The Principality of Andorra and the Grand Duchy of Luxembourg have ratified the double taxation agreement (DTA) to prevent tax evasion and tax fraud related to personal income tax and wealth tax.
This agreement, which got into force on March 7, 2016 after approval of required internal procedures of both countries, will be applicable as of January 1, 2017.
The double taxation agreement to prevent tax evasion and tax fraud between Andorra and Luxembourg addresses downward changes to tax rates applicable to non-residents income tax withholding regarding activities performed by resident entities from both contracting countries in the other signatory country.
In general, the service provider will be taxed for the income caused in his country of residence, methods to avoid double taxation can be applied. Likewise, reduced withholdings will be applied for dividend payments and interests between companies resident in the contracting countries.