CONVENTION

Between the Grand Duchy of Luxembourg and the Principality of Monaco  for the avoidance of double taxation and the prevention of fiscal fraud with respect to taxes on income and on wealth

 

The Government of the Grand Duchy of Luxembourg and the Government of the Principality of Monaco,

Desiring to enter into a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on Capital,

have agreed as follows:

Article 1

Persons covered

 

This Convention shall apply to persons who are residents of one or both of the 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 its local authorities, irrespective of the system of system of collection.

2. 2. The following shall be considered to be taxes on income and on capital: taxes on total  income, on total capital, or on elements of income or capital, including taxes on gains from including taxes on gains from the alienation of movable or immovable property, taxes on the real estate, taxes on the total amount of salaries paid by companies as well as taxes on capital gains.

3. The existing taxes to which the Convention shall apply include

(a) in the case of the Grand Duchy of Luxembourg:

(i) the personal income tax;

(ii) corporate income tax;

(iii) wealth tax;

(iv) the municipal business tax;

(hereinafter referred to as “Luxembourg tax”);

(b) in respect of the Principality of Monaco

(i) the tax on profits;

(hereinafter referred to as “Monegasque tax”).

4. The Convention shall also apply to any identical or substantially similar taxes imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall inform each other of any significant changes which may be made in their tax laws.

 

Article 3

General Definitions

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

(a) the term “Luxembourg” means the Grand Duchy of Luxembourg and, when used in a geographical sense, means the territory of the Grand Duchy ofLuxembourg;

(b) “Monaco” means the Principality of Monaco and, when used in a geographical sense, means the territory of the Principality of Monaco;

(c) the term “person” includes natural persons, companies and any other group of persons;

(d) the term “company” means any legal person or entity that is treated as a legal person for tax purposes

(e) the term “business” means the carrying on of any activity or business

(f) 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

(g) the term “international traffic” means any transport by a ship, aircraft or road vehicle operated by an enterprise whose place of effective management is in a Contracting State, except where the ship, aircraft or road vehicle is operated by an enterprise whose place of effective management is in a Contracting State, the ship, aircraft or road vehicle is operated only between places in the other Contracting State;

(h) the term “competent authority” means:

(i) in relation to Luxembourg, the Minister of Finance or his authorized representative

(ii) in respect of Monaco, the Conseiller du Gouvernement pour les Finances et l’Economie or his authorized representative;

(i) the term “national” means:

(i) any natural person who is a national of a Contracting State;

(ii) any legal person, partnership or association organized under the laws in force in a Contracting State;

(j) the terms “activity”, in relation to an enterprise, and “business” include the practice of professional services or other activities of an independent character.

2. For the purposes of the application of the Convention at any time by a Contracting State, any term or expression not defined therein shall, unless the context otherwise requires, have the the meaning which it has at that time under the law of that State concerning the taxes to which in relation to the taxes to which the Convention applies, the meaning given to that term term or expression under the tax law of that State shall prevail over the meaning given to it under other branches of the law of that State.

Article 4

Resident

1. For the purposes of this Convention, the term “resident of a Contracting State” means:

(a) in relation to the Grand Duchy of Luxembourg, any person who, under the laws of Luxembourg, is subject to tax therein by reason of his domicile similar nature, and shall also apply to Luxembourg and all its local authorities. local authorities. However, this expression does not include persons who are subject to tax in Luxembourg only in respect of income from sources in Luxembourg or located in Luxembourg or on capital located there;

(b) with respect to the Principality of Monaco, any person who, under Monegasque law, has his domicile, residence or place of management therein and also applies to Monaco and all its local authorities.

2. Where, under the provisions of paragraph 1, an individual is a

(a) such person shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both of the State with which his personal and economic relations are closer (center of vital interests)

(b) if the State in which such person has his centre of vital interests cannot be determined, or if he has no permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitually resides;

(c) if such person is ordinarily present in both States or is not ordinarily present in either State, he shall be deemed to be a resident only of the State of which he is a national

(d) if such person is a national of both States or of neither of them, the competent authorities of the Contracting shall settle the question by mutual agreement.

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

 

Article 5

Permanent establishment

1. For the purposes of this Convention, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.part of its business.

2. The term “permanent establishment” includes in particular:

(a) a place of management,

(b) a branch office

(c) an office,

(d) a factory,

(e) a workshop, and

(f) a mine, oil or gas well, quarry or other place of natural resource natural resource extraction.

3. A construction or assembly site constitutes a permanent establishment only if if its duration exceeds 12 months.

4. Notwithstanding the foregoing provisions of this Article, a permanent establishment shall be deemed not to exist if permanent establishment” if:

(a) use is made of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

(b) goods belonging to the business are stored solely for the purpose of storage, display or delivery;

(c) goods owned by the business are stored solely for processing by another business;

(d) a fixed place of business is used solely for the purpose of purchasing goods or gathering information for the enterprise;

(e) a fixed place of business is used solely for the purpose of carrying on any other activity of a preparatory or auxiliary character for the enterprise

(f) a fixed place of business is used solely for the purpose of carrying on the combined activities referred to in subparagraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from such combination remains preparatory or auxiliary characters.

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an other than an agent with independent status to whom paragraph 6 applies – acts on behalf of an enterprise acts on behalf of an enterprise and has and habitually exercises in a Contracting State such powers the contracting State is the place where a person – other than an agent of an independent status to whom paragraph 6 applies – acts on behalf of an enterprise and has enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 referred to in paragraph 4 and which, if exercised through a fixed place of business through a fixed place of business, would not qualify that place of business as a permanent establishment under the provisions of that paragraph.

6. An enterprise shall not be deemed to have a permanent establishment in a State merely because it carries on business in that State through a broker, general commission agent or general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.

7. 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 in that other State (whether through a permanent establishment or otherwise) is not in itself sufficient to make any such company a permanent establishment of the other.

 

Article 6

Income from Real 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 term “immovable property” shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include accessories, livestock and equipment used in agriculture and forestry, rights to which the to which the provisions of private law concerning land ownership apply, usufruct of real estate and rights to variable or fixed payments for the operation or the exploitation or concession of the exploitation of mineral deposits, springs and  other natural resources; ships, boats and aircraft are not considered real property. ships and aircraft are not considered as real estate.

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

(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 shall be taxable only in that State unless  the State, unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business in such a manner 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, where an enterprise of a Contracting State carries on business in Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment shall be attributed in each Contracting State to that permanent establishment the profits which it might be expected to make if it were a separate enterprise carrying on separate enterprise engaged in the same or similar activities under the same or similar conditions the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

3. In determining the profits of a permanent establishment, the following shall be allowed as deductions expenses incurred for the purposes of that permanent establishment, including management and general administrative expenses so incurred, either in the State in which the permanent establishment is the State in which the permanent establishment is situated or elsewhere.

4. If it is customary in a Contracting State to determine the profits attributable to a permanent establishment on the basis of a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various between its various parts, nothing in paragraph 2 shall prevent that Contracting State from Contracting State from determining the taxable profits according to the customary apportionment; the method of apportionment adopted shall, however, be such that the result obtained is the principles contained in this Article.

5. No profit shall be attributed to a permanent establishment by reason of its having merely purchased goods for the enterprise.

6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined annually by the same method, unless there are good and sufficient grounds to proceed otherwise.

7. Where profits include items of income which are treated separately in other Articles of this other Articles of this Convention, the provisions of such Articles shall not be affected by the provisions of this affected by the provisions of this Article.

 

Article 8

Maritime, Inland and Air Navigation

1. Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of the enterprise is situated.

2. 2. Profits from the operation of inland navigation vessels shall be taxable only in the shall be taxable only in the Contracting State in which the place of effective management of the of the enterprise is situated.

3. If the place of effective management of a maritime or inland navigation enterprise is on board a vessel or in a ship, the profits derived from the operation of the vessel may be taxed in the Contracting State in which the enterprise is situated. ship or boat, that place of business shall be deemed to be situated in the Contracting State in which the the Contracting State in which the home port of that ship or boat is situated, or in the port, in the Contracting State of which the operator of the ship or vessel is a resident.

4. The provisions of paragraph 1 shall also apply to profits from the participation in a pool participation in a pool, a joint business or an international operating agency.

Article 9

Associated Enterprises

1. Where

(a) an enterprise of a Contracting State participates directly or indirectly in the 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 an enterprise of the other Contracting State of the other Contracting State, and that, in either case, the two enterprises are, in their commercial or financial relations, are bound by conditions agreed upon or imposed which differ from those which differ from those which would be made between independent enterprises, the profits which, but for these conditions, would have been made by one of the enterprises, but could not in fact have been made because of those conditions, may be included in the profits of that enterprise and taxed accordingly.

2. Where 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 Contracting State has been taxed in that other State, and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions conditions agreed upon between the two enterprises would have been those which would have been the other State shall make an appropriate adjustment to the amount of tax which would the amount of tax imposed therein on such profits. In determining such adjustment, due regard shall be given to 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 that is a resident of a Contracting State to a resident of the other 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 so assessed shall not exceed

(a) 5 percent of the gross amount of the dividends, if the beneficial owner is a corporation (other than a partnership) that directly owns at least 10 percent of the capital of the company paying the dividends

(b) 15 percent of the gross amount of the dividends, in all other cases. This paragraph shall not affect the taxation of the corporation in respect of the profits from which the dividends are paid. 

3. The term “dividends” as used in this section means income from stocks from shares, jouissance shares or jouissance warrants, mining shares, founders’ shares or other shares, founder’s shares or other profit shares, with the exception of debt claims, as well as income from other shares subject to the same tax treatment as income from shares under the law of the of which the distributing company is a resident, and in the case of Luxembourg the profit shares received Luxembourg, the profit shares received as a result of the investment in a commercial, industrial, mining or artisanal enterprise, by the financial backer remunerated in proportion to the profit as well as arrears and interest on bonds when a right is granted for these securities to the attribution, apart from the fixed interest of an additional interest varying according to the amount of the distributed profit.

4. The provisions of paragraphs 1 and 2 shall not apply where the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other of which the company paying the dividends is a resident, carries on business in the other Contracting business through a permanent establishment situated therein, and the holding in respect of which the the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

5. Where a company which is a resident of a Contracting State derives profits or income from the other income of the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except to the extent that such dividends are paid to a resident of that other State or to the extent that the holding in respect of which the dividends are paid dividends is effectively connected with a permanent establishment situated in that other State, nor impose any tax on the undistributed profits of the company in respect of the taxation of the undistributed profits of the company, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

 

Article 11

Interest

1. Interest arising in a Contracting State and beneficially owned by a resident of the other Contracting resident of the other Contracting State shall be taxable only in that other State.

2. The term “interest” as used in this Article means income from debt-claims of any kind, whether or not secured by mortgage or by any provision for participation in the of the debtor, including income from government securities and income from bonds or debentures and bonds, including premiums and prizes attached thereto. However, the term “interest” does not include the income referred to in Article 10. The penalties for late payment shall not be considered interest within the meaning of thiswithin the meaning of this article.

3. The provisions of paragraph 1 shall not apply where the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State interest arises, carries on business in the other Contracting State through a permanent establishment situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with it. In such a case, the provisions of Article 7 shall apply.

4. Where, by reason of a special relationship between the debtor and the beneficial owner or where both beneficiary or between the debtor and the beneficiary and third parties, the amount of interest interest, taking into account the claim for which it is paid, exceeds that which would have been the debtor and the beneficial owner would have agreed in the absence of such relationship, the provisions of this article shall apply only to the latter amount In such a case, the excess part of the payments shall remain taxable according to the laws of each Contracting State and having regard to the other provisions of this Convention.

 

Article 12

Royalties

1. Royalties arising in a Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable resident of the other Contracting State shall be taxable only in that other State.

2. The term “royalties” as used in this Article means remuneration of any kind paid for the use of, or the right to use, any copyright in any literary, artistic or scientific work, including motion pictures, a patent, trademark, design or model, or any other intellectual property right. design, plan, formula or secret process and for the purposes of the use of the same.  information relating to experience gained in the industrial, commercial or scientific field, commercial or scientific experience.

3. The provisions of paragraph 1 shall not apply where the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State from which the royalties arise carries on business in the other Contracting State through a permanent establishment situated therein, and the right or property in respect of which the royalties are paid is effectively connected is effectively connected with it. In such a case, the provisions of Article 7 shall apply.

4. Where, by reason of a special relationship between the payer and the beneficial owner or where both beneficiary or between both of them and third parties, the amount of the royalties, taking into the performance for which they are paid, exceeds the amount that would have been agreed between the debtor and the beneficial owner would have agreed in the absence of such relationship, the provisions of this Article shall apply only to the latter amount. In such a case, the excess part of the payments shall remain taxable according to the laws of each of each Contracting State and having regard to the other provisions of this Convention.

 

Article 13

Capital Gains

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

2. Gains from the alienation of movable property forming part of the business property of a permanent establishment that an enterprise of a Contracting State has in the other Contracting State, including Contracting State, including such gains from the alienation of that permanent establishment (alone or with the whole enterprise) may be taxed in that other State.

3. Gains from the alienation of ships or aircraft operated in international traffic or aircraft operated in international traffic, inland navigation vessels or movable property to the operation of such ships, aircraft or vessels shall be taxable only in the Contracting State in the Contracting State in which the place of effective management of the enterprise is situated.

4. Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3 shall not be taxed in the Contracting State in which paragraphs 1, 2 and 3 shall be taxable only in the Contracting State of which the transferor is a resident.

 

Article 14

Income from Employment

1. Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other similar remuneration derived by a resident of a Contracting State from employment shall be taxed in the Contracting State of the transferor. similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State If the employment is so exercised, such remuneration received in respect thereof may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if

(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the calendar 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

(c) the remuneration is not borne by a permanent establishment which the employer is in another State.

3. Notwithstanding the preceding provisions of this Article, remuneration received in respect of in respect of an employment exercised aboard a ship, aircraft or road vehicle operated in international traffic, or vehicle operated in international traffic, or on board a vessel used for inland navigation, may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.

 

Article 15

Directors’ Fees

Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the resident of a Contracting State 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 may be taxed in that otherState.

 

Article 16

Artists and Athletes

1. Notwithstanding the provisions of Articles 7 and 14, income derived by a resident of a Contracting State from his personal activities as an entertainer, such as a theatre, motion picture as an entertainer, such as a theater, motion picture, radio or television artiste, or a musician, or as an athlete, may be taxed in that other State.

2. Where income from activities which an entertainer or athlete performs personally and in that capacity is attributed not to the entertainer or athlete himself but to another person, such income may, notwithstanding the provisions of Articles 7 and 14, be taxed in that other State. the provisions of Articles 7 and 14, in the Contracting State in which the activities of the artist or the activities of the artist or athlete are carried on.

 

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 past employment shall be employment shall be taxable only in that State.

2. Notwithstanding the provisions of paragraph 1, pensions and other amounts paid under the social security laws of a Contracting State shall be taxable only in that State. 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 paid to a resident of the other Contracting State shall not be taxable in the other Contracting State if such payments are derived from contributions, allowances or insurance premiums contributions, allowances or insurance premiums paid to a supplementary pension plan by or on behalf of the beneficiary, or contributions made by the employer to a domestic plan, and if contributions, allowances, insurance premiums or endowments have been effectively tax in the first-mentioned Contracting State.

 

Article 18

Public Offices

1. (a) Salaries, wages and other similar remuneration paid by a Contracting State or one of its State or a local authority thereof to an individual in respect of services rendered to that services rendered to that State or local authority shall be taxable only in that State.

(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are performed in that State and the individual is a resident of that State who:

(i) is a national of that State, or

(ii) did not become a resident of that State solely for the purpose of rendering the services.

2. (a) Notwithstanding the provisions of paragraph 1, pensions and other similar remuneration paid by a Contracting State or a local authority thereof either directly or out of funds constituted by them, to an individual in respect of individual in respect of services rendered to that State or local authority shall be taxable only

(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 nationality.

3. The provisions of Articles 14, 15, 16 and 17 shall apply to salaries, wages, pensions, and other similar remuneration paid to an individual who is a resident of the other Contracting State, pensions, and other similar remuneration paid in respect of services rendered in connection with a business carried on by a Contracting State or a local authority thereof.

 

Article 19

Students

Amounts paid to a student or trainee who is, or immediately before visiting a Contracting State was, a resident of the other Contracting State and who is State, a resident of the other Contracting State and who is present in the first-mentioned State solely for the first-mentioned State solely for the purpose of furthering his education or training, shall be paid to him for his maintenance, education or training, shall not be taxable in that State, provided that they are derived from sources outside that State.

 

Article 20

Other Income

1. Items of income of a resident of a Contracting State, wherever arising not dealt with in the foregoing Articles of this Convention shall be taxable only in that State. taxable only in that State.

2. The provisions of paragraph 1 shall not apply to income other than income from income from immovable property as defined in paragraph 2 of Article 6, where the Article 6, where the recipient of such income, being a resident of a Contracting State carries on business in the other Contracting State through a permanent establishment situated

permanent establishment situated therein, and the right or property in respect of which the income is paid is effectively connected is effectively connected with it. In such a case, the provisions of Article 7 shall apply.

 

Article 21

Assets

1. Capital represented by immovable property referred to in Article 6 owned by a resident of a Contracting State and situated in the other Contracting State shall be treated as capital. resident of a Contracting State and situated in the other Contracting State may be taxed in that other taxable in that other State.

2. Capital represented by movable property forming part of the business property 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. Capital constituted by ships and aircraft operated in international traffic, vessels used for inland navigation, and movable property used in the operation of such vessels ships, aircraft or boats, shall be taxable only in the Contracting State in which the the Contracting State in which the place of effective management of the enterprise is situated.

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

 

Article 22

Elimination of Double Taxation

1. 1. Subject to the provisions of Luxembourg law concerning the elimination of double taxation which do not the elimination of double taxation which do not affect the general principle thereof, double double taxation shall be avoided in the following manner:

(a) Where a resident of Luxembourg derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in Monaco, Luxembourg shall exempt such income or capital from tax, subject to the provisions of subparagraphs (a) and (b). the provisions of subparagraphs (b), (c) and (d), but may, for the purpose of calculating the amount of tax on the resident’s remaining income or capital, apply the same rates of tax as if the income or capital had not been exempted.

1. b) Where a resident of Luxembourg receives items of income which, in accordance with the provisions of Articles 7, 10, 13(2), and 16, are taxable in Monaco, Luxembourg shall allow a deduction from the income tax of such resident in an amount deduction from the income tax of such residents in an amount equal to the tax paid in Monaco, but only, as regards articles 7 and 13(2), if the profits and capital gains are not derived from agricultural, industrial from agricultural, industrial, infrastructure and tourist activities in Monaco. This deduction may not, however, exceed the fraction of the tax, calculated before deduction, corresponding to these items of income received from Monaco.

1. c) When a company that is a resident of Luxembourg receives dividends from Monaco from Monaco, Luxembourg exempts such dividends from tax provided that the company which is a resident of Luxembourg holds directly since the beginning of its at least 10 percent of the capital of the company paying the dividends since the beginning of its and if this company is subject to an income tax in Monaco corresponding to the Luxembourg corresponding to the Luxembourg corporate income tax. The above-mentioned or shares of the Monaco company are, under the same conditions, exempt from the Luxembourg wealth tax. The exemption provided for in this subparagraph also applies even if the Monaco company is exempt from tax or taxed at a reduced rate in Monaco and if these dividends are derived from profits in connection with agricultural, industrial, infrastructure or tourist activities in Monaco.

(d) The provisions of subparagraph (a) shall not apply to income received or to capital owned by a resident of Luxembourg where Monaco applies the provisions of this Convention to exempt such income or capital from tax. provisions of this Convention to exempt such income or capital from tax, capital or apply the provisions of paragraph 2 of Article 10 to such income.

2. Subject to the provisions of the laws of Monaco regarding the elimination of double taxation of double taxation which do not affect the general principle thereof, double taxation shall be taxation shall be eliminated in the following manner:

1. a) Where a resident of the Principality of Monaco receives income or possesses capital which, in accordance with the provisions of this Convention, may be taxed in Luxembourg, the Principality of Monaco shall exempt such income or capital from tax, subject to the provisions of this Convention. income or capital, subject to the provisions of subparagraphs (b) and (c).

1. b) Where a resident of the Principality of Monaco receives items of income which, in accordance with the provisions of Article 10, are taxable in Luxembourg, the Principality of Principality of Monaco shall allow a deduction from the tax on the profits of such resident of an amount equal to the tax paid on such income. For the calculation of the tax due in the Principality of Monaco, the amount of the tax is first deducted from the gross income; this deduction may not, however, exceed However, this deduction cannot exceed the fraction of the tax, calculated before deduction, This deduction may not, however, exceed the fraction of the tax, calculated before deduction, corresponding to these items of income received from Luxembourg.

(c) The provisions of subparagraph (a) shall not apply to income received or to capital owned by a resident of the Principality of Monaco, where Luxembourg applies the provisions of this Convention. Luxembourg applies the provisions of this Convention to exempt such income or capital from such income or capital or applies the provisions of paragraph 2 of Article 10 to such income

 

Article 23

Non-discrimination

1. Nationals of a Contracting State shall not be subjected in the other Contracting State to to any taxation or any requirement connected therewith which is other or more burdensome than those to which nationals of that other State in the same circumstances, in particular with regard to in the same situation, in particular with regard to residence. This provision shall provision shall also apply, notwithstanding the provisions of Article 1, to persons who are not who are not residents of one or both of the Contracting States.

2. The taxation of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favorably assessed in that other State than the less favorable than the taxation of enterprises of that other State carrying on the same activity. This provision shall not be construed to require a Contracting State to grant to residents of Contracting State to grant to residents of the other Contracting State personal allowances deductions, allowances and reductions for personal circumstances or family responsibilities that it This provision shall not be construed to require a Contracting State to grant to residents of the other Contracting State the personal allowances, reliefs and reductions for status or dependency that it grants to its own residents.

3. Unless the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11 or paragraph 4 of paragraph 7 of Article 11 or paragraph 4 of Article 12 are applicable, interest royalties and other expenses paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, in determining the taxable profits of that enterprise, be deductible profits of that enterprise under the same conditions as if they had been paid to a resident of the paid to a resident of the first-mentioned State. Similarly, debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of that enterprise, under the same conditions as if they the same conditions as if they had been contracted with a resident of the first-mentioned State.

4. Enterprises of a Contracting State, the capital of which is wholly or partly directly or indirectly, owned or controlled by one or more residents of the other Contracting State shall not be subjected in the first-mentioned State to any taxation or any requirement or more burdensome than those to which other similar enterprises are or may be other similar enterprises of the first-mentioned State are or may be subject to.

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

 

Article 24

Mutual Agreement Procedure

1. Where a person considers that the actions of one or both of the Contracting States result or will result States result or will result in taxation not in accordance with the provisions of this in accordance with the provisions of this Convention, he may, irrespective of the remedies  provided for by the domestic law of those States, submit his case to the competent authority authority of the Contracting State of which it is a resident or, if its case comes under paragraph 1 of Article 23, to that of the Contracting State of which he is a nationality. The case must be submitted within three years from the first notification of the notification of the measure that results in taxation not in accordance with the provisions of of the Convention.

2. The competent authority shall endeavor, if the objection appears to it to be well-founded and if it is not to resolve the case satisfactorily, the competent authority shall endeavor to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to avoid taxation not in accordance with the Convention. The agreement shall be applied irrespective of The agreement shall be applied irrespective of the time limits provided by the domestic law of the Contracting States.

3. The competent authorities of the Contracting States shall endeavor by mutual agreement to resolve agreement, to resolve any difficulties or doubts arising as to the interpretation or application of the interpretation or application of the Convention. They may also consult together with a view to eliminating double taxation in cases not provided for in the Convention.

4. The competent authorities of the Contracting States may communicate directly with each other between them, including within a joint committee composed of those authorities or their their representatives, with a view to reaching agreement as provided in the preceding paragraphs.

 

Article 25

Exchange of Information

1. The competent authorities of the Contracting States shall exchange such information as is relevant to the application of the provisions of this Convention or to the administration Convention or for the administration or enforcement of the domestic laws concerning the taxes covered by the Convention imposed on behalf of the Contracting States or of the Contracting States or of their local authorities to the extent that the taxation thereunder is not  the Convention. The exchange of information is not restricted by Article 1.

2. Information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information be treated as secret in the same manner as information obtained under the domestic law of that the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of the taxes referred to in paragraph 1, in connection with the proceedings or prosecutions in relation to such taxes, the determination of appeals in relation to such taxes in relation to such taxes, or in the enforcement of any of the foregoing. Such persons or authorities shall use such information only for such purposes. They may disclose such information in public court hearings or in judgments.

3. In no case shall the provisions of paragraphs 1 and 2 be construed to require a Contracting State

(a) to carry out administrative measures at variance with its own laws and administrative practice or with those of the other Contracting State

(b) to supply information that is not obtainable under the laws or normal administrative practice of that or of the other Contracting State

(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy.

4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use the powers at its disposal to obtain the requested information, even if it does not need the information for its own tax purposes. The obligation in the preceding sentence is subject to the limitations of paragraph 3 unless such limitations are paragraph 3 unless such limitations would prevent a Contracting State from providing information solely State from communicating information solely because it has no interest in the information for its own tax purposes. of no domestic interest to it.

5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to allow a Contracting State to refuse to supply information requested solely because it is requested solely on the basis that the information is held by a bank, other financial institution, nominee or person acting in an agency or fiduciary capacity or because such trustee or because the information relates to the property rights of a person.

 

Article 26

Members of Diplomatic Missions and Consular Posts

The provisions of this Convention shall not affect the fiscal privileges of members of diplomatic missions enjoyed by members of diplomatic missions or consular posts under the general rules of international law or the provisions of special agreements.

 

Article 27

Entry into Force

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

2. The Convention shall apply

(a) with respect to taxes withheld at source, to income allocated on or after January 1 of the calendar year immediately following the year in which the Convention enters into force

(b) in respect of other taxes on income and on capital, to the taxes due for any taxation year beginning on or after the first day of January in the calendar year following the year in which the Convention enters into force.

3. The provisions of Article 25 of this Convention shall have effect with respect to taxable years beginning on or after the first day of January of each year. tax years beginning on the first day of January of the taxable year next following that in which this following that in which this Convention enters into force, or after such date.

 

Article 28

Denunciation

1. This Convention shall remain in force until denounced by a Contracting State. by a Contracting State. Each Contracting State may denounce the Convention by diplomatic channel with a minimum of six months notice before the end of each calendar year beginning after the expiration of five years from the date of its entry into force.

2. The Convention shall cease to have effect

(a) with respect to taxes withheld at source, to income allocated on or after the first day of January of the calendar year immediately following the year in which notice is given

(b) in respect of other income and capital taxes, to taxes payable for any taxation year beginning on or after January 1 of the calendar year immediately following the year in which notice is given.