France asks Luxembourg to renegotiate their double tax treaty
According to our information, the French tax authorities have recently sent a formal request to Luxembourg to renegotiate the double tax treaty concluded between France and Luxembourg.
The objective aims at allowing the taxation in France of capital gains realized by Luxembourg companies on the disposal of shareholdings in French real estate companies. Under the existing double 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 any official position in this respect and no draft protocol to the double tax treaty is available. However, the authorities have confirmed that discussions are in progress
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