United Kingdom - UK Ratifies New Treaty with Luxembourg

The UK on 19 July 2023 ratified a new UK-Luxembourg income tax treaty that includes significant changes to the current treaty.

The new treaty will be effective 1 January 2024 for UK withholding tax and Luxembourg taxes, 1 April 2024 for UK corporation tax purposes, and 6 April 2024 for UK income tax and capital gains tax purposes.

The new treaty includes a so-called “property-rich” clause  that grants both countries the right to tax any gain realised from the sale of shares or corporate interests in an entity that derives more than 50% of its value from immovable property situated in the other country (the “property-rich” entity).

The treaty also provides for full withholding tax exemption for dividends in the source country, as long as the recipient of the dividends is the beneficial owner.

If you require further information, please reach out to your usual BDO contact.

Stuart Strong
BDO in United Kingdom