The income tax treaty between Luxembourg and Serbia entered into force on 27 December 2016. The agreement generally applies from 1 January 2017.
Under the provisions of the treaty, the withholding tax limitations to be applicable to the passive types of income in the state of source will be as follows:
- Dividends – 10% general rate; 5% reduced rate applying if the dividend recipient is a company (other than a partnership) holding directly at least 25% of the capital in the company distributing the dividends;
- Interest – 10% general rate; full exemption is applicable to interest paid on loans granted by the government, central bank or state-owned bank as well as on the state-guaranteed loans;
- Royalties – 5% rate that applies to royalties payable for the rights to use any copyright of literary, artistic or scientific work including cinematographic films or films or tapes used for radio or television broadcasting; And 10% for the use of, or the right to use, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience.
