(Communicated by the Foreign Minister’s Spokesman)

Deputy Prime Minister and Minister of Foreign Affairs Silvan Shalom and Luxemburg Foreign Minister Jean Asselburn today signed in Brussels a Convention for Avoidance of Double Taxation between the two states.

The purpose of the convention is to avoid double taxation of individuals or companies, that are residents of Israel or Luxemburg or both. The convention applies to taxation of income and capital, irrespective of how the taxes are levied.

The provisions of the convention prevent the collection of double taxes by determining the taxation rights of each state and by obligating the state to credit, in certain cases, the taxes that were paid in the other state.

The convention contains clauses that relate to all types of economic activity, such as income from real estate; from the operation of ships or planes in international traffic; from dividends, interest and benefits; income of salaried and self-employed workers; and to specific sectors, such as civil servants, students, lecturers, athletes, and artists.

Furthermore, the convention sets standards for non-discrimination: Citizens of one state will not be subject to taxes in the other state that are different or heavier than the taxes to which the citizens of the second state are subject. The convention also provides for exchange of information between the tax authorities.

The convention is expected to have a positive impact on Israeli individuals and companies operating in Luxemburg and Luxemburg individuals and companies operating in Israel by granting tax benefits, and to encourage individuals and companies in both states to participate in joint business projects.

The convention is subject to ratification by the two governments.