends, resident in a Contracting State, exercises in the other Contracting State of which the company paying the dividends is a resident, an activity of the company through a permanent establishment located there, and that the dividend-generating participation actually attaches to it. In this case, the provisions of article 7 are applicable.
6. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not levy any tax on the dividends paid by that company, except to the extent that these dividends are paid to a resident of that other State or to the extent that the dividend-generating participation is effectively attached to a permanent establishment located in that other State, nor levy any tax, in respect of the taxation of retained earnings, on the undistributed profits of the company, even if the dividends paid or the undistributed profits consist wholly or in part of profits or income deriving from that other State.

Article 11

Interest

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such interest may also be taxed in the Contracting State from which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax thus established shall not. may exceed 5 percent of the gross amount of interest.

3. Notwithstanding the provisions of paragraph 2, interest referred to in paragraph 1 shall be taxable only in the Contracting State of which the person receiving the interest is a resident, if the beneficial owner of the interest is a resident of that State and:

a)	is this State, one of its territorial administrative units or one of its local authorities or the Central Bank;
b)	if the interest is paid by the State from which it comes, by one of its territorial administrative units or one of its local authorities or by one of its public establishments;
c)	if the interest is paid by virtue of a loan, claim or credit which is held, or made, granted, guaranteed or insured by that State, by one of its territorial administrative units or one of its local authorities or by one of its export finance agencies; Where
d)	a financial institution.

4. The term “interest” used in this article means income from debts of any kind, whether or not accompanied by mortgage guarantees or a profit-sharing clause of the debtor, and in particular income from public funds and debt obligations. ‘loans, including premiums and prizes attached to these securities. However, the term “interest” does not include the income referred to in article 10. Penalties for late payment are not considered as interest within the meaning of this article.

5. The provisions of paragraphs 1, 2 and 3 do not apply where the beneficial owner of the interest, resident in a Contracting State, carries on business in the other Contracting State from which the interest arises. through a permanent establishment located there, and that the interest-generating claim actually relates to it. In this case, the provisions of article 7 are applicable.

6. Interest is considered to have accrued in a Contracting State when the debtor is a resident of that State. However, when the debtor of the interest, whether or not he is a resident of a Contracting State, has a permanent establishment in a Contracting State, for which the debt giving rise to the payment of interest has been contracted and which bears the burden of these interests, they are considered as coming from the Contracting State where the permanent establishment is located.

7. When, by reason of special relations existing between the debtor and the beneficial owner of the interest or that both have with third parties, the amount of interest, taking into account the claim for which they have paid, exceeds that agreed upon by the debtor and the beneficial owner of the interest in the absence of such a relationship, the provisions of this article only apply to the latter amount. In this case, the excess part of the payments remains taxable according to the legislation of each Contracting State and taking into account the other provisions of this Convention.

Article 12

Royalties

1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, these royalties may also be taxed in the Contracting State from which they originate and according to the legislation of that State, but if the beneficial owner of these royalties is a resident of the other Contracting State, the tax thus established may not exceed 5 percent of the gross amount of the royalties.

3. The term “royalties” used in this article means remuneration of any kind paid for the use or the concession of the use of a copyright in a literary, artistic or scientific work, including cinematographic films, and films or tapes for radio and television broadcasting, of a patent, of computer software, of a trade mark, a design or a model, a plan, a ‘a secret formula or process, or for the use or concession of the use of industrial, commercial or scientific equipment and for information relating to experience acquired in the industrial, commercial or scientific field.

4. The provisions of paragraphs 1 and 2 shall not apply, where the beneficial owner of the royalties, resident of a Contracting State, exercises in the other Contracting State from which the royalties originate, a business activity by the intermediary of a permanent establishment located there, and that the right or the property generating the royalties is actually attached to it. In this case, the provisions of article 7 are applicable.

5. Royalties are considered to arise in a Contracting State when the debtor is a resident of that State. However, when the debtor of the royalties, whether or not he is a resident of a Contracting State, has a permanent establishment in a Contracting State, for which the obligation giving rise to the payment of the royalties has been contracted and which bears the burden of these royalties, they are considered as coming from the Contracting State where the permanent establishment is located.

6. When, by reason of special relations existing between the debtor and the beneficial owner of the royalties or that both have with third parties, the amount of the royalties, taking into account the use, the right or the the information for which they are paid exceeds that which would have been agreed upon by the debtor and the beneficial owner of the royalties in the absence of such relations, the provisions of this article only apply to the latter amount. In this case, the excess part of the payments remains taxable according to the legislation of each Contracting State and taking into account the other provisions of this Convention.

 

Article 13

Capital gains

1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.

2. Gains from the alienation of movable property which form part of the assets of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the disposal of this permanent establishment (alone or with the whole company) are taxable in that other state.

3. Gains which an enterprise of a Contracting State derives from the alienation of ships or aircraft operated in international traffic, or movable property used in the operation of such ships or aircraft, shall be taxable only in that case. State.

4. Gains derived by a resident of a Contracting State from the alienation of shares which derive directly or indirectly more than 50 per cent of their value from immovable property situated in the other Contracting State may be taxed in that other State. .

5. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4, may be taxed only in the Contracting State of which the transferor is a resident.

 

Article 14

Employment income

1. Subject to the provisions of Articles 15, 17 and 18, wages, salaries and other similar remuneration which a resident of a Contracting State receives in respect of paid employment shall be taxable only in that State, unless the employment is not exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remuneration which a resident of a Contracting State receives in respect of paid employment exercised in the other Contracting State shall be taxable only in the former State if:

a)	the beneficiary stays in the other State for a period or periods not exceeding in the aggregate 183 days during any twelve month period beginning or ending in the fiscal year concerned, and
b)	the remuneration is paid by or on behalf of an employer who is not a resident of the other State, and
vs)	the cost of remuneration is not borne by a permanent establishment which the employer has in the other State .

3. Notwithstanding the foregoing provisions of this article, remuneration received in respect of salaried employment exercised on board a ship or an aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State. 

 

Article 15

Directors’ fees

Directors’ fees, attendance fees and other similar remuneration that a resident of a Contracting State receives in his capacity as a member of the board of directors or supervisory board of a company which is a resident of the other Contracting State, are taxable. in that other state.

Article 16

Artists and sportsmen

2. Notwithstanding the provisions of Articles 7 and 14, income which a resident of a Contracting State derives from his personal activities carried on in the other Contracting State as a performing artist, such as a theater artist, of cinema, radio or television, or as a musician, or as an athlete, are taxable in that other State.
3. When the income from activities that an entertainer or an athlete exercises personally and in this capacity, are attributed not to the artist or to the athlete himself, but to another person, whether he is or not a resident of a Contracting State, such income may be taxed, notwithstanding the provisions of Articles 7 and 14, in the Contracting State where the activities of the artist or sportsman are carried out.

Article 17

Pensions

1. Subject to the provisions of paragraph 2 of article 18, pensions and other similar remuneration paid to a resident of a Contracting State in respect of previous employment shall be taxable only in that State.

2. Notwithstanding the provisions of paragraph 1, pensions and other sums paid under the social security legislation of a Contracting State shall be taxable only in that State.

3. Notwithstanding the provisions of paragraph 1, pensions and other similar remuneration (including lump sum payments) arising in a Contracting State and paid to a resident of the other Contracting State, shall not be taxable in the other Contracting State. if these payments result from contributions, allowances or insurance premiums paid to a supplementary pension scheme by the beneficiary or on his behalf, or from contributions made by the employer to an internal scheme, and if these contributions, allowances, premiums of The insurance or endowments were actually subject to tax in the first Contracting State.

 

Article 18

Public functions

1.

a)	Salaries, wages and other similar remuneration, other than pensions, paid by a Contracting State or one of its territorial administrative units or one of its local authorities to a natural person, in respect of services rendered to that State or to that State. territorial administrative unit or to this local authority, are taxable only in that State.
b)	However, such salaries, wages and other similar remuneration may be taxed only in the other Contracting State, if the services are rendered in that State and if the individual is a resident of that State who: (i) has the nationality of that State, or (ii) did not become a resident of that State for the sole purpose of rendering the services.

2.

a)

Notwithstanding the provisions of paragraph 1, pensions and other similar remuneration paid by a Contracting State or one of its territorial administrative units or one of its local authorities, either directly or by deduction from funds which they have established , to a natural person, in respect of services rendered to that State or to this territorial administrative unit or to this local collectivity, are taxable only in that State.

b)

However, such pensions and other similar remuneration shall be taxable only in the other Contracting State, if the individual is a resident of that State and holds its nationality.

3. The provisions of Articles 14, 15, 16 and 17 shall apply to wages, salaries, pensions and other similar remuneration paid for services rendered in the course of a business activity carried on by a Contracting State or one of its territorial administrative units or one of its local communities.

 

Article 19

Students

The sums that a student or trainee who is, or who was immediately before going to a Contracting State, a resident of the other Contracting State and who is staying in the first State solely for the purpose of continuing his studies there or his training, received to cover his costs of maintenance, studies or training, is not taxable in the first State, provided that they come from sources located outside that State.

Article 20

Other income

1. Items of income of a resident of a Contracting State, wherever they arise, which are not dealt with in the preceding articles of this Convention, shall be taxable only in that State.

2. The provisions of paragraph 1 do not apply to income other than income from immovable property as defined in paragraph 2 of article 6, when the recipient of such income is resident in a Contracting State , carries on a business activity in the other Contracting State through a permanent establishment located there, and the right or the income-generating property actually attaches thereto. In this case, the provisions of article 7 are applicable.

3. Notwithstanding the provisions of paragraphs 1 and 2, items of income which an individual who is a resident of a Contracting State draws from games of chance and lotteries and derives from the other Contracting State may be taxed in this other state.

 

Article 21

Fortune

1. Wealth consisting of immovable property referred to in article 6, owned by a resident of a Contracting State and which is situated in the other Contracting State, may be taxed in that other State.

2. Wealth consisting of movable property which forms part of the assets of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State may be taxed in that other State.

3. The fortune constituted by ships and aircraft operated in international traffic by an enterprise of a Contracting State as well as by movable property used for the operation of these ships and aircraft, is taxable only in that State.

4. All other elements of the capital of a resident of a Contracting State may be taxed only in that State.

 

Article 22

Elimination of double taxation

1. In Moldova, double taxation is avoided as follows:

a)

When a resident of Moldova receives income or owns capital which, in accordance with the provisions of this Convention, is taxable in Luxembourg, Moldova grants: (i) from the tax it collects on the income of this resident, a deduction of an amount equal to the income tax paid in Luxembourg; (ii) from the tax it collects on the wealth of this resident, a deduction of an amount equal to the wealth tax paid in Luxembourg. In either case, however, this deduction may not exceed the fraction of the income tax or the wealth tax, calculated before deduction, corresponding as the case may be to the income or to the taxable fortune in Luxembourg.

b)

Where, in accordance with any provision of the Convention, the income which a resident of Moldova receives or the fortune he possesses is exempt from tax in Moldova, Moldova may nevertheless, in order to calculate the amount of tax on the remainder of the income or fortune of this resident, take into account the exempt income or fortune.

2. Subject to the provisions of Luxembourg law concerning the elimination of double taxation which do not affect its general principle, double taxation is avoided as follows:

a)	When a resident of Luxembourg receives income or has assets which, in accordance with the provisions of this Convention, are taxable in Moldova, Luxembourg shall exempt such income or assets from tax, subject to the provisions of sub-paragraphs b) and c), but may, in order to calculate the amount of tax on the remainder of the resident’s income or capital, apply the same tax rates as if the income or capital had not been exempted.
b)	When a resident of Luxembourg receives income which, in accordance with the provisions of Articles 10, 11, 12 and 16, is taxable in Moldova, Luxembourg grants on personal income tax or on income tax communities of that resident, a deduction of an amount equal to the tax paid in Moldova. This deduction may not, however, exceed the fraction of the tax, calculated before deduction, corresponding to these items of income received from Moldova.
vs)	The provisions of sub-paragraph a) do not apply to income received or to assets owned by a resident of Luxembourg, where Moldova applies the provisions of this Convention to exempt such income or assets from tax or applies the provisions of paragraph 2 of Articles 10, 11 or 12 to this income.

 

Article 23

Non-discrimination

1. Nationals of a Contracting State shall not be subject in the other Contracting State to any taxation or obligation relating thereto which is other or more onerous than those to which the nationals of that other State who find themselves in the same situation, in particular with regard to residence.

2. The taxation of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be established in that other State in a less favorable manner than the taxation of enterprises of that other State. other States carrying out the same activity. This provision may not be interpreted as obliging a Contracting State to grant to residents of the other Contracting State the personal deductions, allowances and tax reductions according to the situation or the family responsibilities which it grants to its own residents. .

3. Unless the provisions of paragraph 1 of article 9, paragraph 7 of article 11 or paragraph 6 of article 12 apply, interest, royalties and other expenses paid by an enterprise of a Contracting State to a resident of the other Contracting State, are deductible, for the determination of the taxable profits of that enterprise, under the same conditions as if they had been paid to a resident of the first State. Likewise, the debts of an enterprise of a Contracting State towards a resident of the other Contracting State are deductible, for the determination of the taxable fortune of this enterprise, under the same conditions as if they had been contracted towards a resident. of the first state.

4. Enterprises of a Contracting State, the capital of which is wholly or in part, directly or indirectly, owned or controlled by one or more residents of the other Contracting State, shall not be subject in the first State to any taxation or obligation relating thereto, which is different or heavier than those to which other similar enterprises of the first State are or may be subject.

5. The provisions of this article shall apply to the taxes covered by this Convention.

 

Article 24

Mutual agreement procedure

1. Where a person considers that the measures taken by a Contracting State or by both Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, independently of the remedies provided for by the internal law of those Contracting States States, submit her case to the competent authority of the Contracting State of which she is a resident or, if her case falls under paragraph 1 of Article 23, to that of the Contracting State of which she is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Convention.
2. The competent authority shall endeavor, if the complaint appears to it to be justified and if it is not itself able to find a satisfactory solution, to resolve the case by amicable agreement with the authority. jurisdiction of the other Contracting State, for the avoidance of taxation not in accordance with the provisions of this Convention. The agreement is applied regardless of the time limits provided for by the internal law of the Contracting States.

3. The competent authorities of the Contracting States shall endeavor, by mutual agreement, to resolve any difficulties or to dispel any doubts which may arise in the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention.

4. The competent authorities of the Contracting States may communicate with each other directly, including within a joint commission composed of these authorities or their representatives, with a view to reaching an agreement as indicated in the preceding paragraphs.

Article 25

Exchange of information

1. The competent authorities of the Contracting States shall exchange the information necessary to apply the provisions of the Convention or those of the domestic legislation of the Contracting States relating to the taxes covered by the Convention to the extent that the taxation it provides for is not contrary to the Convention. The exchange of information is not restricted by Article 1. Information received by a Contracting State shall be kept secret in the same way as information obtained under the domestic law of that State and shall only be communicated to persons or authorities (including courts and administrative bodies) concerned by the. establishment or collection of the taxes covered by the Convention, by the procedures or prosecutions relating to these taxes, or by decisions on appeals relating to these taxes. These persons or authorities only use this information for these purposes. They may reveal this information in public court hearings or in judgments.

2. The provisions of paragraph 1 may in no case be interpreted as imposing on a Contracting State the obligation:

a)	to take administrative measures at variance with its laws and administrative practice or those of the other Contracting State;
b)	to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
b)	to provide information which would reveal a trade secret, industrial, professional or a trade process or information the communication of which would be contrary to public order.

Article 26

Members of diplomatic missions and consular posts

The provisions of this Convention are without prejudice to the fiscal privileges enjoyed by members of diplomatic missions or consular posts by virtue either of the general rules of international law or of the provisions of special agreements.

 

Article 27

Entry into force

1. Each of the Contracting States shall notify the other in writing through the diplomatic channel of the completion of the procedures required by its law for the entry into force of this Convention. The Convention will enter into force on the date of receipt of the last of these notifications.

2. The Convention will be applicable:

a)	in respect of taxes withheld at source, to income derived on or after 1 st January in the calendar year immediately following the year in which the Convention enters into force;
b)	in respect of other taxes on income and taxes on capital, for taxes chargeable for any tax year beginning on or after 1 st January in the calendar year immediately following the year in which the Convention will come into force.

Article 28 

Denunciation

1. This Convention shall remain in force until it has been denounced by a Contracting State. Each Contracting State may denounce the Convention through the diplomatic channel with a written notice of denunciation made at least six months before the end of each calendar year beginning after the expiration of a period of five years from the date of entry into force. force of the Convention.

2. The Convention will cease to be applicable:

a)	in respect of taxes withheld at source, to income derived on or after 1 st January in the calendar year immediately following the year in which the notice is given;
b)	in respect of other taxes on income and taxes on capital, for taxes chargeable for any year of assessment beginning on or after 1st January in the calendar year immediately following the year in which the notice given.

IN WITNESS WHEREOF the undersigned, being duly authorized for this purpose, have signed this Convention.

DONE in Chisinau on July 11, 2007 in two originals in the French, Moldavian and English languages, all texts being equally authentic.

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