The avoidance of double taxation
The Hong Kong Special Administrative Region of the People’s Republic of China and the Grand Duchy of Luxembourg have signed a treaty for the avoidance of double taxation
and the prevention of fiscal evasion. The agreement applies to taxes on income and capital and is beneficial for investors who have businesses in Hong Kong
The treaty is important for strengthening the relationship between the two parties. It will allow for better tax planning and business opportunities for Luxembourg entrepreneurs in Asia. Hong Kong has signed a number of double tax treaties
with a number of other countries and the Special Administrative Region will most likely increase the number of such agreements.
Our Hong Kong company formation agents
can help you understand how these double taxation agreements are beneficial for your company if you are a foreign investor in Hong Kong
Taxes covered in the Hong Kong-Luxembourg treaty
The agreement for the avoidance of double taxation applies to individuals who are residents of one or both Contracting Parties. It applies to taxes imposed on income and capital by one of the countries, irrespective of the manner in which they are levied.
In case of Hong Kong the treaty applies for the following taxes:
- the profits tax;
- the salaries tax;
- the property tax.
In case of Luxembourg the double tax treaty is applicable for the following taxes:
- the individual income tax;
- the corporate tax;
- the capital tax;
- the communal trade tax.
Our partner company formation representatives in Luxembourg
can give you more information about the taxes in the Grand Duchy. The agreement also applies to any similar taxes or taxes imposed in place of the ones mentioned above after the signature date of the treaty.
Provisions of the treaty
A double taxation treaty
offers certain advantages for investors who have companies established in the two Contracting Parties. Like in the case of other such agreements signed by Luxembourg, the double tax treaty with Hong Kong
allows for no withholding tax on dividends paid by a Luxembourg company to a resident Hong Kong company
that is the parent company.