Luxembourg – Rwanda Treaty details are now available

On 29 September 2021, Luxembourg and Rwanda signed a tax treaty.

The specifics of the Luxembourg – Rwanda treaty can be found below.

Taxes Covered

Luxembourg:

1. Personal income tax
2. Corporation tax
3. Capital tax
4. Communal trade tax

Rwanda:

1. Personal income tax
2. Corporate income tax
3. Tax on rent of immovable property
4. Withholding taxes

Withholding Taxes

• Dividends 10%
• Interest 10%
• Royalties 10%
• Technical Fees (Services of a technical, managerial, professional or consultancy nature) 10%

Permanent Establishment

There is a permanent establishment clause in the Luxembourg – Rwanda treaty.

A permanent establishment will be deemed constituted if an enterprise furnishes services in a contracting state through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 183 days within any 12-month period.

Capital Gains

The following capital gains derived by a resident of one contracting State may be taxed by the other State:

• Gains from the alienation of immovable property situated in the other State.
• Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State.
• Gains from the alienation of shares deriving more than 50% of their value directly or indirectly from immovable property situated in the other State.
• Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Rwanda – Credit Method

Luxembourg – Exemption Method

However, for Luxembourg, the credit method will apply in respect of certain income. I.e. dividends, interest, royalties, technical fees, capital gains, artists and sportspersons and other income as per article 21 of the treaty.

Arbitration Clause

Article 25 of the treaty contains an arbitration clause.

Article 25 provides that if issues cannot be resolved under Mutual Agreement Procedure within two years from the date when all required information has been provided to the competent authorities, the person that submitted the case may request that the case be submitted to arbitration.

Entry into force

The treaty will enter into force once the ratification instruments are exchanged.

It will apply as from 1 January of the year following its entry into force.

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