Details

  • Service: Tax, International Corporate Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 2/10/2012

Luxembourg - French tax authorities request change to treaty treatment of capital gains realized by Luxembourg companies on disposal of shareholdings in French real estate companies 

February 10:   According to reports from Luxembourg, French tax authorities have sent a formal request to Luxembourg’s tax authorities, requesting a renegotiation of the income tax treaty between France and Luxembourg.  At issue is the taxation of capital gains realized by Luxembourg companies on the disposal of shareholdings in French real estate companies.

Under the existing Luxembourg-France income tax treaty, the right to tax these capital gains is generally allocated to Luxembourg (where an exemption may be granted if the conditions of the Luxembourg domestic participation exemption regime are fulfilled)—and not to France.


At this stage, the Luxembourg tax authorities have not taken an official position concerning this request, and no draft treaty amendment is currently available. Informal conversations with the Luxembourg tax authorities disclose that discussions are in progress.


To read a February 2012 report on this treaty matter, prepared by the KPMG member firm in Luxembourg: France asks Luxembourg to renegotiate their double tax treaty




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