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Luxembourg Approves Update To French DTA

Tuesday, November 26, 2019

On November 15, 2019, Luxembourg's Council of Ministers approved a protocol to the 2018 double tax treaty with France, making changes to the way cross-border workers are taxed.

Under the changes, French workers living adjacent to the border with Luxembourg and who work in Luxembourg will not be liable to pay tax in France on Luxembourg salaries. Double tax relief will newly be provided through the exemption method.

The 2018 Franco-Luxembourg tax treaty was signed on March 20, 2018. The new treaty is based on the latest version of the OECD model tax treaty and includes provisions to implement the BEPS minimum standards. It replaced the existing treaty between France and Luxembourg dating back to 1958.

It is expected that the provisions of the new tax agreement and protocol will apply to taxable periods beginning on or after January 1, 2020.