India signs double taxation avoidance deal with Luxembourg

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New Delhi, Jun 2 (UNI) India today signed a double taxation avoidance agreement with Luxembourg to prevent evasion of income and capital taxes.

Aimed at promoting economic cooperation by stimulating flow of capital, technology and personnel between the two countries, the agreement will come in to force from the day it is notified, said Finance Ministry in a statement here.

In case of India, the agreement will cover income and wealth tax, including surcharge, if any, while in respect of Luxembourg, income tax on individuals, corporation tax, capital tax and communal trade tax will come under its ambit, the statement added.

The agreement provides for taxing dividend, interest, royalties and fees for technical services-both in the country of residence as well as the country of source. However, the rate of tax in the country of source shall not exceed ten per cent of the gross amount of payment in case the beneficial owner of payments is a resident of the other contracting state.

Capital gains from alienation of shares of a company shall be taxable in the country where the company is a resident.

The incidence of double taxation shall be avoided by one country giving credit for taxes paid by its residents in the other country. The agreement provides for exchange of information in cases under investigation in either country.

Both the countries will assist each other in collection of revenue claims.

The agreement provides for limitation of benefits to prevent its misuse.

It was signed by Central Board of Direct Taxes Chairman R S Mathoda and Luxembourg MP Ambassador Marc Courte the statement added.


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