Capital gains tax provisions on real estate have been amended by Luxembourg & France and this is for a fourth time has revised their double tax agreement.
The Protocol was signed on September 5, 2014, by Michel Sapin, France’s Minister of Finance and Public Accounts, and Pierre Gramegna, Luxembourg’s Finance Minister.
A new paragraph 4 to Article 3 of the convention has been added as amendment providing that gains from the alienation of shares or other rights in a company that is predominantly engaged in real estate activities, or a trust or any other institution or entity, shall be taxed only in the country of source. An entity is predominantly engaged in real estate activities if its portfolio, by value, includes at least 50 percent real estate assets.
The change will allow France to tax gains accruing to Luxembourg residents on real estate held in France, eliminating double non-taxation, Luxembourg’s tax authority said. The new measures will have effect from January 1, 2015 if both nations complete their domestic ratification procedures this year.
