S.I. No. 65/1973 - Double Taxation Relief (Taxes on Income and on Capital) (Grand Duchy of Luxembourg) Order, 1973.

1. This Convention shall be ratified and the instruments of ratification shall be exchanged at Luxembourg as soon as possible.

2. The Convention shall enter into force upon the exchange of instruments of ratification and its provisions shall have effect

(

a

) in Ireland

(1) as respects income tax (including sur-tax) for any year of assessment beginning on or after the 6th April, 1968;

(2) as respects corporation profits tax for any accounting period beginning on or after the 1st April, 1968, and for the unexpired portion of any accounting period current at that date;

(

b

) in Luxembourg

for periods of assessment beginning after 31st December, 1967.

ARTICLE 31

Termination

This Convention shall remain in force indefinitely, but either of the Contracting States may terminate the Convention, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year after the year 1973. In such event the Convention shall cease to have effect

(

a

) in Ireland

(1) as respects income tax (including sur-tax) for any year of assessment beginning on or after the 6th April in the calendar year next following that in which such notice is given;

(2) as respects corporation profits tax for any accounting period beginning on or after the 1st April in the calendar year next following that in which such notice is given and for the unexpired portion of any accounting period current at that date;

(

b

) in Luxembourg

for periods of assessment beginning after the end of the calendar year in which notice is given.

IN WITNESS WHEREOF the above-mentioned Plenipotentiaries have signed this Convention and have affixed thereto their seals.

DONE in duplicate at LUXEMBOURG this 14th January, 1972, in the English and French languages, both texts being equally authoritive.

For the President of Ireland

Frank Coffey.

For His Royal Highness The

Grand Duke of Luxembourg

Gaston Thorn.

GIVEN under the Official Seal of the Government this 13th day ofMarch, 1973.

SEÁN Ó LOINSIGH,

Taoiseach.

EXPLANATORY NOTE.

This Order gives the force of law to the Convention with Luxembourg which is set out in the Schedule.

Under the Convention certain classes of income derived from one country by a resident of the other country are (subject to certain conditions) to be exempt from tax in the former country. These classes include trading profits not arising through a "permanent establishment" (Article 6), shipping and air transport profits (Article 7), interest (Article 10), patent and copyright royalties (Article 11), profits from professional or other independent activities not attributable to a fixed base (Article 13), certain earnings of temporary residents (Articles 14, 19 and 20), pensions (other than Government pensions) (Article 17), Government salaries and pensions are normally to be taxed by the paying Government only (Article 18).

In general, dividends paid by Irish companies to Luxembourg residents are to be exempt from Irish sur-tax; the rate of withholding tax on dividends paid by Luxembourg companies to Irish residents is not to exceed 15 per cent and, where the Irish resident is a company holding shares representing at least 25 per cent of the voting power in the Luxembourg company, is not to exceed 5 per cent (Article 9).

In the matter of personal allowances and reliefs for tax purposes, each country is to treat the nationals of the other in the same way as it treats its own nationals under the same conditions (Article 24).

Where, under the Convention, income derived from one country by a person resident in the other country may be taken into account for tax purposes in both countries, a measure of double taxation relief is to be granted by the latter country. In Ireland relief is to be given by allowing against the Irish tax payable on Luxembourg income, a credit in respect of the Luxembourg tax which the income has borne including generally, in the case of dividends, an appropriate proportion of the Luxembourg tax on the profits out of which the dividends are paid. In Luxembourg, relief is to be given by way of exemption of income (except dividends) from sources in Ireland but the income so exempted is to be taken into account for the purpose of determining the rate of Luxembourg tax to be imposed on the taxpayer's other income. Irish dividends, whether or not subject to Irish income tax by deduction are to be exempt from Luxembourg tax if received by a Luxembourg company controlling directly at least 25 per cent of the voting power in the company paying the dividends. In the case of other dividends, Luxembourg tax is charged on the gross dividend less Irish income tax at the full rate, whether or not the dividend has suffered tax at the full or at a reduced rate, and credit is given for 15 per cent of the Luxembourg tax so chargeable (Article 23).

Subject to certain exceptions (e.g. immovable property) property of an Irish resident situated in Luxembourg is to be exempt from the annual capital tax imposed in that country (Article 22).

Provision is made for the exchange, between the competent authorities of the two countries, of information necessary to give effect to the Convention and for the prevention of fiscal fraud (Article 27).

The benefit of the Convention is denied to holding companies which are given privileged tax treatment in Luxembourg (Article 29).

The Convention takes effect for the fiscal year 1968/69 (Article 30).

3. The Convention shall not apply to International Organisations, to organs or officials thereof or to persons who are members of a diplomatic or consular mission of a third State, who are present on the territory of a Contracting State and who are not treated in either Contracting State as residents thereof for the purposes of taxes on income and on capital.

ARTICLE 29

Holding Companies

This Convention shall not apply to holding companies entitled to any special tax benefit under the Luxembourg laws of 31st July, 1929, or 27th December, 1937, or any similar law enacted by Luxembourg after the signature of this Convention.

CHAPTER VII

FINAL PROVISIONS

ARTICLE 30

Entry into Force

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States.

ARTICLE 27

Exchange of Information

5. The provisions of this Article shall not be construed as obliging Ireland to grant to any company other than a company incorporated in Ireland and resident therein for the purposes of income tax, any relief or exemption allowed in accordance with the provisions of

(i) the

Finance (Profits of Certain Mines) (Temporary Relief from Taxation) Act, 1956

, (No. 8 of 1956), as subsequently amended, or

(ii) Part II of the

Finance (Miscellaneous Provisions) Act, 1956

(No. 47 of 1956), as subsequently amended, or

(iii) Chapter II or Chapter III of Part XXV of the

Income Tax Act, 1967

(No. 6 of 1967), as subsequently amended.

6. In this Article the term "taxation" means taxes of every kind and description.

ARTICLE 26

Mutual Agreement Procedure

7. Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

ARTICLE 7

Shipping and Air Transport

Profits of an enterprise from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

ARTICLE 8

Associated Enterprises

Where

(

a

) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(

b

) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

ARTICLE 9

Dividends

S.I. No. 65 of 1973.

DOUBLE TAXATION RELIEF (TAXES ON INCOME AND ON CAPITAL) (GRAND DUCHY OF LUXEMBOURG) ORDER, 1973.

WHEREAS it is enacted by section 361 (1) of the Income Tax Act, Act, 1967 (No. 6 of 1967), that if the Government by order declare that arrangements specified in the order have been made with the government of any territory outside the State in relation to affording relief from double taxation in respect of income tax, sur-tax or corporation profits tax and any taxes of a similar character, imposed by the laws of the State or by the laws of that territory, and that it is expedient that those arrangements should have the force of law, the arrangements shall, notwithstanding anything in any enactment, have the force of law

AND WHEREAS it is further enacted by section 361 (6) of that Act that where such an order is proposed to be made, a draft thereof shall be laid before Dáil Éireann and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann

AND WHEREAS a draft of this Order has been laid before Dáil Éireann and a resolution approving of the draft has been passed by Dáil Éireann

NOW, the Government, in exercise of the powers conferred on them by

section 361

of the

Income Tax Act, 1967

(No. 6 of 1967), hereby order as follows