CONVENTION between the Government of the Grand Duchy of Luxembourg and the Government of Canada for the avoidance of double taxation and the prevention of fiscal evasion with respect to Taxes on Income and on Capital

  The Government of the Grand Duchy of Luxembourg and the Government of Canada, desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal fraud with respect to taxes on income and on capital taxes on income and on capital,  Have agreed on the following provisions:

Article 1

Persons Covered

This Convention shall apply to persons who are residents of one or both Contracting States or of both Contracting States.

Article 2

Taxes Covered

1. The existing taxes to which the Convention shall apply are

(a) in the case of Canada: the taxes imposed by the Government of Canada under the Income Tax Act, (hereinafter referred to as “Canadian tax”) (b) in the case of Luxembourg:

(i) the personal income tax;

(ii) the community income tax

(iii) the special tax on directors’ fees

(iv) the wealth tax; and

(v) the municipal business tax;

(hereinafter referred to as “Luxembourg tax”).

2. The Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Convention and which are the date of signature of the Convention and which would be added to the existing taxes or would The Convention shall also apply to any identical or substantially similar taxes imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes which may be made in their respective taxation laws.

Definitions

Article 3

General Definitions

1. For the purposes of this Convention, unless the context otherwise requires different interpretation:

(a) “Canada”, when used in a geographical sense, means the territory of Canada, including:

(i) any area beyond the territorial sea of Canada which, in accordance with international law and the laws of Canada, is an area within which Canada may exercise rights with respect to the seabed and subsoil and

(ii) the sea and airspace over the area referred to in subparagraph (i), in respect of any activity carried on in connection with the exploration or exploitation of the natural resources referred to in that subparagraph

(b) “Luxembourg”, when used in a geographical sense, means the territory of the Grand Duchy of Luxembourg; (c) the terms “a Contracting State” and “the other Contracting State” mean, as the context requires, Canada or Luxembourg ; (d) “Person” includes an individual, an estate, a trust, a corporation, a partnership, and any other body of persons; (e) “corporation” means any body corporate or any entity that is treated as a body corporate for tax purposes (f) the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; (g) the term “competent authority” means:

(i) in the case of Canada, the Minister of National Revenue or his authorized representative;

(ii) in respect of Luxembourg, the Minister of Finance or his authorized representative;

(h) the term “national” means:

(i) any individual who is a national of a Contracting State;

(ii) any legal person, partnership or association organized in accordance with the laws in force in a Contracting State.

2. For the purposes of the application of the Convention at any time by a Contracting State, any term or expression not defined therein shall, unless the context otherwise requires, have the meaning which it has at that time under the law of that State concerning the taxes to which the Convention applies, the meaning is given to such term under the tax law of that the tax law of that State shall prevail over the meaning given to such term or expression under other law of that State.

 

Article 4

Resident

1. For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax in that State by reason of his domicile, residence, place of management or any other criterion of a similar nature. This term shall also include a Contracting State or a political subdivision or local authority thereof or any legal person under public law of that State, subdivision or local authority. However, this term does not include persons who are subject to tax in that State only on income from sources in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, his status shall be determined as follows

(a) such person shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both of the State with which his personal and economic relations are the closer center (b) if the State in which such person has his center of vital interests cannot be determined, or if he has no permanent home available to him in any State, he shall be deemed to be a resident only of the State in which he has an habitually staying ; (c) if such person is ordinarily present in both States or is not ordinarily present in either State, he shall be considered a resident only of the State of which he is a national; (d) if such person is a national of both States or of neither of them, the competent authorities of the Contracting shall settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1 a person other than an individual an individual is a resident of both Contracting States, the competent authorities of the Contracting States shall endeavor to settle the question by mutual agreement. In the absence of agreement, such person shall not be entitled to claim any relief or exemption from exemptions from tax provided for in the Convention.

Article 5

Permanent Establishment

1. For the purposes of this Convention, the term “permanent establishment” means a

fixed place of business through which the business of an enterprise is wholly or partly carried on part of its business.

2. The term “permanent establishment” includes in particular:

(a) a place of management ;

(b) a branch ;

(c) an office;

(d) a factory;

(e) a workshop;

(f) a mine, oil or gas well, quarry or other place related to the exploration or exploitation of natural resources.

3. A construction or assembly site constitutes a permanent establishment only if its duration if its duration exceeds twelve months.

4. Notwithstanding the foregoing provisions of this Article, there shall be deemed not to be a “permanent establishment” if :

(a) use is made of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise (b) goods belonging to the business are stored solely for the purpose of storage, display or delivery; (c) goods belonging to the enterprise are stored solely for processing by another enterprise; (d) a fixed place of business is used solely for the purpose of purchasing goods or assembling information for the enterprise; (e) a fixed place of business is used solely for the purpose of carrying on any other activity of a preparatory or auxiliary character for the enterprise; (f) a fixed place of business is used solely for the purpose of carrying on the combined activities referred to in subparagraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from such combination shall remain of a preparatory or Auxiliary.

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an independent status to whom paragraph 6 applies – acts on behalf of the enterprise and has in a business and has and habitually exercises in a Contracting State such powers as will enable him to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of enterprise, that person shall be deemed to have a permanent establishment in that State in respect of all the activities which that person carries on for the enterprise unless the activities of that person are limited to the activities of such person are limited to those mentioned in paragraph 4 and which, if exercised through a  fixed place of business, would not make it possible to regard such place of business as a permanent establishment under the provisions of that paragraph.
6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.
7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State or which carries on business in The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting of itself to make any such company a permanent establishment of the other.

III. taxation of income

Article 6

Real estate income

1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture and forestry) situated in the other Contracting State may be taxed in that other State.
2. For the purposes of this Convention, the term “immovable property” shall have the meaning which it has the meaning which it has for the purposes of the relevant tax law of the Contracting State in which the property is situated. The term shall, in any case, include property accessory to real property, livestock, and equipment of agricultural and forestry undertakings, rights to which the provisions of private law respecting landed property, the usufruct of immovable property rights to variable or fixed payments for the exploitation or concession of the exploitation of mineral deposits, springs and other natural resources; ships and aircraft natural resources; ships and aircraft are not considered as real estate.

(3) The provisions of paragraph (1) shall apply to income from the direct operation, rental or leasing, or any other form of property and to income from the alienation of such property.

4. The provisions of paragraphs 1 and 3 shall also apply to income from the real estate of anproperty of an enterprise as well as to income from real estate used for the exercise of a self-employed profession.

Article 7

Business Profits

1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on or has business in such a manner, the profits of the enterprise may be taxed in the other State other State but only to the extent that they are attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in State through a permanent establishment situated therein, there shall be attributed to that permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment shall be attributed in each Contracting State to that permanent establishment the profits which it might be expected to make if it were a separate enterprise carrying on separate enterprise engaged in the same or similar activities under the same or similar conditions and the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it permanent establishment and with all other persons.
3. In determining the profits of a permanent establishment, there shall be allowed those deductible expenses incurred for the purposes of that permanent establishment, including
4. In determining the profits of a permanent establishment, there shall be allowed such deductible expenses as are incurred for the purposes of that permanent establishment, including executive and general administrative expenses incurred, either in the State in which such permanent establishment is situated or elsewhere.
5. No profit shall be attributed to a permanent establishment by reason of its having merely purchased goods or merchandise for the enterprise. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined annually by the same method, unless there are good and sufficient reasons for sufficient grounds to proceed otherwise.
6. Where profits include items of income which are treated separately in other Articles of this other Articles of this Convention, the provisions of those Articles shall not be affected by the provisions of this Article.

 

Article 8

Maritime and Air Navigation

1. Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State. of ships or aircraft in international traffic shall be taxable only in that State.
2. Notwithstanding the provisions of paragraph 1 and Article 7, profits derived by an enterprise of a Contracting State from a voyage of a ship where the principal purpose of the voyage is to carry of the voyage is to transport passengers or goods exclusively between places in the other points in the other Contracting State may be taxed in that other State.
3. The provisions of paragraphs 1 and 2 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
4. For the purposes of this Article,

(a) the term “profits” includes:

(i) gross receipts and income directly derived from the operation of ships or aircraft in international traffic, and

(ii) interest on money derived directly from the operation of ships or aircraft in international traffic, provided that such interest is incidental to such operation

(b) the term “operation of ships or aircraft in international traffic” by an enterprise includes:

(i) the chartering or leasing of ships or aircraft,

(ii) the leasing of containers and ancillary equipment, and

(iii) the disposal of ships, aircraft, containers and ancillary equipment,by such enterprise provided that such charter, lease or disposal is incidental to the operation of ships or aircraft in international traffic by such by that enterprise.

Article 9

Associated enterprises

1. Where

(a) an enterprise of a Contracting State participates directly or indirectly in the control or capital of an enterprise of the other Contracting State, or (b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, or and that, in either case, the two enterprises are, in their commercial or financial relations commercial or financial relations, are bound by conditions agreed upon or imposed which are differ from those which would be agreed upon between independent enterprises, income which, but for these conditions, would have been realized by one of the enterprises but could not in fact have been realized because of those conditions, may be included in the income of that enterprise and taxed accordingly.

2. Where a Contracting State includes in the income of an enterprise of that State – and taxes accordingly – income and taxes accordingly – income on which an enterprise of the other Contracting State has been other State, and the income so included is income that would have been earned by the income which would have accrued to the enterprise of the first-mentioned State if the conditions between the two enterprises had been those which would have been agreed upon between independent enterprises, the other State shall make an appropriate adjustment to the amount of tax imposed therein on such income. In determining such adjustment, due regard shall be had to the other provisions of this Convention and, if necessary, the competent authorities of the Contracting States shall consult each other.
3. A Contracting State shall not adjust the income of an enterprise in the cases referred to in paragraph 1 after the expiration of the time limits for doing so provided in its domestic laws and, in any event, after the end of the year in which the income that would be subject to adjustment is earned. income which is the subject of such an adjustment would, but for the conditions referred to in paragraph 1, would have been realized by that enterprise.
4. The provisions of paragraphs 2 and 3 shall not apply in the case of fraud or wilful omission.

 

Article 10

Dividends

1. Dividends paid by a company that is a resident of a Contracting State to a resident of the other residents of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so assessed shall not exceed

(a) 5 percent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) that directly or indirectly controls at least 10 percent of the voting power of the company paying the dividends (b) notwithstanding the provisions of paragraph (a), 10 percent of the gross amount of the dividends if the dividends are paid by a non-resident-owned investment corporation that is resident in Canada to a beneficial owner that is a corporation (other than a partnership) that is a resident of Luxembourg and that owns at least 25 per cent of the capital of the company paying the dividends; and (c) 15 percent of the gross amount of the dividends in all other cases. The provisions of this paragraph shall not affect the taxation of the company in respect of profits used to pay the dividends.

3. Notwithstanding the provisions of paragraph 2, dividends paid by a company which is a resident of Luxembourg shall not be taxable in Luxembourg if the beneficial owner of the dividends is a company which is a resident of Canada and which has held during an uninterrupted period of two years preceding the date of payment of the directly at least 25% of the voting rights of the company paying the dividends. This provision applies only to dividends from the portion of the interest that has been uninterrupted ownership by the beneficial owner during the said two-year period of two years. On the other hand, the provisions of this paragraph shall only apply if the only apply if the distributed dividend is derived from an effective industrial or commercial activity in Luxembourg (other than an activity consisting of making or managing management of investments, unless it is an activity carried on by a banking or insurance company) and if such dividends are exempt in Canada.

 

4. Notwithstanding the provisions of paragraph 2, dividends arising in a Contracting State and paid to an organization that is constituted and operated in the other Contracting State exclusively for the purpose of providing benefits or administering funds under one or more pension, retirement or other benefit plans to employees shall be exempt from tax in the first-mentioned State provided that:

(a) the organization beneficially owns the shares on which the dividends are paid, holds such shares as an investment, and is generally exempt from tax in the other State (b) the organization does not directly or indirectly own more than 5 percent of the capital or 5 percent of the voting power in the company paying the dividends; and (c) the class of shares of the company paying the dividends is regularly traded on an approved stock exchange.  

5. For the purposes of paragraph 4, the term “approved stock exchange” means

(a) in the case of dividends arising in Canada, a Canadian stock exchange prescribed for the purposes of the Income Tax Act ;

(b) in the case of dividends from Luxembourg, the Luxembourg Stock Exchange; and

(c) any other stock exchange agreed upon by exchange of letters between the authorities of the Contracting States.

6. The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” warrants, mining shares, founders’ shares or other shares, except debt-claims, as well as income which is subject to the same taxation income from shares by the legislation of the State of which the distributing company is a resident.
7. The provisions of paragraphs 1, 2, and 3 shall not apply where the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other of which the company paying the dividends is a resident, carries on business in the other Contracting business activity through a permanent establishment situated therein, or performs independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with it. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
8. Where a company that is a resident of a Contracting State derives profits or income from the other Contracting State, the company shall be deemed to have income of the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except to the extent that such dividends are paid to a resident of that other State or to the extent that the holding in respect of which the dividends are paid dividends is effectively connected with a permanent establishment or a fixed base situated in that other State, nor impose any tax on the undistributed profits by reason of the taxation of profits of the company, even if the dividends paid or the undistributed profits consist of or the undistributed profits consist wholly or partly of profits or income arising from that other State.
9. Nothing in this Convention shall be construed to prevent Canada from imposing on the income of a company attributable to permanent establishments in Canada, a tax in addition to the tax that would be applicable to the income of a company incorporated in Canada, provided that the additional tax so imposed shall not exceed 5 percent. For the purposes of this provision, the term “income” means the profits attributable to such permanent establishments in Canada (including gains from the alienation of property forming part of the business property of such permanent establishments, referred to in paragraph 2 of Article 13) in accordance with Article 7, for the year and for previous years, after deducting therefrom

(a) business losses attributable to such permanent establishments (including losses from the alienation of property forming part of the business property of such permanent establishments) in such year and previous years ; (b) all taxes applicable in Canada to such profits, other than the additional tax referred to in this paragraph; (c) profits reinvested in Canada, provided that the amount of such deduction shall be determined in accordance with the existing provisions of the law of Canada relating to the computation of the allowance for investment in property situated in Canada, and any subsequent modification thereof in Canada and any subsequent modification of those provisions which does not affect the would not affect the general principle thereof; and five thousand one hundred Canadian dollars ($500,000) less any amount deducted under this paragraph (d),

(i) by the corporation, or

(ii) by a person associated with the corporation, in respect of a business that is the same or similar to that carried on by the corporation; for the purposes of this paragraph (d), a corporation is associated with another corporation if it controls

(d) a corporation is associated with another corporation if it directly or indirectly controls the other corporation, or if both corporations are directly or indirectly controlled by the same person or persons, or if the two corporations do not deal with each other at arm’s length corporations do not deal with each other at arm’s length. The provisions of this paragraph shall also apply in respect of income a corporation engaged in the business of real property from the disposition of real property situated in Canada, notwithstanding the absence of a permanent establishment in Canada, but only to the extent that such income is taxable in Canada under the provisions of Article 6 and paragraph 1 of Article 13.   

Article 11

Interest

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

 

2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the arising therefrom and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 percent of the gross amount of the interest. The tax so charged shall not exceed 10 percent of the gross amount of the interest.

Notwithstanding the provisions of paragraph 2 a) interest arising in Luxembourg and paid on a debt of the government of that Contracting State or of a political subdivision or local authority thereof shall be taxable only in the other Contracting State provided that a resident of that other State is the beneficial owner of the interest; (b) interest arising in Luxembourg and paid to a resident of Canada shall be taxable only in Canada if it is paid in respect of a loan made, guaranteed or insured, made, guaranteed or insured by the Export Development Corporation of Canada; and (c) interest arising in a Contracting State and paid to an organization that has been established and is operated in the other Contracting State exclusively for the purpose of providing benefits or administering funds under one or more pension, retirement or other employee benefit plans shall be exempt from tax in the first-mentioned (d) the taxable income of the other State is exempt from tax in the first-mentioned State provided that :

(i) the organization is the beneficial owner and is generally exempt from tax in the other State; and

(ii) the interest is not derived from the conduct of a trade or business or of a related person.

4. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to a resident of the other Contracting State who is the beneficial owner shall be taxable only in that other State if such interest

(a) is a penalty for late payment, or

(b) is paid in connection with the sale on credit of any equipment or goods, except where the sale is between persons not dealing at arm’s length with each other. between persons not dealing at arm’s length with each other.

5. The term “interest” as used in this section means income from debt obligations of any kind, whether of any kind, whether or not secured by mortgage or by a provision for participation in the debtor, including income from government securities and income from debt obligations, including bonds, including premiums and prizes attaching to such securities, and any other income all other income subject to the same tax regime as income from loans by the law of the State in which the income arises. However, the term “interest” does not include the income referred to in Article 10.
6. The provisions of paragraphs 1, 2, 3 and 4 shall not apply where the beneficial owner of the resident of a Contracting State carries on business in the other Contracting State in which the interest arises, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in the other Contracting State by means of a fixed base situated therein, and the debt-claim in respect of which the interest is effectively connected with it. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
7. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. However, where the payer of the interest, whether or not he is a resident of a Contracting State, has in a Contracting State a permanent establishment or a fixed base, in respect of which the indebtedness on which the interest is paid was incurred and where the indebtedness giving rise to the interest was incurred and which bears the expense of that interest, such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
8. Where, by reason of a special relationship between the payer and the beneficial owner or where both beneficiary or between both of them and third persons, the amount of the interest, taking into account interest, taking into account the claim for which it is paid, exceeds that which would have been the debtor and the beneficial owner would have agreed in the absence of such relationship, the provisions of this Article shall apply only to the latter amount. In such a case, the excess part of the payments shall remain taxable according to the laws of each Contracting State and having regard to the other provisions of this Convention.

Article 12

Royalties

1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the arise and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10 percent of the gross amount of the royalties.
3. Notwithstanding the provisions of paragraph 2

(a) copyright royalties and other like payments in respect of the production or reproduction of any literary, dramatic, musical or other artistic work cinematographic films and royalties in respect of works on film or videotape or other means of reproduction for use in connection with television broadcasting), and (b) royalties for the use of, or the right to use, computer software or a patent or for information concerning industrial commercial or scientific experience (but not including any information provided under a rental or franchise agreement), arising in a Contracting State and paid to a resident of the other Contracting State who is the beneficial owner, shall be taxable only in that other State.

4. The term “royalties” as used in this Article means remuneration of any kind paid for the remuneration of any kind paid for the use of, or the right to use, any copyright, patent, trademark, design or model, plan, formula or other intellectual property rights secret plan, formula or process, as well as for the use of or the right to use of industrial, commercial or scientific equipment and for information relating to information relating to experience gained in the industrial, commercial or scientific field experience; this term also includes remuneration of any kind for cinematographic films and works on film, tapes and other means of reproduction for use in connection with television.
5. The provisions of paragraphs 1, 2 and 3 shall not apply where the of the royalties, being a resident of a Contracting State, carries on business in the other State in which the royalties arise carries on business in that other State through a business activity through a permanent establishment situated therein, or performs in the other independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with it. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
6. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. However, where the payer of the royalties, whether or not a resident of a Contracting State, is a resident of that State, the royalties shall be deemed to arise in that State. whether or not a resident of a Contracting State, has in a Contracting State a permanent establishment, or a fixed base, in a Contracting State in connection with which the obligation the payment of the royalties has been made and which bears the cost of such royalties, those royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or where both beneficiary or between both of them and third persons, the amount of the royalties, taking into service for which they are paid, exceeds the amount that would have been agreed upon by the debtor and the beneficial owner would have agreed in the absence of such relationship, the provisions of this Article shall apply only to the latter amount. In such a case, the excess part of the payments shall remain taxable according to the laws of each Contracting State and having regard to the other provisions of this Convention.

Article 13

Capital Gains

1. Gains derived by a resident of a Contracting State from the alienation of real property situated in the other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the business property of an establishment that an enterprise of a Contracting State has in the other Contracting State, or of movable property pertaining to a fixed base available to a resident of a Contracting State available to a resident of the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such permanent establishment (alone or with the whole enterprise) or fixed base, may be taxed in that other State.
3. Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in that State.
4. Gains derived by a resident of a Contracting State from the alienation of

(a) shares (other than shares listed on an approved stock exchange in the other Contracting State) forming part of a substantial interest in the capital of a company the value of which is derived principally from real property situated in that other State (b) an interest in a partnership, trust or estate, the value of which is derived principally from real property situated in that other State, may be taxed in that other State. For the purposes of this paragraph, the term “property” does not include property (other than rental property) in which the corporation, partnership the company, partnership, trust or estate has carried on its business; and, there is a substantial interest where the resident and persons associated with the resident owns 10 percent or more of the shares of any class of the capital of a corporation.

5. Gains from the alienation of any property other than that referred to in paragraphs 1 to 4 shall be taxable only in the Contracting State of which the alienator is a resident.
6. Where a resident of a Contracting State disposes of property in connection with an incorporation or other organization, reorganization, amalgamation, demerger or similar transaction and the profit, gain or income from such alienation is not recognized for is not recognized for the purpose of taxation in that State, if so requested by the person the person acquiring the property, the competent authority of the other Contracting State may, subject to terms and conditions satisfactory to it, agree to defer recognition of the profit, gain or income from such property for the purpose of taxation in other States until such time and in such manner as may be specified in the agreement.
7. The provisions of paragraph 5 shall not affect the right of either Contracting State to levy, in accordance with the States to levy, in accordance with its laws, a tax on gains from the alienation of property derived by an individual who is a resident of the other Contracting State and who was a resident of the first-mentioned State at any time during the six years immediately preceding the alienation of the property.
8. Where an individual who, immediately after ceasing to be a resident of a Contracting State becomes a resident of the other Contracting State shall be treated for the purposes of taxation in the first-mentioned State as having alienated property and shall be taxed by reason of such alienation, he may elect for the purposes of taxation in the other State to be State, to be treated as having sold and repurchased, immediately before becoming a resident of that State, the property for an amount equal to its fair market value at that time. However, this provision shall not apply to property that would give rise, immediately before the individual becomes a resident of that other State, to gains taxable in that other State, or to real property situated in a third State.

Article 14

Independent Personal Services

1. Income derived by an individual who is a resident of a Contracting State from professional or similar services of an independent character shall be taxable only in that State, unless that resident has an in that State unless that resident has a fixed base regularly available in the other Contracting State for the purpose of performing his profession. If he has or has had, such a fixed base, the income may be taxed in the other State but only to the extent that it is attributable to that fixed base.
2. The term “professional services” includes in particular independent activities of a scientific, literary, artistic, educational or teaching nature, as well as the activities of doctors, lawyers, engineers, architects, dentists and accountants.

Article 15

Dependent Professions

1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages, and other remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is exercised in that State, remuneration derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if

(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve-month period beginning or ending in the taxable year concerned, and

(b) the remuneration is paid by or on behalf of an employer who is not a resident of the other State, and

(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.

3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated by an enterprise of a Contracting State in international traffic may be taxed in that State.

Article 16

Directors’ fees

Directors’ fees and other similar payments which a resident of a Contracting State receives in his capacity as a member of the board of directors or of the supervisory board of a company a resident of a Contracting State in his capacity as a member of the board of directors or supervisory board of a company which is a resident of the other Contracting State may be taxed in that other State. of a company which is a resident of the other Contracting State may be taxed in that other State.

Article 17

Artists and Athletes

1. Notwithstanding the provisions of Articles 7, 14 and 15, income derived by a resident of a from his personal activities as an entertainer, such as a theatre artist, actor or sportsman, exercised in the other Contracting State as an entertainer, such as a theater, motion picture, radio or television artiste, or a musician, or as an athlete, may be taxed in that other State.

 

2. Where income from activities which an entertainer or athlete performs personally and in that capacity is attributed not to the entertainer or athlete himself but to another person, such income may be taxed, notwithstanding the provisions of Articles 7, 14 and 15, in the Contracting State in which the activities of the artist or athlete are carried on.

 

3. The provisions of paragraph 2 shall not apply if it is established that neither the entertainer or sportsmen, or persons associated with him, participate directly or indirectly in the profits of the directly or indirectly in the profits of the person referred to in that paragraph.

Article 18

Pensions and Annuities

 

1. Pensions and annuities arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

 

2. However, such pensions and annuities may also be taxed in the State in which they arise and according to the laws of that State. However, such pensions and annuities may also be taxed in the State in which they arise and according to the laws of that State.

 

3. Notwithstanding any provision of this Convention

(a) pensions paid by the Luxembourg State or by one of its political subdivisions or local authorities, either directly or out of funds constituted by them, to an individual in respect of services rendered to that subdivision or local authority, shall be taxable only in Luxembourg; (b) war pensions and allowances (including pensions and allowances paid to veterans or paid as a result of damages or injuries sustained in connection with a war) arising in Canada and paid to a resident of Luxembourg will be exempt from Luxembourg tax, as long as they are exempt from Canadian tax; (c) benefits and annuities received from Luxembourg from the accident insurance association and the war damage board as compensation for personal injury shall be exempt from Canadian tax as long as they are exempt from Luxembourg tax; (d) alimony and other similar payments arising in a Contracting State and paid to a resident of the other Contracting State who is subject to tax therein on such income shall be taxable only in that other State, but the amount that is taxable in that other State shall be taxable in that other State the amount that may be taxed in that other State shall not exceed the amount that would be taxable in the first-mentioned State if the recipient were a resident of that first-mentioned State; (e) benefits paid under the social security legislation of a Contracting State shall be taxable only in the first-mentioned State.

Article 19

Public Office

(a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political subdivision or local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall not be taxed as remuneration for services rendered to that State or subdivision or authority. (b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are performed in that State and the individual is a resident of that State who :

(i) is a national of that State, or

(ii) did not become a resident of that State solely for the purpose of rendering the services.

2. The provisions of paragraph 1 shall not apply to salaries, wages and other similar remuneration paid in respect of remuneration paid in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or local authority thereof.

Article 20

Students

Amounts which a student or trainee who is, or immediately before entering a Contracting State was to a Contracting State, a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of furthering his education or training, shall be paid to him for his maintenance, education or training, shall not be taxable in that State, provided that such remuneration they are derived from sources outside that State.

Article 21

Other Income

1. Items of income of a resident of a Contracting State, wherever arising not dealt with in the foregoing Articles of this Convention shall be taxable only in that taxable only in that State, except that if such income is derived from sources in the other Contracting State, it may also be taxed in that other State. However, in the case of in the case of income from an estate or trust, other than a trust that has received contributions trust which has received contributions in respect of which a deduction has been allowed, the tax so charged shall not exceed 15 percent of the gross amount of the income provided that the income is taxable in the Contracting State of which the beneficiary is a resident.

 

2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property, if the income from immovable property, where the recipient of such income resident of a Contracting State carries on business in the other Contracting State through a business activity through a permanent establishment situated therein, or performs in the other Contracting State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

 Taxation of wealth

Article 22

Wealth

1. Capital represented by immovable property owned by a resident of a Contracting State and situated in the State and situated in the other Contracting State may be taxed in that other State.

 

2. Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, or Contracting State, or by movable property pertaining to a fixed base available to a resident of a resident of a Contracting State has in the other Contracting State for the purpose of performing independent of  personal services, may be taxed in that other State.

 

3. Capital represented by ships and aircraft operated in international traffic by an enterprise of a Contracting State and by movable property pertaining to the operation of such ships and aircraft shall be taxable only in that State.

 

4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.

Methods for Prevention of Double Taxation

Article 23

Elimination of Double Taxation

 

1. In the case of Canada, double taxation shall be avoided as follows

(a) subject to the existing provisions of the law of Canada regarding the deduction from tax payable in Canada of tax paid in a territory outside Canada and to any subsequent modification of those provisions which shall not affect the general principle thereof, and the general principle thereof, and without prejudice to any greater deduction or relief provided by deduction or relief provided under the laws of Canada, tax payable in Luxembourg in respect of profits, income or gains arising in Luxembourg shall be deducted from any deducted from any Canadian tax payable in respect of the same profits income or gains; (b) where, in accordance with any provision of the Convention, income derived or capital owned by a resident of Canada is exempt from tax in Canada, Canada may nevertheless, for the purpose of calculating the amount of tax on other income or capital, take into account the exempted income or capital.  

2. In the case of Luxembourg, double taxation shall be avoided as follows

(a) where a resident of Luxembourg derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in Canada, Luxembourg shall exempt such income or capital from tax, subject to the provisions of sub paragraph (b) the provisions of subparagraph (b) but may, for the purpose of calculating the amount of tax on the remaining income or capital of such resident, apply the same rate as if such income or if the income or capital in question had not been exempted; (b) where a resident of Luxembourg derives income which, in accordance with the provisions of Articles 10, 11, 12, 13 (4) and (7), 18 and 21, may be taxed in Canada, Luxembourg shall allow a deduction from the tax imposed on such resident an amount equal to the tax paid in Canada. The amount so deducted shall not, however, exceed the amount of tax paid in Canada. The amount so deducted shall not, however, exceed the portion of the tax, computed before the deduction, corresponding to the income received from Canada; (c) by way of derogation from subparagraph (b), dividends distributed by a capital company which is a resident of Canada and subject in that State to corporate income tax to a capital company which is a Luxembourg which has, since the beginning of its fiscal year, directly disposed of at least 10 percent of the capital of the first company. The above-mentioned shares or units of the Canadian company are, under the same conditions, exempt from Luxembourg wealth tax.  

3. For the purposes of this Article, profits, income or gains of a resident of a Contracting State shall be deemed to arise from sources in the other Contracting State if they are taxable in that Contracting State if it may be taxed in that other Contracting State in accordance with this Convention.

Special provisions

Article 24

Non-discrimination

 

1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than those to which nationals of that other State in the same circumstances are or may be subject. in the same situation. This provision shall also apply, notwithstanding the provisions of Article 1, to individuals who are not residents of a Contracting State or of one or both of the Contracting States.

 

2. The taxation of a permanent establishment which an enterprise of a Contracting State has in the Contracting State shall not be less favorably assessed in that other State than the taxation of less favorable than the taxation of enterprises of that other State carrying on the same activity. This provision shall not be construed to require a Contracting State to grant to residents of the other Contracting State personal allowances deductions, allowances and reductions for personal circumstances or family responsibilities that it This provision shall not be construed to require a Contracting State to grant to residents of the other Contracting State the personal allowances, reliefs and reductions for status or dependency that it grants to its own residents.

 

3. Enterprises of a Contracting State, the capital of which is wholly or partly, directly or indirectly, owned or controlled by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any tax or more burdensome than those to which other similar enterprises of the first-mentioned State, the capital of which is wholly or partly owned or controlled in whole or in part, directly or indirectly, by one or more residents of a third State.

 

4. The term “taxation” as used in this Article means the taxes covered by this Convention.

Article 25

Mutual Agreement Procedure

1. Where a person considers that the actions of one or both of the Contracting States result or will result States result or will result in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by provided for in the domestic law of those States, apply to the competent authority of the Contracting State of which it is a resident or, if its case comes under paragraph 1 of Article 24, to the competent of the Contracting State of which he is a national, a written request, stating the reasons therefor the Contracting State of which it is a national, a written request for a review of such taxation. [The second sentence of paragraph 1 of Article 25 of this Convention shall be replaced by the second sentence of paragraph 1 of Article 16 of the MI] [To be admissible, the said request must be submitted within two years of the first notification of the measure that results in taxation which results in taxation not in accordance with the Convention].

 

2. The competent authority referred to in paragraph 1 shall endeavor, if the complaint appears to it to be well-founded and if it is not itself able to provide a satisfactory solution, to and if it is not itself able to resolve the matter satisfactorily, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with the Convention.

 

3. The competent authorities of the Contracting States shall endeavor by mutual agreement to resolve any difficulties or to resolve any difficulties or doubts arising as to the interpretation or application of the interpretation or application of the Convention. They may also consult together with a view to eliminating double taxation in cases not provided for in the Convention.

 

4. In particular, the competent authorities of the Contracting States may consult together with a view to reaching agreement :

(a) that the profits accruing to an enterprise of a Contracting State and its permanent establishment situated in the other Contracting State shall be attributed in an identical manner;

(b) to ensure that profits accruing to associated enterprises referred to in Article 9 are in the same way;

(c) on the method for the avoidance of double taxation in the case of an estate or trust.

 

5. The competent authorities of the Contracting States may communicate directly with each other in carrying out the provisions of the Convention.

Article 26

Exchange of information

1. The competent authorities of the Contracting States shall exchange such information as is that is foreseeably relevant to the application of the provisions of this Convention or to the administration or enforcement of the domestic laws of the Contracting States relating to taxes of every kind and description imposed by or on behalf of the Contracting States to the Contracting States insofar as the taxation thereunder is not contrary to this Convention. The exchange of information is not restricted by Articles 1 and 2.

 

2. Information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as secret in the same manner as information obtained under the domestic laws of that State and shall law of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of taxes in the assessment or collection of, proceedings or prosecutions in respect of, or appeals in relation to, such taxes the assessment or collection of taxes, the determination of appeals in connection with such taxes, or the review of any of the foregoing. Such persons or authorities shall use such information only for such purposes. They may disclose such information in public court hearings or in judgments. Notwithstanding the foregoing, information received by a Contracting State may be State may be used for other purposes where this is possible under the laws of both States and where the competent authority of the State providing the information authorizes such use.

 

3. In no case shall the provisions of paragraphs 1 and 2 be construed to require a Contracting State

(a) to carry out administrative measures at variance with the laws and administrative practices of that or of the other Contracting State

(b) to supply information that is not obtainable under the laws or normal administrative practice of that or of the other Contracting State;

(c) to supply information that would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy.

 

4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use the powers at its disposal to obtain the requested information, even if it does not need the information for its own tax purposes. The obligation in the preceding sentence is subject to the limitations of paragraph 3 unless such limitations would prevent a Contracting State from providing information solely State from communicating information solely because it has no interest in the information for its own tax purposes of no domestic interest to it.

 

5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to allow a Contracting State to refuse to supply information solely because it is held by a solely because the information is held by a bank, other financial institution, trust, foundation financial institution, a trust, a foundation, an agent or a person acting in an agency capacity agent or trustee or because the information relates to ownership interests in a person property rights in a person.

Section 27

Members of diplomatic missions and consular posts

1. The provisions of this Convention shall not affect the fiscal privileges of members of diplomatic missions, members of diplomatic missions or consular posts under the general rules of international law under the general rules of international law or under the provisions of special agreements.

 

2. Notwithstanding Article 4, an individual who is a member of a diplomatic mission mission, consular post or permanent delegation of a Contracting State which is situated in the State that is located in the other Contracting State or in a third State shall be considered, for considered for the purposes of the Convention to be a resident of the sending State provided that provided that it is subject in the sending State to the same obligations with respect to the same obligations in relation to taxation on all of his income as are residents of that State.

 

3. The Convention shall not apply to international organizations, to organs or officials of such organizations their officials, or to persons who are members of a diplomatic mission consular post or permanent delegation of a third State or group of States, when they are States, when they are in the territory of a Contracting State and are not subject in either Contracting State and are not subject in that State to the same obligations in relation to the same obligations in relation to taxes on total income as are residents of the said States.

Article 28

Miscellaneous Provisions

1. The provisions of this Convention shall not be construed to limit in any manner whatsoever any exemption, allowance, deduction, credit or other deductions, credits or other reliefs which are or may be granted by the laws of a Contracting State in the determination of the tax imposed by that State.

 

2. Nothing in the Convention shall be construed to prevent a Contracting State from imposing a State from imposing a tax on amounts included in the income of a resident of that State with respect to a partnership, trust, or controlled foreign affiliate in which he controlled foreign affiliate in which it has an interest.

 

3. The Convention shall not apply to holding companies within the meaning of the special laws of legislation of Luxembourg, currently governed by the law of July 31, 1929, and the Grand-Ducal of December 17, 1938, or any other similar law which may enter into force in Luxembourg after in force in Luxembourg after the signature of the Convention, nor to companies subject to similar tax legislation in Luxembourg. It does not apply to income that a resident of income derived by a resident of Canada from such companies or to shares or other capital securities of such companies owned by such a person.

 

4. For the purposes of paragraph 3 of Article XXII (Consultation) of the General Agreement on services, the Contracting States agree that, notwithstanding this paragraph, any dispute between them as to whether a measure falls within the scope of this Convention may not be brought before the Council for Trade in Services as provided for in this paragraph, only with the consent of both Contracting States. Any doubt as to the interpretation of this paragraph shall be resolved paragraph 3 of Article 25 or, in the absence of agreement under that procedure, under any other procedure, under any other procedure agreed to by both Contracting States.

VII. Final provisions

Article 29

Entry into force

1. This Convention shall be ratified and the instruments of ratification exchanged as soon as possible.

 

2. The Convention shall enter into force upon the exchange of the instruments of ratification and its provisions shall

(a) in respect of tax withheld at source on amounts paid or credited to non-residents on or after the first day of January in the calendar year next following immediately following the year in which the instruments of ratification are exchanged; and

(b) in respect of other taxes, for any taxation year beginning on or after the first day of January in the calendar year following that in which the instruments of ratification are exchanged.

3. The provisions of the Convention between the Grand Duchy of Luxembourg and Canada for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital signed in Luxembourg on January 17, 1989 shall cease to have effect with respect to the taxes to which this Convention applies in accordance with the provisions of paragraph 2.

Article 30

Denunciation

1. This Convention shall remain in force indefinitely, but each of the Contracting States may, on or before June 30 of any calendar year subsequent to the year of the exchange of instruments of ratification, give notice of denunciation in writing through diplomatic channels of denunciation to the other contracting State through diplomatic channels. In this case, the Convention shall cease to be applicable:

(a) in respect of tax withheld at source on amounts paid or credited to non-residents on or after the first day of January in the calendar year immediately following the calendar year in which the notice is given; and

(b) in respect of other taxes, for any taxation year beginning on or after January 1 of the calendar year immediately following the year in which the notice is given.