Double Taxation Treaty between Argentina and Luxembourg

Javier CanosaPartner, Canosa Abogados

On April 13, 2019, Argentina and Luxembourg executed a Treaty to prevent double taxation (“DTT”). This DTT is not yet in force because that legislative ratification of both countries has not been approved. It was written according to the OECD Model Convention, with update clauses based on the latest international recommendations.

In this sense, it contemplates the following imposition ceilings:

  • Permanent Establishment: The traditional definition of Permanent Establishment is followed, and no reference has been incorporated into the concept of “significant digital presence” promoted by the OECD within the framework of the BEPS rules.
  • Dividends: Limits
    • 10% of the gross amount of the dividends if the effective beneficiary is a company that directly owns at least 25 percent of the capital of the company that pays the dividends, this percentage should have been held by the beneficiary for a period not less to 364 days before payment.
    • 15% in all other cases.
  • Interest: A maximum of 12% is established over the gross amount of interests for the country from which those interests are paid.
  • Royalties:
    • 3% for the use or the right to use news information;
    • 5% for the use or for the right to use copyright in literary, artistic or scientific works, with exceptions;
    • 10% in all other cases.

Finally, it was arranged an exchange of information between the two States regarding the relevant data to apply the agreement, administer or enforce internal legislation regarding taxes of all kinds.

The DTT will enter into force after the legislative ratification of each of the signatory countries. However, it will take effect from January 1st of the calendar year following its entry into force.