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Luxembourg: guidance on savings income published

On 27 February 2017, the Luxembourg administration for direct taxes published Circular Rebeli No. 1 on the taxation of savings income. In addition to the information already reported, the Circular, inter alia, confirms that:

  • The rules on the taxation of savings income do not apply to income from real estate, insurance benefits, pensions, commissions and income from derivatives. The same applies to income from structured products which is not regarded as interest according to the Commentary on article 11 of the OECD Model and which are not issued as guaranteed or unsecured capital and current accounts.
  • A credit is granted for interest from Austria which in 2017 is still subject to a 35% withholding tax unless a certificate from the Luxembourg tax administration is provided stating that the interest is declared in Luxembourg.
  • An exemption applies to savings accounts not exceeding €250.
  • The withholding tax on profit sharing bonds is 15%.

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