Double Tax Treaty between Luxembourg & USA

CONVENTION

Between the Government of the Grand Duchy of Luxembourg

and the Government of the United States of America 

for the Avoidance of double taxation and to Prevent Fiscal Evasion with Respect to

Taxes on Income and on Capital

 

The Government of the Grand Duchy of Luxembourg and the Government of the United States of America, desiring to conclude 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

General scope of application

  1. This Convention shall apply only to persons who are of both Contracting States, unless it provides otherwise. Residents of a Contracting State.

 

  1. The Convention shall not limit in any way the benefits which are or may be granted

(a) by the laws of either Contracting State; or

(b) by any other agreement between the Contracting States

.

  1. Notwithstanding the provisions of the Convention other than paragraph 4 of this Article the United States may tax its residents (within the meaning of Article 4 (Resident)) and citizens  by reason of citizenship as if the Convention did not exist. For this purpose, the term ,,citizen” includes any former citizen whose renunciation of U.S. citizenship had as one of its tax evasion, but only for a period of ten years following such renunciation.

 

  1. The provisions of paragraph 3 shall not affect:

(a) benefits granted by the United States under the provisions of paragraph 2 of Article 9 (Associated Enterprises), subparagraph 1(b) of Article 19 (Pensions,

(b) benefits granted by the United States under the provisions of Articles 20 (Public Offices), 21 (Students, Trainees, Teachers and Researchers) and 29 (Diplomatic Agents and Consular Officers)

(a) Notwithstanding any other agreement to which the Contracting States are parties, a dispute as to whether a measure falls within the scope of this Convention shall be decided solely by the competent authorities of the Contracting States as determined by the competent authorities of the Contracting States. authorities of the Contracting States as defined in subparagraph (le) of Article 3 (General Definitions) of this Convention, and only the procedures set forth in this Convention shall apply to such Convention shall apply to such disputes.

(b) Unless the competent authorities determine that a taxation measure is not covered by this Convention, the non-discrimination obligations of this Convention shall apply with respect to that measure. apply with respect to that measure, except for national treatment or most-favored-nation obligations. national or most-favored-nation treatment obligations that apply to trade in goods under the General Agreement on Tariffs and Trade. No national or most-favoured-nation treatment obligations under any other agreement are not applicable with respect to this measure.

(c) For the purposes of this paragraph, “measure” means laws, regulations, decisions, orders in council regulations, decisions, administrative acts and any other form of measure.

 

Article 2

Taxes Covered

  1. The existing taxes to which this Convention shall apply are:

(a) in the United States:

 (i) the federal income taxes imposed under the Social Security Act 9 and Internal Revenue Code (but not including

(ii) federal excise taxes on insurance premiums paid to foreign insurers.

However, the Convention does not apply to excise taxes on premiums paid to foreign insurers in respect of reinsurance. insurers in respect of reinsurance. The Convention shall not apply to excise duties on insurance premiums paid to foreign insurers, other than in respect of reinsurance, only to the extent that

in respect of reinsurance, only to the extent that the risks covered by such premiums are not reinsured with a person who cannot be exempted from such duties under the provisions of a provisions of an income tax treaty that applies to such taxes;

(b) in Luxembourg:

(i) personal income tax, including the contribution to the fund for employment fund;

(ii) corporate income tax, including the contribution to the employment fund

(iii) the special tax on directors’ fees;

(iv) wealth tax; and

(v) municipal business tax.

 

  1. The Convention shall apply also to any identical or substantially similar taxes imposed after  the date of signature of the Convention and which are in addition to or in place of the existing taxes. replace them. The competent authorities of the Contracting States shall notify each other of any substantial changes in their respective taxation laws of their respective taxation laws, as well as official documents published concerning the application of the Convention, including explanatory notes, regulations, arrangements or judgments.

 

Article 3

General Definitions

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

(a) the term ,,person” includes natural persons, vacant estates partnerships, corporations and any other body of persons; trusts,,corporations

(b) the term “corporation” means any body corporate or any entity which is treated as a body corporate for tax purposes

(c) 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;

d) the term “international traffic” means any transport by a ship or aircraft, except where the ship or aircraft is operated solely between places in a Contracting State

e) the term ,, competent authority” means:

(i) in the case of the United States, the Secretary of the Treasury or the Secretary’s designee; and

(ii) in the case of Luxembourg: the Minister of Finance or his authorized representative;

 (f) “United States” means the United States of America, but does not include Puerto Rico, the Virgin Islands, Guam or any other territory or possession of the United States;

(g) the term ,,Luxembourg” means the Grand Duchy of Luxembourg;

(h) the term ,,national”, in relation to a Contracting State, means:

(i) any natural person who is a national or citizen of that Contracting State; and

(ii) any corporation, partnership or association organized under the laws in force in that Contracting State;

(i) the term “beneficial owner” means, in the case of a company that is treated as a partnership, or that is not otherwise subject to tax as a partnership under the laws of the other Contracting State the laws of the other Contracting State are subject to tax on the income of the company.

 

  1. For the purposes of the application of the Convention by a Contracting State, any term not defined therein shall have the meaning which it has under the law of that State concerning the taxes to which the Convention applies, unless the context requires a different interpretation, or the competent authorities agree, in accordance with the authorities agree, in accordance with the provisions of Article 27 (Mutual Agreement Procedure), on a common meaning.

 

Article 4

Resident

  1. For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, citizenship, place of management, registered office or any other criterion of a similar nature, provided that other criterion of a similar nature, provided, however, that,

(a) that term shall not include persons who are subject to tax in that State in respect only of income from sources in that State or capital situated therein

(b) in the case of income derived by partnerships, unincorporated estates or trusts, that term shall apply only to the extent that such income is subject to tax in that State as income of a resident, either at the level of such partnerships, unincorporated estates or trusts or at the level of such trusts or partnerships.

(c) an individual who is a citizen of the United States or an alien permanently present in  the United States within the meaning of this paragraph, but only if the individual’s principal place of abode, has a permanent home in the United States, or habitually resides in the

(d) the Government of a Contracting State or a political subdivision or a local authority thereof or any agency or instrumentality of that Government, political subdivision or authority shall be treated as a resident, within the meaning of this paragraph, of that Contracting State

(e) a person who, under the laws of a Contracting State, is a resident of that State and who is wholly or partly exempt from tax in that State by virtue of the fact that it organizes and operates exclusively either:

(i) for religious, charitable, educational, scientific OR other public purposes; or

(ii) to provide, pursuant to a pension plan, pensions or other benefits to employees that person shall be treated as a resident of that Contracting State for the purposes of this paragraph.

  1. Where by reason of the provisions of paragraph 1 an individual is a resident of both

(a) he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State in which he has a permanent home available to him shall be deemed to be a resident of the State with which the person’s personal and economic relations are closest (center of vital interests);

(b) if the State in which such person has his center of vital interests cannot be determined, or if he has no permanent home in either State, he shall be deemed to be a resident of the State in which he has an habitual abode;

(c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national; or

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

 

  1. Where, under the provisions of paragraph 1, a person other than an individual is of both Contracting States, the competent authorities shall endeavor to settle the question by mutual agreement, having regard to the seat of the by mutual agreement, taking into account the place of effective management of that person, his place of business and any other relevant factor. In the absence of such agreement, such person shall not be considered a resident of either Contracting State for the purpose of according to the benefits of this Convention.

 

Article 5

Permanent Establishment

  1. For the purposes of this Convention, the term “permanent establishment” means a place of business in a Contracting State. For the purposes of this Convention, the term “permanent establishment” means a place of business through which an enterprise carries on all or part of its activities.

 

  1. The term “permanent establishment” includes, in particular

(a) a place of management,

(b) a branch office,,a fixed lion

(c) an office,

(d) a factory,

(e) a workshop, and

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

  1. A construction or assembly site, a drilling rig or a drilling vessel used for the exploration of natural resources constitutes a permanent establishment only if the duration of the construction or assembly site, or the duration of the use of the rig or vessel exceeds twelve months.

 

  1. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include 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) merchandise owned by another business is stored solely for the purpose of processing

(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 shall be used solely for the purpose of carrying on the activities mentioned in subparagraphs (a) to (e).

 

  1. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an agent

(a) the business of the person is used solely for the purpose of carrying on the combined activities referred to in subparagraphs (a) and (e); and enterprise and has and habitually exercises in a Contracting State such powers as will enable him to enterprise, that enterprise shall be deemed to have a permanent establishment in that State fora permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such a person are limited to those mentioned in paragraph 4 which, if they were paragraph 4 and which, if exercised through a fixed place of business, would not enable that fixed place of business to be would not qualify that place of business as a permanent establishment under the provisions of that paragraph.

 

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

 

  1. 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) shall not of itself constitute a permanent establishment of the other.

 

Article 6

Real estate income

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

 

  1. The term “real property” shall have the meaning which it has under the law of the Contracting State in which the property is situated.

 

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

 

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

property of an enterprise as well as to income from real estate used for the exercise of a

independent profession.

 

  1. A resident of a Contracting State who is subject to tax in the other Contracting State on property situated in that other Contracting State may elect to be taxed on such income for the purposes of tax on such income on a net basis as if such income were attributable to a permanent establishment in that other State.

 

Article 7

Business Profits

 

  1. The profits of an enterprise of a Contracting State shall be taxable only in that 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, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

 

  1. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in its business in the other Contracting State through a permanent establishment situated therein, there shall be attributed in each Contracting State the profits which it might be expected to make in each Contracting State if it were a separate and independent enterprise, shall be attributed to that permanent establishment had it been a distinct and independent enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it permanent establishment.

 

  1. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses permanent establishment, including a reasonable proportion of the management and general expenses of the management and general administrative expenses, research and development expenses interest and other expenses incurred for the purposes of the enterprise as a whole (OR that part thereof which includes the permanent establishment), whether in the State in which such permanent establishment is situated or elsewhere.establishment is situated, or elsewhere.

 

  1. No profit is charged to the goods for the enterprise. No profit is attributed to a permanent establishment by reason of the fact that it has merely purchased goods.

 

  1. For the purposes of this Convention, the profits to be attributed to the permanent establishment shall include the profits to be attributed to the permanent establishment shall consist solely of the profits derived from the assets or activities of the permanent establishment and shall be determined the same method of accounting, unless there are good and sufficient reasons for doing otherwise.

 

  1. Where profits include items of income which are dealt with separately in other Articles of this Convention, the provisions of those Articles shall not be affected by the provisions of this Article.

 

  1. In applying paragraphs 1 and 2 of Article 7 (Business Profits), paragraph 4 of (Dividends), paragraph 3 of Article 12 (Interest), paragraph 3 of Article 13 (Royalties), paragraph 3 of article 14 (Earnings), article 15 (Independent Professionals) and paragraph 2 of Article 22 (Other Income), income or gains attributable to a permanent establishment or permanent establishment or a fixed base during its existence may be taxed in the Contracting State in which such permanent establishment or fixed base is situated, even if the payments are deferred until such time as that permanent establishment or fixed base has ceased to exist.

 

Article 8

Shipping and Air Navigation

  1. Profits derived by an enterprise of a Contracting State from ships or aircraft shall be taxable only in that State. from the operation in international traffic of

 

  1. For the purposes of this Article, profits from the operation of ships or aircraft in international traffic shall be taxable only in that State. For the purposes of this Article, profits from the operation of ships or aircraft in international traffic shall include profits from the rental of ships or aircraft equipped ships or aircraft (on a time or voyage basis). It also includes also profits from the bareboat charter of ships or aircraft operated in international traffic by the lessee or

by the lessee or if such rental income is ancillary to the profits derived from the operation of

the operation of ships or aircraft in international traffic. Profits derived by an enterprise of a Contracting State from the domestic transportation of goods or passengers within either of the contracting States shall be treated as profits from the operation of ships or aircraft in international traffic ships or aircraft, if such transportation is performed by the enterprise as part of international traffic.

 

  1. Profits derived by an enterprise of a Contracting State from the use, maintenance or rental of containers operated in international traffic (including trailers, barges and related equipment for the transport of containers) shall be taxable only in that State.

 

  1. The provisions of paragraphs 1 and 3 shall also apply to profits from The provisions of paragraphs 1 and 3 shall also apply to profits derived from 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 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 an enterprise of the other Contracting State, and in either case the two enterprises are, in their commercial or financial relations, bound by agreed terms financial relations, are bound by conditions agreed upon or imposed which differ from those which would be agreed upon or imposed, which differ from those which would be agreed upon between independent enterprises, the profits which, but for those conditions, would have been made by one of the enterprises but not the other of those conditions, may be included in the profits of that enterprise and taxed in the same way as the profits of the other enterprise. included in the profits of that enterprise and taxed accordingly.

 

  1. Where a Contracting State includes in the profits of an enterprise of that State, and taxes accordingly, profits on which an enterprise of that profits on which an enterprise of the other Contracting State has been taxed in that other State, and other State, and that other State recognizes that the profits so included are profits that would have profits which would have accrued to the enterprise of the first-mentioned State if the conditions agreed upon between the two enterprises had been those which would have been agreed upon between independent enterprises, that other State shall make an appropriate adjustment to 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 in a Contracting State may be taxed in that State. which is another resident State. of a Contracting State to a resident.

2.(a) 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 is a resident of the other Contracting State, except as otherwise provided in paragraph 6, the tax so charged shall not exceed assessed shall not exceed:

(i) 5 percent of the gross amount of the dividends if the beneficial owner is a company that directly holds at least 10 percent of the voting power of the company paying the dividends; or

(ii) 15 percent of the gross amount of the dividends in any other case.

(b) Notwithstanding the provisions of clause (i) of subparagraph (a), dividends paid by a company that is a resident of Luxembourg shall not be company that is a resident of Luxembourg shall not be taxable in Luxembourg if the beneficial owner of the dividends is a company that is a resident of the United States and that has held for an uninterrupted period of two years preceding the date of payment of the at least 25 percent of the voting power of the company paying the dividends, directly dividends. This provision shall apply only to dividends from the portion of the interest which has been continuously owned by the beneficial owner during the said two-year period. On the other hand, the provisions of this subparagraph apply only if the dividend distributed is derived from an effective industrial or commercial activity in Luxembourg (other than an activity consisting of making or managing investments, unless it is an activity carried out by a

(c) This paragraph 2 shall not affect the taxation of the company on profits used to pay dividends.

3. (a) The term “dividends” means income from stocks, shares or profit-sharing certificates, shares, founder’s shares or other profit shares, with the exception of debt claims, as well as income subject to the distribution regime under the tax laws of the State of which the distributing company is a resident; and income from arrangements, including claims, which entitle arrangements, including claims, which entitle the holder to participate in, or refer to, the profits of the issuer or of the issuer or any of its associated enterprises to the extent that such income is treated as a

(b) The provisions of this Article shall apply where a beneficial owner holds certificates of deposit evidencing the holding of the shares or units in respect of which the dividends are paid, instead of the shares or units themselves.

  1. The provisions of paragraphs 1 and 2 shall not apply where the beneficial owner of the dividends, a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in the other Contracting State independent personal services from a fixed base situated therein,and the dividends are attributable to that permanent establishment or fixed base. In such cases the provisions of Article 7 (Business Profits) or Article 15 (Independent Personal Services) , the case may be, are applicable.
  1. Where a company which is a resident of one of the States derives profits or income from the other State that other State may not impose any tax on dividends paid by the company, except to the extent that such dividends are paid to a resident of the other State paid to a resident of that other State or to the extent that the holding in respect of which the dividends are effectively connected with the assets of a permanent establishment or a fixed base situated in that fixed base situated in that other State, nor, except as otherwise provided in Article 11 (Branch Tax), impose any tax on the taxation of undistributed profits, even if the dividends paid or the undistributed dividends paid or undistributed profits consist wholly or partly of profits or income arising in such other from that other State.

 

  1. Subparagraph (a)(i) of paragraph 2 shall not apply in the case of dividends paid by a United States person that is a ,, Regulated Investment Company” or, Real Estate Investment Trust (REIT)”. In the case of a United States person that is a ,, REIT”, subparagraph (a)(ii) of paragraph 2 shall also not apply, unless the beneficial owner of the dividend is an individual of the dividend is an individual with less than a 10 percent interest in the,, REIT” corporation.

 

Article 11

Notwithstanding any other provision of this Convention, a company that is a resident of Luxembourg shall be subject to a tax in the United States in addition to the tax on profits. However, such additional tax shall not exceed 5 percent of the dividend equivalent amount of the profits of the company. The Company shall not be liable to a tax in the United States in addition to the tax on profits, except that such additional tax shall not exceed 5 percent of the dividend equivalent amount of the Company’s profits that are either connected with a permanent establishment in the United States or are taxable on a net basis in the United States under the provisions of Article 6 (Real Property Income) or paragraph 1 of Article 14 (Gains).

 

Article 12

Interest

  1. Interest arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in that other State if such resident is the beneficial owner thereof.

 

  1. The term “interest” as used in this Convention means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits unless referred to in paragraph 3 of Article 10 (Dividends), and in particular income from government securities and income from bonds or debentures, including premiums and prizes attaching to such and other income which is subjected to the treatment of income from money lent by the taxation law of the Contracting State the taxpayer shall be entitled to the benefit of the taxpayer’s taxpayer. Penalties for late payment shall not be considered as interest within the meaning of penalties for late payment shall not be considered as interest within the meaning of this Convention.

 

  1. The provisions of paragraph I shall not apply where the beneficial owner of the interest resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, either business activity through a permanent establishment situated therein, or performing independent personal services from a fixed base situated therein, and the interest is attributable to that permanent establishment or fixed base. In such a case, the provisions of Article 7 (Business Profits) or Article 15 (Independent Personal Services), as the case may be, shall apply.

 

  1. Interest shall be deemed to arise in a Contracting State when:

(a) the payer is a resident of that State, or

(b) the debtor, whether or not a resident of a Contracting State, has in that Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred and which bears the cost of that interest.

 

  1. Where, by reason of a special relationship between the debtor and the beneficial owner or where both maintain beneficiary, the amount of the interest, taking into account the debt for which it is paid, exceeds the amount for which it is paid, exceeds that which would have been agreed upon by the debtor and the beneficial owner in the 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, due regard being had to the other provisions of this Convention.

 

  1. Notwithstanding the provisions of paragraph I:

(a) interest arising in a Contracting State that is determined by reference to the profits of the issuer or an associated enterprise of the issuer and is paid to a resident of the other Contracting State may be taxed in that other State;

(b) however, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner is a resident of the other Contracting State, the gross amount of the interest may be taxed at a rate not exceeding the rate provided in subparagraph 2(a) subparagraph 2(a)(ii) of Article 10 (Dividends).

(c) Interest that is income referred to as ,,excess inclusion,” with respect to interests resident in an entity referred to as a ,,real estate mortgage investment conduit,” shall be taxable in each State in accordance with its domestic law.

 

Article 13

Royalties

  1. Royalties arising in a Contracting State and paid to a resident of the other State contractor does not shall be taxable only in that other State, if such resident is the beneficial owner thereof.

 

  1. The term “royalties” as used in this Agreement means:

(a) remuneration of any kind for the use of, or the right to use, any copyright in any literary, artistic or scientific work (including cinematographic films, sound and video tapes, records and any other cinematographic films, sound and videotapes, records and all other means of reproduction) (including motion pictures, sound and videotapes, records and other means of reproduction), a patent, a trademark, a design, plan, secret formula or process, or other similar right or property,  for information relating to industrial, commercial or scientific experience;

(b) the gain from the disposition of property referred to in subparagraph a depends on the productivity, use or application of such property

 

  1. The provisions of paragraph l do not apply when the beneficial owner of the royalties, resident in a Contracting State, exercises in the other Contracting State from which the royalties originate, either an industrial or commercial activity through the intermediary of a permanent establishment located there, that is to say a. independent profession by means of a fixed base located there, and that the royalties are attributable to that permanent establishment or fixed base. In this case, the provisions of Article 7 (Business profits) or Article 15 (Independent professions), as the case may be, shall apply.

 

  1. Royalties are considered to arise in a Contracting State when they are paid for the use or license to use property, information or experience in that State.

 

  1. When, due to special relationships existing between the debtor and the beneficial owner or that both have with third parties; the amount of the royalties, taking into account the service for which they are paid, exceeds that agreed upon by the debtor and the beneficial owner 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 14

Earnings

  1. Gains derived by a resident of a Contracting State from the other Contracting State may be taxed in that other State.

 

  1. For the purposes of this Article, the term “immovable property situated in the other “Contracting State” includes

(a) real property referred to in Article 6 (Income from Real Property);

(b) rights referred to as the “United States real property interest” as defined in the Internal Revenue Code as of the date of the signing of this Convention, as it may be amended from time to time without changing the general principles of this paragraph, and

(c) shares, units, or comparable rights in a company that is a resident of Luxembourg and the assets of which consist principally of real property situated in Luxembourg.

 

  1. Gains from the alienation of movable property forming part of the assets of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, or movable property which belongs to a belongs to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such permanent establishment (alone or with the whole enterprise) or fixed base, may be taxed in that other State.

 

  1. Gains derived by an enterprise of a Contracting State from the alienation of ships, aircraft or containers operated or used in international traffic, or movable property pertaining to the operation or use of such ships, aircraft or containers shall be taxable only in that State.

 

  1. Gains from the alienation of any property other than that referred to in paragraphs 1 to 4 shall be taxable only in the Contracting State of which the alienator is a resident.

 

Article 15

Independent Personal Services

  1. Income derived by an individual who is a resident of a Contracting State from professional services for personal services shall be taxable only in that State; unless such resident has a fixed base in the other Contracting State for the resident has a fixed base regularly available in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other State but only to the extent that it is attributable to that fixed base.

 

  1. In determining the income referred to in paragraph 1 that may be taxed in the other Contracting State, the principles of paragraph 3 of Article 7 (Business Profits) shall apply.

 

Article 16

Dependent Professions

  1. Subject to the provisions of Articles 17 (Fees), 19 (Pensions, social security and annuities) and 20 (Government Service), salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of employment 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 exercised in that State, remuneration received in respect thereof may be taxed in that other State. If the employment is exercised in that other State, the remuneration received in respect thereof may be taxed in that other State.

 

  1. 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 tax year,

(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 or a fixed base which the employer is in another State.

 

  1. Notwithstanding the preceding provisions of this Article, remuneration received continuously or predominantly in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State. If that State does not tax income from such employment, such income may be taxed in the State of which the employee is a resident.

 

Article 17

Directors’ Fees

Directors’ fees and other similar payments derived by a 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 for services performed in the other Contracting State may be taxed in that other taxable State.

 

Article 18

Artists and Athletes

  1. Notwithstanding the provisions of Articles 15 (Independent Personal Services) and 16 (Dependent Personal Services) income derived by a resident of a Contracting State from his personal activities as an entertainer in the other Contracting State 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, unless the amount of the gross receipts derived by such artist or sportsman from such activities, including expenses reimbursed to him or reimbursed to him or borne on his behalf for such activities, does not exceed, for the taxable year ten thousand United States dollars or the equivalent in Luxembourg francs.

 

  1. Where the income from activities performed by an entertainer or athlete in that capacity is attributed not to the artist or sportsman himself but to another person, such income of such other person is notwithstanding the provisions of Articles 7 (Business Profits) and IS (Independent Professionals), such income shall be taxable (Independent Personal Services), in the Contracting State in which the activities of the artist or activities are carried on, unless it is established that neither the artist or the athlete nor the persons associated or related to him (whether or not they are residents of that State) participate, directly or indirectly, in the directly or indirectly, in the earnings or profits of such other person in any way, including the receipt of including the receipt of deferred compensation, bonuses, fees, dividends, partnership distributions or other

 

Article 19

Pensions, social security and annuities

  1. Subject to the provisions of Article 20 (Civil Service):

a) the pension and other similar remuneration, paid to a resident of a Contracting State who is the beneficial owner in respect of prior employment, shall be taxable only in that State; And

(b) notwithstanding the provisions of subparagraph (a), payments made by a Contracting State or a public institution thereof under the social security or similar laws of a Contracting State to a resident of the other Contracting State or to a citizen of the United States shall not be taxed in that State. or a citizen of the United States shall be taxable only in the first-mentioned State.

 

  1. Annuities paid to a resident of a Contracting State who is the beneficial owner thereof shall not are taxable only in that State. The term “annuities” as used in this paragraph means a stated amount payable periodically at specified times during a specified number of years in satisfaction of an obligation to make payments in exchange for adequate and full consideration (other than services rendered).

 

Article 20

Public functions

  1. Notwithstanding the provisions of Article 15 (Independent occupations), 16 (Dependent occupations) and 18 (Artists and

(a) remuneration, other than a pension, paid by a Contracting State or a political subdivision or local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall, subject to the provisions of subparagraph

(b) not be taxed in the hands of that individual subparagraph shall be taxable only in that State;

2. (a) however, such remuneration shall be taxable only in the other Contracting State if it is paid in that State and the individual is a resident of that State who:

(i) is a national of that State, or

(ii) has not become a resident of that State solely for the purpose of rendering the services. Notwithstanding the provisions of Article 19 (Pensions, Social Security and Annuities)

(b) pensions paid by a Contracting State or a political subdivision or local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall, subject to the provisions of subparagraph shall be taxable only in that State; however, such pensions shall be taxable only in the other Contracting State if the individual is a resident of that State and is a national of that State.

 

  1. The provisions of Articles 16 (Dependent Personal Services), 17 (Directors’ Fees) and 19 (Pensions, Social Security and Annuities) shall apply with respect to remuneration and pensions paid in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or local authority thereof.

 

Article 21

Students, trainees, teachers and researchers

  1. Amounts which a student, apprentice or business trainee who is, or was immediately before visiting a Contracting State, a resident of the other Contracting State and who is present in the first-mentioned State may be paid to the other Contracting State, a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of State solely for the purpose of continuing his full-time education or training at a recognized educational institution training, shall not be taxable in that State, provided that they cover his maintenance, education or training. The exemption from tax referred to in this section shall apply to The exemption from tax referred to in this Article shall apply to an apprentice or trainee only for a period not exceeding two years from the date of his first entry into the first-mentioned Contracting State for the sole purpose of pursuing his training. If the period of stay exceeds two  years, the first-mentioned State may, in accordance with its domestic law, tax the individual for the entire stay, unless, in a unless, in a particular case, the competent authorities of the States decide otherwise.

 

  1. A resident of one of the Contracting States who, at the invitation of a university, college,  school or other recognized educational institution located in the other Contracting State, is  temporarily in that other State for the sole purpose of teaching or research, or both in that educational institution, for a period not exceeding two years from the date of his first of his first entry into the other State, shall be exempt from taxation by the other State on his remuneration received for such teaching or research. If the stay exceeds two years, the other State may, in accordance with its domestic law the other State, in accordance with its domestic law, may tax the individual for the entire stay, unless in a particular case the competent authorities of the States decide otherwise in a particular case.

 

  1. No exemption shall be granted under paragraph 2 in respect of remuneration received for remuneration received for research carried out for the benefit of a person other than the  educational institution which has made the invitation referred to in paragraph 2.

 

Article 22

Other income

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

 

  1. The provisions of paragraph 1 shall not apply to income other than income from real property as defined in paragraph 2 of Article 6, (Income from Real Property) where the beneficial owner of the income, being a resident of a Contracting State, carries on business in the other Contracting State, carries on business in that other State through a permanent establishment  situated therein, or performs in the other Contracting State independent personal services from a fixed base situated therein, and the income is attributable to that permanent establishment or fixed base. In such a case, the provisions of Article 7 (Business Profits) or Article 15 (Independent Personal Services), as the case may be, shall apply.

 

Article 23

Assets

  1.  Capital represented by immovable property referred to in Article 6 (Income from Immovable Property) owned by a resident of a Contracting State and situated in the Contracting State in which the property is situated shall be deemed to be capital property resident of a Contracting State and situated in the other Contracting State may be taxed in that other State.

 

  1. 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, or by movable property pertaining to a fixed base of which a resident belongs to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, may be taxed in that other State.

 

  1. The capital of an enterprise of a Contracting State operating in international traffic referred to in Article 8 (Maritime and Air Navigation), consisting of ships, aircraft or containers as well as movable property used in the operation of such ships, aircraft or containers, shall be taxable only in that State.

 

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

 

Article 24

Limitation of Benefits

 

  1. A resident of a Contracting State shall be entitled to all the benefits of this Convention only if it is a “qualified resident” as defined in this Article. A person who is not a qualified resident a qualified resident shall be entitled to the benefits of this Convention with respect to certain items of income provided for in paragraphs 3, 4 and 7.

 

  1. A resident of a Contracting State shall be a qualified resident for a taxable year only if

(a) that person is an individual;

(b) such person is a Contracting State, or a political subdivision or local authority thereof, or a body corporate thereof;

(c) such person is a company in which:

(i) at least SO percent of the principal class of its shares or interests in the corporation are beneficially owned by persons who are qualified residents or citizens of the United States in accordance with this subsection; and

(ii) amounts paid or allocated by the corporation during its taxable year

(A) to persons who are neither qualified residents nor citizens of the United States, and

(B) that are deductible for income tax purposes in the corporation’s state of residence (but not including payments made on an arm’s length basis in the ordinary course of business for services or for the acquisition or sale of property services or for the acquisition or rental of tangible property including real property), do not exceed 50 percent of the corporation’s gross income in that year;

(d) that person is a corporation whose principal class of shares is ordinarily and substantially traded on one or more regulated stock exchanges; the shares or units in a class of shares are considered to be on one or more regulated stock exchanges during a taxation year if the total number of shares or units in a if the total number of shares of that class traded on such stock exchange or exchanges during the stock exchange or exchanges during the preceding taxation year amounts to at least 6 percent of the average number of shares of that class traded on such stock exchange or exchanges during the preceding taxation year.

(e) such person is a company that is controlled, directly or indirectly, by entities that are residents of one of the Contracting States, the shares or units of which are traded on stock exchanges that are specified in subparagraph (d), provided that its payments to persons who are neither qualified residents nor citizens of the United States meet the requirements of subparagraph (c)(ii); or

(f) such a person is a nonprofit organization which, by virtue of such status, is generally exempt from income tax in its Contracting State of residence, provided that more than one-half of the beneficiaries, members or participants, if any, in such organization are qualified residents.

 

(a) A resident of a Contracting State who is not a qualified resident shall be entitled to the benefits of this Convention in respect of any item of income arising in the other State if such resident carries on directly (or indirectly through an associated enterprise) an effective business in the first-mentioned business activity in the first-mentioned State (other than the making or managing of investments (other than an activity of making or managing investments, unless the activity is carried on by a banking or insurance company), and:

(i) the item of income is connected with the carrying on of the trade or business in the first-mentioned State, and that trade or business is significant in relation to the resident’s proportionate interest in the activity generating the income in the other State; or

(ii) the item of income arising in the other State is incidental to the carrying on of that business in the first-mentioned State incidental to the performance of that activity

(b) The item of income is connected with the carrying on of a trade or business if:

(i) such item of income arises in the ordinary course of business and the beneficial owner holds, directly or indirectly, less than 5 percent of the shares (or other comparable corporate units) of the payer of the item of income; or

(ii) the activity generating the item of income in the other State is a part of, or complementary to, the industrial or commercial activity carried on in the first-mentioned State by the recipient of the income.

(c) For the purposes of this paragraph, the determination of whether a business activity is significant shall be based on the factual circumstances; provided, however, that this condition shall in all cases be deemed to be met if, for the previous tax year, each of the following three ratios for factors relating to the activity carried on in the first State is at least 7.5 percent, and the average is at least 10 percent.

(i) value of assets;

(ii) gross income; and

(iii) wages paid

wages and salaries paid that relate to the income-producing activity in the other State. If one of the 7.5 percent test in the first preceding tax year, the average of the factors the average of the ratios for that factor for the three preceding tax years may be substituted If the resident owns, directly or indirectly, more than one share of the capital stock of the other state, the If the resident holds, directly or indirectly, an interest of directly or indirectly, less than 100 percent interest in a business carried on in either State, only the other State, only the resident’s proportionate interest in such activity shall be taken into account in meeting the

(d) The item of income from the other State is incidental to a business carried on in the first-mentioned State if the income is not covered by subparagraph and the realization of that item of income facilitates the carrying on of the business in the first business activity in the first-mentioned State (e.g., the investment of operating capital in such industrial or commercial activity).

 

  1. Unless subparagraph (c) applies, a company that the contracting party is equally entitled to all the benefits of this Convention is a resident if:

(a) 95 percent of the shares or units of the corporation are beneficially owned by seven or fewer residents of a state that is a party to NAFTA or that is a member state of the European Union with which the other state has a comprehensive income tax treaty; and

(b) amounts paid or allocated by the corporation in its taxation year

(i) to persons who are not residents of a state that is a party to NAFTA, residents of a member state of the European Union or citizens of the United States, and

(ii) which are deductible for the purpose of computing income tax in the State of residence of the company (but not including payments made on an arm’s length basis in the ordinary course of business for services or for the acquisition or rental of property) do not exceed 50 percent of the corporation’s gross income for that year.

(c) Notwithstanding any other provision of this subsection 4, a resident as defined in this subsection shall not be entitled to the benefits of sections 10 (Dividends), 11 (Branch Tax), 12  (Interest) and 13 (Royalties) in respect of an item of income referred to in any of those Articles, unless the general income tax convention referred to in subparagraph (a) between one of the States and a third State provides for a rate of tax which is equal to or lower than the rate provided by this

(d) 

(i) The term “resident of a member state of the European Union” means a person who would be entitled to the benefits of a general income tax convention in force between a member state of the European Union and the contracting state from which the benefits of this Convention, but only if, where such convention does not contain a where that convention does not contain a general article relating to the limitation of treaty benefits (containing provisions similar to those in subparagraphs 2 (c) and 2 (d) and paragraph 3), that person would be entitled to the benefits of this Convention under the principles of paragraphs 2 or 3 if he were a resident of a Contracting State under the provisions of Article 4 (Resident) of this Convention.

(ii) The term “resident of a State that is a party to NAFTA” means a person who would be entitled to the benefits of a general income tax convention in force between a member state of the North American Free Trade Agreement and the contracting state to which the benefits of this Convention are sought, but only where that convention does not contain a general article relating to the limitation of treaty benefits (containing provisions similar to those in subparagraphs 2(c) and 2(d) and paragraph 3), such person would be entitled to the benefits of this Convention under the principles of paragraphs 2 or 3 if such person were a resident of a Contracting State under the provisions of Article 4 (Resident) of this Convention.

(iii) In applying the principles of paragraph 3, an item of income, arising in one of the Contracting States from which treaty benefits are sought, must be connected with an actual business carried on by a resident of the third State in that State.

 

  1. Notwithstanding the other provisions of this Convention, where:

(a) an enterprise of a Contracting State derives income from the other Contracting State

(b) such income is attributable to a permanent establishment of that enterprise in a third jurisdiction, and

(c) the enterprise is exempt from tax in the first-mentioned State on the profits attributable to the permanent establishment the tax benefits that would be accorded under the other provisions of the Convention shall not apply to any item of income that is subject in the first-mentioned State and in the third jurisdiction to cumulative the amount of which is less than 50 percent of the tax that would be imposed in the first State, if the income were earned or received in the first-mentioned State by the enterprise and were not attributable to the permanent establishment. Dividends, interest or royalties to which the provisions of this paragraph apply shall be subject to paragraph shall be subject in the other State to a tax not exceeding 15 percent of the gross amount thereof. of the gross amount thereof. Other income to which the provisions of this paragraph apply shall be subject to tax according to the domestic law of the other Contracting State. The provisions of this paragraph shall not apply if the income arising in the other Contracting State is connected with, or incidental to, an business activity carried on by the permanent establishment in the third jurisdiction (other than the business of making or managing investments unless it is a banking or insurance business carried on by the (other than an activity of making or managing investments, unless it is a banking or insurance activity carried on by a bank or insurance company).

 

  1. Notwithstanding the other provisions of this Article, the benefits of this Convention shall not be accorded to the party shall not be extended to the disproportionate part of the income (i.e., that part of the income, from a Contracting State, in excess of the income that would have been received in the absence of the terms or arrangements referred to in subparagraph (a) of this paragraph) enjoyed by a company that is a resident of the other Contracting State if that company, or a company controlling that company, has available shares in a class of shares available in a class of shares:

(a) the terms or other arrangements of which entitle the holders to a greater share of the income of the company from the first State than the share that such holders would receive in the absence of such terms or arrangements; and

(b) 50 percent or more of the voting power and value of which is held by persons who are not qualified residents of either Contracting State or of a State that is a party to  NAFTA or is a member state of the European Union.

  1. A resident of a Contracting State that is not entitled to the benefits of the Convention under the provisions of the preceding paragraphs of this Article may nevertheless enjoy such benefits if the competent authority of the other Contracting State so determines.

 

  1. The following provisions shall apply for the purposes of this Article:

(a) The term ,,a regulated stock exchange” means:

(i) any stock exchange registered with the Securities and Exchange Commission as a national securities exchange within the meaning of the Securities Exchange Act of 1934;

(ii) the Luxembourg Stock Exchange;

(iii) the United States Automated Quotation System (NASDAQ)

(iv) any other stock exchange agreed upon by the competent authorities.

With respect to companies with significant shareholders, the term “regulated stock exchange” does not include the stock exchanges referred to in (ii) and (iii) and, if the competent authorities so decide by mutual agreement, those referred to in  subparagraph (iv).

(b) The term “widely held company” means

a corporation of which 50 percent or more of the principal class of shares is owned by persons, other than qualified residents, residents of a member state of the European Union, or residents of a European Union, or residents of a state that is a party to NAFTA, each of whom actually directly or indirectly, alone or together with related persons, more than 5 percent of such shares or more than 5 percent of such shares or units for a period exceeding 30 days in a taxation year.

 

  1. The competent authorities of the Contracting States shall consult together to work out common rules of application of the provisions of this Article, including the issuance of regulations or other guidelines. The competent authorities shall, in accordance with the provisions of Article 28 (Exchange of Article 28 (Exchange of Information), such information as may be necessary to carry out the provisions of this Article.

 

  1. Notwithstanding the other provisions of this article, Luxembourg holding companies within the meaning of the law of July 31, 1929 and the Grand Ducal decree of December 17, 1938, or any subsequent revision, or such other companies enjoying similar special tax treatment under the laws of Luxembourg, are not Luxembourg, are not residents.

 

Article 25

Elimination of Double Taxation

 

  1. In accordance with the provisions of the law of the United States and subject to the limitations therein (as such law may be amended from time to time without affecting the general principles hereof) the United States shall the general principles hereof) the United States shall allow residents or citizens of the United States as a credit against United States income tax:

 

(a) income tax paid in Luxembourg by or on behalf of such citizens or residents;

(b) in the case of a United States company that owns 10 percent or more of the voting power in a company that is a resident of Luxembourg and from which the United States company receives dividends, the income tax paid in Luxembourg by or on behalf of the distributing company in respect of the profits that are used to pay the dividends. the income tax paid in Luxembourg by or on behalf of the distributing corporation on the profits from which the dividends are paid.

For the purposes of this paragraph, the taxes referred to in subparagraph 1(b) and paragraph 2 of Article 2 (Taxes) shall be deemed to be the taxes referred to in subparagraph 1(b) and paragraph 2 of Article 2 (Taxes Covered), other than the wealth tax and the portion of the municipal business tax  the taxes referred to in subparagraph 1 (b) and paragraph 2 of Article 2 (Taxes Covered), other than the wealth tax and the portion of the municipal business tax calculated on a basis other than profits, shall be considered to be income taxes.

 

  1. In Luxembourg, double taxation shall be eliminated as follows

(a) where a resident of Luxembourg derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in the United States, Luxembourg shall, subject to the provisions of subparagraphs (b) and (c), but may, in calculating the amount of tax on the remainder of the income or capital of the resident

(b) where a resident of Luxembourg derives income which, in accordance with the provisions of Article 10 (Dividends) and subparagraph 6(b) of Article 12 (Interest), may be taxed in the United States Luxembourg shall allow a deduction from the tax imposed on the income of such resident in an amount deduction from the tax imposed on the income of such resident in an amount equal to the tax paid to the United States. However, this deduction may not exceed the portion of the tax, computed before deduction, corresponding to such items of income received from the United States; and

(c) where a company that is a resident of Luxembourg receives dividends from sources in the United States 10 percent of the capital of the company paying the dividends and if that company is subject to a tax in the United States corresponding to The above-mentioned shares or units of a Luxembourg company are not subject to any tax in the United States, but are subject to a tax corresponding to the Luxembourg corporate income tax.

 

  1. The aforementioned shares or units of the US company are, under the same conditions exempt from Luxembourg wealth tax. Where a United States citizen is a resident of Luxembourg

(a) with respect to items of income which are not exempt from Luxembourg tax under paragraph 2 and which under the provisions of this Convention are exempt from United States tax, or which are subject to United States tax at a reduced rate, that a resident of Luxembourg, who is not a citizen of the United States, would receive, Luxembourg shall deduct from the Luxembourg tax only such tax as the United States may impose under the provisions of this Convention – if such a levy is provided for in the Convention – other than Convention – other than taxes that may be imposed solely by reason of citizenship under the saving clause in paragraph 3 of Article 1 (General Scope)

(b) for the purpose of computing the tax of the United States on items of income referred to in subparagraph (a), the United States shall allow against the tax of the United States the tax on income paid in the United States shall allow against United States tax the income tax paid in Luxembourg reduced to the extent of the deduction referred to in subparagraph (a); the deduction so allowed shall not reduce the portion of the

(c) for the exclusive purpose of eliminating double taxation in the United States under subparagraph (b), the items of income referred to in subparagraph (a) shall be treated as as arising in Luxembourg to the extent necessary to avoid double taxation of such income under subparagraph (b).

 

  1. Except as provided in subparagraph (c) of paragraph 3 for the purpose of eliminating double taxation the elimination of double taxation in accordance with this Article and subject to the rules of the domestic law of the Contracting States relating to the source of the income which apply for the purpose of limiting the deduction of foreign tax, income derived by a resident of a Contracting State that may be taxed in the other Contracting State in accordance with this Convention (other than income taxable solely by reason of citizenship in accordance with paragraph 3 of Article I (General Scope) shall be deemed to arise in that other State.

 

Article 26

Non-Discrimination

  1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation to any taxation or any requirement connected therewith which is other or more burdensome than those to which nationals of that other State who are or may be subject nationals of that other State who are in the same position. This provision shall apply also to persons who are not residents of one or both of the Contracting States.

However, for United States tax purposes, a national of the United States who is not a resident of the United States and a Luxembourg national who is not a resident of the United States are not in the same situation.

 

  1. The taxation of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, or of Contracting State, or of the remuneration of an individual resident of a Contracting State, attributable to a fixed base in the other Contracting State regularly available to that resident shall not be established in that other State in a manner less favorable than the taxation of enterprises or residents of that other State engaged in the same business. State carrying on the same activity. The provisions of this paragraph shall not allow the Contracting State to grant to residents of the other Contracting State the personal deductions, allowances and reductions for taxation purposes on account of civil status or family responsibilities that it grants to its own residents.

 

  1. Unless the provisions of paragraph 1 of Article 9 (Associated Enterprises), paragraph 5 of Article 12 (Interest) or paragraph 5 of Article 13 (Royalties) are applicable, interest, royalties and other expenses paid to interest, royalties and other expenses paid by a resident of a Contracting State to a resident of the other Contracting State shall, in determining the taxable profits of the first-mentioned resident, be deductible under the same conditions as if they had been 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 be deductible, for the purpose of determining the taxable capital of that enterprise, under the same conditions as if conditions as if they had been contracted with a resident of the first-mentioned State.

 

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

 

  1. The provisions of this section shall not be construed to preclude the imposition of a tax of the type imposed by this section. The provisions of this article shall not be construed to prevent the imposition of a tax of the type described in the article I I (Branch Tax). the United States from

 

  1. The provisions of this Article shall apply, notwithstanding the provisions of Article 2 (Taxes Covered), to (Taxes Covered), to taxes of every kind and description imposed by a Contracting State or a political subdivision or local authority thereof. political subdivisions or local authorities.

 

Article 27

Mutual Agreement Procedure

  1. Where a person considers that the actions of one or both of the Contracting States result or will result in taxation on that person States result or will result for him in taxation not in accordance with the provisions of this Convention, that person may, irrespective of the remedies provided by the domestic law of those States submit its case to the competent authority of the Contracting State of which it is a resident or of which it nationality.

 

  1. The competent authority shall endeavor, if the claim appears to it to be well-founded and if it is not itself in a position to provide a satisfactory solution to resolve the case by mutual agreement with the competent authority of the other Contracting State. competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with the

Convention. The agreement shall be applied irrespective of the time limits provided by the domestic law of the States.

 

  1. The competent authorities of the Contracting States shall endeavor by mutual agreement to resolve any difficulties or doubts arising as to the interpretation or application of the Convention.

the Convention. In particular, the competent authorities of the Contracting States may agree to

 

(a) attribute identically the income, deductions, credits, or allowances of an enterprise of a Contracting State to its permanent establishment situated in the other Contracting State

(b) allocate income, deductions, credits, and allowances in the same manner between persons;

(c) to admit the same characterization for particular items of income

(d) to determine on a common basis the source State of an item of income; and

(e) defining a term or expression in a common manner.

They may also consult together for the elimination of double taxation in cases not provided for in Convention.

 

4.The authorities to reach authorities of the contracting States may communicate directly with each other as indicated in the preceding paragraphs.

 

  1. The authorities of the Contracting States may also consult with a view to developing mutually agreed provisions of this Convention, including the provisions of Article 24 (Limitation of Article 24 (Limitation of Benefits). Each of the competent authorities of the Contracting States may issue guidelines for the implementation of this Convention.

 

Article 28

Exchange of information

  1. The competent authorities of the Contracting States shall exchange such information as is necessary to the provisions of this Convention or of the domestic laws of the Contracting States relating to taxes covered by this Convention to the extent that of the Contracting States relating to taxes covered by this Convention insofar as the taxation thereunder is not contrary to this Convention. is not contrary to this Convention. The exchange of information is not restricted by Article 1 (General Scope). Information received by the competent authority of a Contracting State from the Contracting State from the competent authority of the other Contracting State shall be treated as secret in the same manner as information obtained under the same manner as information obtained under the domestic law of that State and shall be disclosed only to persons or communicated only to persons or authorities (including courts and administrative bodies) concerned with the assessment, collection or administration of the taxes covered by the Convention in connection with the assessment, collection or administration of the taxes covered by the Convention, or in connection with the enforcement or prosecution of such taxes, or in connection with the determination of appeals in relation to such taxes. Such persons or authorities shall use such information only for such purposes. They may disclose such information in public court proceedings or in judgments.

 

  1. The provisions of paragraph 1 shall not apply. The provisions of paragraph 1 shall not apply to any Contracting State:

(a) to provide for measures to be taken by that State or by paragraph I shall in no case be construed as imposing on a istrative measures derogating from the Contracting State; to provide information which is not obtainable under the law or in the course of administrative practice

(b) the information is not available under the laws or in the normal course of the administrative practice of that State or of the other Contracting State;

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

 

  1. If information is requested by a Contracting State through its competent authorities, the authorities, the competent authority of the other Contracting State shall collect the information that is the subject of the request in the same manner as if the tax of the first-mentioned State were the tax of that other State and was levied by that other State. If the competent authority of a Contracting State specifically so requests, the competent authority of the other Contracting State shall provide the information provided for in this Article in this Article in the form of witness statements or certified copies of original unrestored documents (such as books or records, papers, statements, registrations, accounts and writings) in the same manner as the competent authority of the other competent State may obtain such statements documents for investigation or trial under its own laws and administrative practice.

 

  1. The Contracting States agree to provide each other with support and assistance in the collection of to the extent necessary to ensure that reductions in the tax imposed by a contracting state are not obtained by persons not entitled thereto. With respect to a specific request for collection assistance:

(a) the requesting State shall produce a copy of a document approved by its competent authority specifying that the sums indicated therein for the recovery of which it requests the intervention of the other State are definitely due and enforceable

(b) a bill of collection submitted in accordance with the provisions of this paragraph shall be rendered enforceable in the form provided for by the law of the State addressed;

(c) the requested State collects in accordance with the rules applicable to the collection of its own similar tax claims; however, the tax claims to be collected shall not be considered privileged claims in the requested State; and

(d) disputes relating to the existence or amount of the claim are within the exclusive jurisdiction of the court of the requesting State.

The provisions of this paragraph shall not impose on either Contracting State the obligation to administrative measures contrary to its sovereignty, security, public order or vital interests. vital interests

 

Article 29

Diplomatic agents and consular officers

The provisions of the present Convention shall not affect the fiscal privileges of diplomatic agents or consular officers diplomatic agents or consular officers under the general rules of international law or under the provisions of the law of nations or under the provisions of special agreements.

 

Article 30

Entry into force

  1. The instruments of ratification shall be exchanged as soon as possible.

 

  1. The Convention shall enter into force at the time of the exchange of instruments of ratification. source, to amounts paid or credited on or after the first day of January next following the entry into force of the Convention, and with respect to taxes on other income and on capital for any Tax Period beginning on or after the first day of January next following the date of the date of entry into force of the Convention.

 

  1. Where a greater exemption would have been accorded to a person entitled to the benefits of the Convention between the Grand Duchy of Luxembourg and the United States of America with respect to Taxes on 18 December 1962, hereinafter referred to as the “1962 Convention”, under the said Convention than under the Convention”, under the said Convention as under this Convention, the 1962 Convention shall continue to apply, at the 1962 Convention shall continue to apply, at the request of such person, in its entirety for the first taxable period or year or taxation year following the date on which the provisions of this Convention would be applicable in accordance with the applicable in accordance with the provisions of paragraph 2.

 

  1. The 1962 Convention shall cease to have effect with respect to income and capital to which this Convention applies in accordance with paragraphs 2 and 3 of this Article. The 1962 Convention shall cease to have effect on the last date on which it has effect in accordance with the provisions of this Article.

 

Article 31

Denunciation

This Convention shall remain in force until denounced by a Contracting State. by a Contracting State. Each Contracting State may denounce the Convention through diplomatic channels with a minimum of six months’ notice before the end of each calendar year following the year of its entry into force In such event, the Convention shall cease to have effect with respect to taxes withheld at the source on amounts paid or credited to the taxpayer. withholding taxes for amounts paid or credited, and with respect to other taxes for tax periods beginning on or after the first day on or after the first day of January next following the expiration of the six-month period.

 

IN WITNESS WHEREOF the undersigned, duly authorized thereto, have executed this Agreement.

 

DONE in duplicate at Luxembourg, this 3rd day of April 1996, in the English and French languages, both texts being equally authentic.

 

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