Luxemburg can become a real alternative to Cyprus

02.11.2011 Recently Luxemburg Deputy Prime Minister and Foreign Affairs Minister have come to visit Moscow to discuss the further fruitful cooperation between the two states. The officials’ negotiations focused on the relationship of mentioned countries as well as their economic ties with the European Union. Also the discussion covered the vital issues of EU member states that are going through difficult times of crisis. However the most pressing issue was the subject of signing the protocol to the bilateral tax treaty between Russia and Luxembourg.
Let’s recall that Russia and Luxembourg have already had a bilateral agreement on double taxation avoidance but the protocol introduces additional provisions that will definitely make the country of Benelux more attractive jurisdiction for investment. Thus there is lowering the minimum tax rate on dividends to 5% (minimum tax rate on dividends is 10% now) under certain conditions, for example, if the recipient of the dividends has invested in the capital of the paying company at least 80 000 euro.

Expert’s opinion

“Luxemburg has already occupied confidently its positions among the first 10 of the largest investors of the Russian Federation and the coming changes of the tax agreement that are provided in the protocol will only be the significant incentive for the Russian business. It’s often enough when the tax optimization scheme is required to withdraw dividends through certain jurisdictions. Thus new alternative to e.g. Cyprus and Singapore states will extend the possibilities of making choice by investors”.

On the basis: www.tax-news.com

Vorontsova Maria ( the lawyer of international consulting department of Honest & Bright )