Switzerland Luxembourg Double Taxation Treaty

Switzerland-Luxembourg Double Taxation Treaty

Updated on Monday 21st September 2015

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Switzerland-Luxembourg-Double-Taxation-TreatyThe double taxation agreement between Switzerland and Luxembourg

Switzerland signed its first double taxation agreement with Luxembourg in 1993. The agreement was revised and amended in 2009 when provisions about the exchange of tax information were included. It was the second tax agreement Switzerland signed in order to comply with the Organization for Economic Co-operation and Development (OECD) regulations. The double taxation agreement applies to both Luxembourg and Swiss citizens.

What are the taxes covered by the Swiss-Luxembourg agreement?

The agreement between the two countries covers the Luxembourg and Swiss income taxes and the capital tax on both federal and local level. The agreement applies on the total income or capital, or an specific elements of the income or capital. The agreement also applies on the alienation of movable or immovable property and salaries paid by Swiss or Luxembourg companies. The double taxation agreement will apply as it follows:

  • - in Luxembourg the agreement covers the income tax, the corporate tax, the tax on directors’ fees, the capital tax and the communal tax based on business profits and capital;
  • - in Switzerland the agreement covers the federal, cantonal and communal taxes on income and on capital.

The agreement does not cover the Swiss federal tax on lottery prizes, which will be levied at source. The double taxation agreement between Luxembourg and Switzerland applies to both individuals and companies.

 Tax rates according to the Switzerland-Luxembourg double tax treaty

The taxation agreement between the two contracting states also covers common taxes, such as the Luxembourg and Swiss dividend taxes and the taxes applied to interests and royalties. The dividend tax applies as it follows:

  • - 5% of the gross amount of the dividends if the recipient is a company owning at least 25% of the capital in the company paying the dividends,
  • - 15% of the gross amount in all other situations.

Interests and royalties will be taxed in the recipient’s home country. Any income resulted from the alienation of immovable property may be taxed in the country the property is located in.

For complete information about the provisions of the double taxation agreement with Luxembourg, please contact our law firm in Switzerland.