India signs DTAA with Luxembourg

The agreement will cover income and wealth tax including any surcharge in India, while for Luxembourg it would cover income tax on individuals, corporation tax, capital tax and the communal trade tax.

The DTAA provides for taxation of 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 10 per cent of the gross amount of payment in case the beneficial owner of the payments is a resident of the other Contracting State.

The DTAA provides that capital gains from sale of shares of a company will be taxable in the country where the company is a resident.

The incidence of double taxation will be avoided by one country giving credit for taxes paid by its residents in the other country.

There is also a provision for limitation of benefits under the DTAA to prevent misuse of the provisions of the DTAA.

The Agreement was signed by R S Mathoda, chairman, Central Board of Direct Taxes on behalf of India and Marc Courte, Ambassador extraordinary and plenipotentiary on behalf of the Government of Luxembourg.