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Luxembourg - Untd A Emirates Tax Treaty (as amended by 2014 protocol) — Orbitax Tax Hub

Note: This Treaty may be impacted by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). MLI impact on Tax Treaties is available with the Orbitax International Tax Research & Compliance Expert.

ARTICLE 23

ELIMINATION OF DOUBLE TAXATION

*(1) Subject to the provisions of the law of Luxembourg regarding the elimination of double taxation which shall not affect the general principle hereof, 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 Arab Emirates, Luxembourg shall, subject to the provisions of sub-paragraphs (b), (c) and (d), exempt such income or capital from tax, but may, in order to calculate the amount of tax on the remaining income or capital of the resident, apply the same rates of tax as if the income or capital had not been exempted.
  • (b) Where a resident of Luxembourg derives income which, in accordance with the provisions of Articles 7, 10, 13 (2) and 16 may be taxed in the United Arab Emirates, Luxembourg shall allow as a deduction from the income tax on individuals or from the corporation tax of that resident an amount equal to the tax paid in the United Arab Emirates, but only, with respect to Articles 7 and 13 (2), if the business profits and the capital gains are not derived from activities of a permanent establishment in the United Arab Emirates in agriculture, industry, infrastructure and tourism. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given, which is attributable to such items of income derived from the United Arab Emirates. That means if income is derived from a permanent establishment in the United Arab Emirates being active in agriculture, industry, infrastructure and tourism, this income will be exempted in Luxembourg even if no tax has been paid in the United Arab Emirates.
  • (c) Where a company which is a resident of Luxembourg derives dividends from United Arab Emirates sources, Luxembourg shall exempt such dividends from tax, provided that the company which is a resident of Luxembourg holds directly at least 10 percent of the capital of the company paying the dividends since the beginning of the accounting year and if this company is subject in the United Arab Emirates to an income tax corresponding to the Luxembourg corporation tax. The above-mentioned shares in the United Arab Emirates company are, under the same conditions, exempt from the Luxembourg capital tax. The exemption under this sub-paragraph shall also apply notwithstanding that the United Arab Emirates company is exempted from tax or taxed at a reduced rate in the United Arab Emirates and if these dividends are derived out of profits from activities in agriculture, industry, infrastructure or tourism in the United Arab Emirates.
  • (d) The provisions of sub-paragraph (a) shall not apply to income derived or capital owned by a resident of Luxembourg where the United Arab Emirates, applies the provisions of this Convention to exempt such income or capital from tax or applies the provisions of paragraph 2 of Article 10 to such income.

(2) In the case of the United Arab Emirates, double taxation shall be eliminated as follows:

  • Where a resident of the United Arab Emirates derives income which in accordance with the provisions of this Convention may be taxed in Luxembourg, the United Arab Emirates shall allow as a deduction from tax on income of that person an amount equal to the tax on income paid in Luxembourg.
  • Such deduction shall not exceed that part of income tax, as computed before the deduction is given, which is attributable to the income which may be taxed in Luxembourg.