L-R: J. Randolph Evans, US Ambassador to Luxembourg; Pierre Gramegna, Minister of Finance; Credit: Ministry of Finance

The US-Luxembourg double taxation protocol came into effect today, Monday 9 September 2019.

Luxembourg's Minister of Finance, Pierre Gramegna, and US Ambassador to Luxembourg, J. Randolph Evans, today announced the completion of the respective ratification procedures of the "Protocol amending the Double Taxation Convention", thus bringing the Protocol into force.

By exchanging the instruments of the Protocol, both countries have acknowledged the ratification of the 2009 "Protocol amending the Convention between the Government of the United States of America and the Government of the Grand Duchy of Luxembourg for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital".

The new Protocol replaces the existing treaty's exchange of information article with one that follows the approach of the US Model Income Tax Treaty and the Organisation for Economic Cooperation and Development (OECD) Model Tax Convention on Income and Capital.

It will become effective for requests for information made on or after the date of entry into force for tax years on or after 1 January 2009. The provisions of the Protocol, which allow for information held by financial institutions to be exchanged on request between Luxembourg and the US are complementary to the "Intergovernmental Agreement on Foreign Account Tax Compliance Act" (FATCA) signed on 24 March 2014 and adopted by the Law of 24 July 2014.

Pierre Gramegna commented: "By aligning the convention to the internationally agreed standards of the OECD on the exchange of information on request, this protocol will help ensure better and simpler cooperation between our tax authorities. It is another common step in the further consolidation of our already excellent financial relations".

Ambassador Evans agreed: "Luxembourg and the United States house the two largest financial centres for investment funds in the world. This protocol ensures our bilateral tax treaty is in accord with OECD standards for information exchange and improves transparency in the banking sector, marking yet another significant step in our relations as we work toward a secure and prosperous future together".