Market Taxation Guide - Luxembourg
This Market Taxation Guide (Luxembourg) provides the following details:
- Reference information about all taxes applied at source, through Clearstream Banking1 and its local depositories, to securities deposited in Clearstream Banking; and
- Instructions for obtaining relief at source or a refund of withholding tax, where these are available, through Clearstream Banking.
New and improved tax information and procedures that become available will be included on an ongoing basis.
Important note:
This Market Taxation Guide (including any attachments and other links) is for informational purposes only and is not intended and should not be considered to be legal advice on any subject matter. Readers of this Market Taxation Guide, whether customers or otherwise, should not act or refrain from acting on the basis of any information included in this Market Taxation Guide without seeking appropriate legal or other professional advice.
Withholding tax
No withholding tax is deducted from interest on Luxembourg debt securities held in Clearstream Banking.
| Equities | Holding restriction? | Withholding tax rate | Relief at source | Quick refund | Standard refund |
No | 15% | ||||
Residents of Double Taxation Treaty (DTT) countries | No | No | Yes | ||
Residents of Luxembourg cannot reclaim withholding tax through Clearstream Banking.
Debt securities
No withholding tax is deducted by Clearstream Banking on interest from Luxembourg debt securities.
Debt securities eligible in the Luxembourg market are as follows:
- Domestic bonds denominated in EUR;
- Foreign bonds, including private placements.
According to the EU Savings Tax Directive, tax may be withheld at source by paying agents on interest payments made to beneficial owners that are individuals resident in an EU country. Clearstream Banking has no obligation to withhold tax at source as all its customers are legal entities. However, as Clearstream Banking’s customers may have underlying clients that are individuals resident in an EU country, they may be considered to be the relevant paying agent under the Directive and, consequently, obliged to withhold tax at source.
Furthermore, a 10% tax may be withheld at source by paying agents on interest payments made to beneficial owners that are individuals resident in Luxembourg. Legal entities do not fall under the scope of the Luxembourg domestic law. Clearstream Banking has no obligation to withhold tax at source as all its customers are legal entities. However, as Clearstream Banking’s customers may have underlying clients that are individuals resident in Luxembourg, they may be considered to be the relevant paying agent.
Please consult your tax advisor for further information.
Equities
The standard rate of withholding tax on dividends is 15%. Before 1 January 2007, the rate was 20%
Equities and equity products are eligible in the Luxembourg market.
Relief at source is not available through Clearstream Banking.
In the majority of cases, the rate of withholding tax on dividend payments available to beneficial owners in accordance with a Double Taxation Treaty (DTT) between their country of residence and Luxembourg is equal to or greater than 15%.
No action is required from beneficial owners that previously enjoyed a 15% DTT rate.
A reclaim of withholding tax is available if the beneficial owner qualifies for the benefit of a reduced rate of withholding tax lower than 15% in accordance with the DTT between his country of residence and Luxembourg.
The customer can reclaim withholding tax on behalf of the beneficial owner through Clearstream Banking by submitting the appropriate documentation.
Capital gains tax
There is no capital gains tax withheld through Clearstream Banking on securities held in Clearstream Banking. Capital gains tax may however be payable on specific gains. Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.
Stamp Duty
There is no stamp duty withheld through Clearstream Banking on securities held in Clearstream Banking. Stamp duty may however be payable on specific transactions. Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.
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1. “Clearstream Banking” refers to Clearstream Banking AG.