The United Kingdom and Luxembourg signed a new tax treaty on June 7 2022

10 June, 2022  | TAX NEWS

The treaty still needs to be ratified before it will enter into force.

Protocol and CIVs

What is interesting is that in article 2 of the Protocol, the definition of resident is extended to include a Luxembourg investment vehicle that is set up in the form of a body corporate for tax purposes. To qualify as a resident the beneficial interests in the vehicle needs to be owned for at least 7% by so-called ‘equivalent beneficiaries’, which in essence are investors that would qualify for treaty application if they would directly invest themselves.


The term collective investment vehicles used in the treaty, includes UICTS, RAIFs and SIFs as well as other invest funds or arrangements established in Luxembourg which the competent authority agreements agree to regards as CIV. With respect to dividends, the treaty offers a full tax exemption in the source country, provided the recipient is the beneficial owner of the payment, except for dividends paid out of income from immovable property. The Treaty does not accommodate a (withholding tax) exemption for distributions by investment vehicles that annually distribute most of their income and whose income or capital gains derived from real estate are tax exempt.