On 4 October 2023, the law of 18 September 2023 was officially published in the Memorial (the Luxembourg official gazette), so that the new tax treaty between Luxembourg and the United Kingdom can now enter into force and develop its effects as from 2024, as planned in Article 29.

The new tax treaty replacing the one currently in force, was signed on 7 June 2022 in London between the Luxembourg and UK governments (the "Treaty"). The Treaty had however to follow the ratification and notification processes in both countries before being in force.

The UK already completed its own ratification process in 2022.

On 18 September 2023, the law ratifying the Treaty was finally adopted by Luxembourg.

Article 29 provides the following calendars:

  • Luxembourg:
    • in respect of withholding taxes, to income derived on or after 1st January 2024;
    • in respect of other taxes on income or capital, for any tax year beginning on or after 1st January 2024.
  • UK:
    • in respect of withholding taxes, to income derived on or after 1st January 2024;
    • in respect of income and capital gains tax, for any year of assessment as from 6 April 2024;
    • in respect of corporation tax, for any financial year beginning on or after 1st April 2024.

For more details about the changes and impacts of the Treaty, notably in terms of withholding tax on dividends, right to tax capital gains on UK property rich companies, as well as for some collective investment vehicles and recognized pension funds, we refer to our publication of 20 June 2022.

Please note that less than 3 months remains before the Treaty triggers its first effects in Luxembourg. We strongly recommend analyzing the impact of the new Treaty on existing structures, especially the potential impact of the 'land-rich' clause in relation to cross-border investment structures related to real estate situated in the UK.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.