Luxembourg and Poland: protocol to treaty – detailsJune 19, 2012
Details have become available of the amending protocol and a supplementary amending protocol, signed on 7 June 2012, to the Luxembourg–Poland Income and Capital Tax Treaty (1995).
The maximum rates of withholding tax will become:
- 15% on dividends generally, but 0% if the receiving company owns directly at least 10% of the capital of the company distributing the dividends (article 1 of the protocol)
- 5% on interest (article 2 of the protocol)
- 5% on royalties (article 3 of the protocol)
A provision will be inserted in the article on capital gains which provides that gains derived by a resident of a contracting state from the alienation of shares deriving more than 50% of their value directly or indirectly from immovable property situated in the other contracting state may be taxed in that other state (article 4 of the protocol).
Both states generally provide for the credit and exemption-with-progression method for the avoidance of double taxation (article 5 of the protocol).
In addition, article 6 of the protocol provides for new article 27 on exchange of information.
Paragraph 2 of the new article 27 addresses privacy, noting that exchanged information may be disclosed only to bodies (including courts and administrative bodies) involved in the assessment, collection, administration, enforcement or prosecution or determination of appeals in relation to the taxes covered by the treaty.
Such information may additionally be disclosed in public court proceedings and judicial decisions.
Paragraph 3(a)-(c) limits the required action on behalf of the contracting states. It provides that the parties are not obliged to:
- Carry out administrative measures at variance with the laws and administrative practice of that or the other contracting state
- Supply information which is not obtainable under the laws or in the normal course of the administration of that or the other contracting state
- Supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information – the disclosure of which would be contrary to public policy
Paragraph 4 provides that a contracting state may not decline to supply information solely because it has no domestic interest in such information.
Paragraph 5 provides that a contracting state cannot decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or fiduciary capacity, or because it relates to ownership interests in a person.
Article I of the supplementary protocol lists the information which needs to be submitted by the state which requests the exchange of information.
The treaty will not apply to payments made or income received under an artificial arrangement (article 7 of the protocol).
Article II of the supplementary protocol provides that this provision also applies to companies that take advantage of legislation, regulations and administrative practices that the EU Code of Conduct Group for Business Taxation has declared to be harmful tax competition.
The treaty will not affect the application of EU legislation and implementing measures taken by the contracting states (article III of the supplementary protocol).
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