Tax changes effective in 2012 - 1502/2012
With each year come changes for the financial services providers, especially for the asset management industry. Through our tax news we informed you about the key issues which impacted Luxembourg investment funds during 2011 and we will keep you posted on anticipated 2012 developments such as new opportunities regarding withholding tax reclaims (Aberdeen case), tax reporting for funds in Italy, FATCA or the Financial Transaction Tax.
Further to different budget and financial bills voted at the end of 2011, taxation at source of securities income (dividends / interest / capital gains) has been modified in various jurisdictions and we are happy to summarise below such developments in selected countries.
Changes effective in 2012
Changes effective as at 1 January 2012
The domestic withholding tax rate on interest increased from 15% to 21%. Note that local exemptions exist on interest on registered government bonds and registered corporate bonds.
The domestic withholding tax rate on dividends decreased from 28% to 27%. Luxembourg SICAVs have, in principle, access to the double tax treaty with Denmark and therefore should benefit from the reduced withholding tax rate of 15%.
The domestic withholding tax rate on dividends increased from 28% to 30%. Luxembourg SICAVs have in principle access to the double tax treaty with Finland and therefore should benefit from the reduced withholding tax rate of 15%. Furthermore, following the 2009 Aberdeen European Court of Justice decision, Luxembourg funds should consider whether they are willing to file dividend withholding tax reclaims in order to obtain full refund.
As detailed in our Operational Tax News dated 2 January 2012, the withholding tax rate on dividends increased from 25% to 30%. Lump sum taxation of dividends (“prélèvement forfaitaire libératoire”) has been increased from 19% to 21% as well.
The domestic withholding tax rate on interest derived from Icelandic debt securities decreased from 18% to 10%. The withholding tax rate of 18% still applies to dividend payments however.
The domestic withholding tax on dividends increased from 20% to 25%.
Luxembourg SICAVs can access to the double tax treaty with Israel and therefore should benefit from the reduced withholding tax rates of 5% and 15%.
Italy has introduced a common 20% tax rate for both dividends and interest payments except to certain securities such as Italian government bonds. For further details, please refer to our Operational Tax News dated 30 December 2011 and 20 January 2012.
The domestic withholding tax rate on dividends decreased from 15% to 6%, except for dividends paid out of profits derived during the years 2008-2011.
Luxembourg SICAVs have access to the double tax treaty with Moldova and therefore should benefit from the reduced withholding tax rate of 10%.
The domestic withholding tax rate on interest and dividends increased from 21,5% to 25%. Note that local exemptions exist on interest on registered government bonds and registered corporate bonds.
Luxembourg SICAVs have access to the double tax treaty with Portugal and therefore should benefit from the reduced withholding tax rate of 15% for both interest and dividends.
The withholding tax rate on interest and dividend has been increased from 19% to 21%. As respect to dividends, Luxembourg UCITS funds should however obtain a refund (up to 1% of the net income) subject to a specific procedure, as detailed in our Operational Tax News dated 10 June 2010.
Further to first announcements mentioned in our Operational Tax News dated 18 August 2011, the 30% withholding tax on dividends has been repealed on payments made to EEA UCITS investment funds or EEA non-UCITS investment funds subject to supervision.
Changes effective as at 1 April 2012
The application of the new Capital Gains tax regime on listed securities, which was expected to be effective as from 1 January 2012, has been postponed. Meanwhile, the securities transaction tax continues to be levied on proceeds from the sale of shares.
Please refer to our Operational Tax News dated 1 February 2011 for our previous communication on the new capital gains tax regime for more details.
Dividend withholding tax has been introduced and shall become effective on 1 April 2012. The expected withholding tax rate will be of 10%. For further details, please refer to the alert issued by our colleagues in South Africa.
Operational Taxes Matters webpage
Operational Taxes Matters – new webpage presenting a full range of services
Deloitte Luxembourg has launched a new webpage for operational taxes, dedicated to our services related to the taxation of financial products, investment funds and their investors.
In practice, the operational tax area includes matters such as:
- EU Savings Directive
- U.S. Qualified Intermediary regime
- Tax reporting obligations for investment funds
- Tax reporting services for private banking clients
- European withholding tax reclaims (Aberdeen case) for investment funds / pension funds
- Withholding tax requirements on financial products
- Taxation of investment fund vehicles and their investors
Operational Taxes people – multidisciplinary teams on a worldwide scale
Our operational tax teams combine in-depth experience in operational tax matters with a truly multidisciplinary approach, combining the services of experienced tax advisers, consultants and auditors as and when required. Our Luxembourg teams have strong relations with highly skilled operational tax teams within our international network.
To find more information on the details of the operational tax areas in which we can serve you, please visit our website: Operational Tax webpage or do not hesitate to contact us directly.
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