Bilateral tax treaties are a cornerstone of the international tax landscape and play a vital role in the global economy.
Attempting to reconcile the complex and ever-changing domestic tax laws of the contracting states, the main purpose of tax treaties is to foster cross-border investment and business activities albeit the more recent focus of the OECD was on the tackling of perceived tax treaty abuses.
The economies of Luxembourg and the Federal Republic of Germany are particularly intertwined. Luxembourg is a financial centre, a major fund location and the location of choice for establishing holding companies. As such, the Federal Republic of Germany is one of the main investment jurisdictions and a key investor jurisdiction of Luxembourg companies and investment funds.
The tax treaty concluded between the Grand Duchy of Luxembourg and the Federal Republic of Germany (the “Tax Treaty”) entered into force on 30 September 2013 and became effective as from 1 January 2014, replacing the former tax treaty signed back in 1958. The Tax Treaty was largely drafted along the lines of the 2010 version of the OECD Model Tax Convention. The Tax Treaty is further complemented by a protocol that forms an integral part of the Tax Treaty.
This guide provides a clear understanding of the Tax Treaty and anticipates the changes resulting from the OECD Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting ("Multilateral Instrument” or “MLI”). Charts, overviews and checklists will accompany the reader in assessing the vital elements to consider in each tax analysis. Tax advisers and practitioners should gain substantially from the insights provided in this book.
Oliver R. Hoor is a Partner in the International and Corporate Tax department of ATOZ. A tax professional since 2003, Oliver has experience in Luxembourg and international taxation with a focus on alternative Investments (private equity, real estate, sovereign wealth funds, hedge funds), mergers & acquisitions and multinational groups. Oliver advises clients on all direct tax aspects regarding deal structuring, maintenance, reorganisations and exit planning. He is Head of Transfer Pricing and the German Desk. Oliver is further a member of the tax working groups of the Association of the Luxembourg Fund Industry (ALFI) and the Luxembourg Private Equity Association (LPEA). Oliver is the author of more than 250 articles and books on Luxembourg and international taxation including Transfer Pricing and related documentation requirements, the OECD Base Erosion and Profit Shifting (“BEPS”) Project and the EU Anti-Tax Avoidance Directives (ATAD 1 & 2), reporting obligations of tax intermediaries (DAC 6), the OECD Model Tax Convention and Tax Treaties, EU Law and the State Aid investigations of the EU Commission. He is also a regular speaker at conferences as well as a lecturer with House of Training, Legitech and ILA.
Andreas Medler is a Principal in the International and Corporate Tax department at ATOZ.
A tax professional since 2010, Andreas has experience in Luxembourg transfer pricing and international tax advisory for a wide range of institutional investors. Andreas provides advice on the tax and transfer pricing structuring of alternative investments through Luxembourg (private equity, real estate, sovereign wealth funds) as well as tax structuring of multinational groups. He advises clients on all direct tax matters (deal structuring, corporate reorganisations, mergers and acquisitions as well as exit planning) as well as on transfer pricing aspects in relation to the pricing of financial instruments and intra-group services.
Andreas is a certified German tax adviser (“Steuerberater”) and is also a chartered accountant in Luxembourg. He holds a degree in Business Administration with a Major in Tax from the University of Trier (Germany). He also holds a post-graduate degree in Luxembourg Tax.
I. Introduction
II. Mechanism of the Tax Treaty
III. Scope of the Tax Treaty and general definitions
IV. Taxation of income and capital
V. Elimination of double taxation (Article 22 of the Tax Treaty)
VI. Special provisions
VII. The multilateral instrument (“MLI”)
VIII. Appendix
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