Withholding tax study 2023

For this 16^th edition of KPMG Luxembourg’s WHT study, we researched 124 countries and analyzed the WHT rates applicable on interest, dividends and capital gains derived by Luxembourg UCITS SICAVs and FCPs based on their legal status as of 1 January 2023.

In addition to the analysis, the study provides further insight into topics like Mandatory Disclosure Rules (DAC6), FATCA and developments in CSR and the sustainable investments sector. 

Through the 360° WHT service approach, we can ensure that your funds do not suffer unnecessary tax leakage and comply with local tax legislation. To reach these goals, we can coordinate the entire project activities, providing local services and global support during the fund’s entire life cycle with a focus on:

KPMG Luxembourg has developed outstanding technical know-how in EU and global tax matters and is now filing claims on behalf of several European and non-European resident investment funds in numerous countries, such as France, Germany, South Korea, Poland, Taiwan and more.

Our multidisciplinary EU Tax team has gained experience in mobilizing and coordinating dedicated and skilled people within the KPMG network to respond to your needs quickly and efficiently. KPMG Luxembourg can assist you with applying for a reduction at source and filing WHT reclaims in all countries that infringe EU law, DTT regulations, and domestic law by applying a discriminatory tax treatment to cross-border dividend distributions.

To ensure that investment funds can benefit from the best possible performance by enjoying the most favorable WHT rates, KPMG Luxembourg has developed the KPMG WHT HealthCheck, a fully automated tool especially designed for this purpose. The tool will verify, on a worldwide basis, whether investment funds benefit from reduced WHT rates and/or whether you can file WHT reclaims based on domestic law, double tax treaties, or EU law.

The WHT HealthCheck analyzes the 124 investment markets to see if WHT has been correctly applied to your funds and produces a report with a concrete action plan. It provides complete oversight and further assurance that can be outlined to investors.

The relief and claim documents are automatically prepared and/or generated by the WHT Ecosystem. Based on a Power of Attorney between you and KPMG, the tax forms are signed by KPMG whenever the market practices allow it. Additional documents required for the filling of claims, that need to be obtained from various stakeholders, can also be collected by KPMG.

We can help improve your tax governance and tax risks management to be in line with the different regulatory requirements, such as:

The Mandatory Disclosure Rules (DAC 6) introduced the obligation for intermediaries or taxpayers to report cross-border tax aggressive arrangements within a 30-day period. We support our clients in identifying their role as an intermediary by producing an impact analysis reflecting the particular and unique service lines of each client.

KPMG Luxembourg developed a unique methodology to determine whether you have arrangements to report under DAC6 and, if required, can assist you in the reporting process, ensuring that the 30-day deadline is accurately complied with.

Luxembourg investment funds are compelled to comply with a set of due diligence, withholding and reporting requirements. KPMG Luxembourg can help you achieve smart compliance towards FATCA, CRS and other operational tax rules. Our assistance includes end-to-end assistance (from client onboarding to reporting), entity classification, drafting or review of procedures, training, health checks and annual reporting. Get in touch with our experts today.

Over the past few years, the international tax landscape has shifted towards increased tax transparency and enhanced tax conformity across many industries and professions. As a result, Luxembourg underwent a significant tax reform in 2017, which created — amongst others — new tax-related criminal offenses. In this context, and in response to the Luxembourg fund industry’s concerns, the CSSF issued Circular 20/744 that introduced nine tax indicators to identify potential tax crimes, on top of the 21 tax indicators already presented in Circular 17/650.

The CSSF Circular 20/744 applies to all professionals from the asset management sector that the CSSF directly supervises. By systematically tackling potential tax risks, they aim to enhance the existing tax governance frameworks and strengthen the Luxembourg fund industry’s robustness and stability.

After Circular 20/744 was published in July 2020, the CSSF included 9 new indicators in the scope of its 2021 audits and began sending specific observations in December 2021 requesting dedicated procedures on the Circular. Going forward, both circulars and their implementation will be a key consideration of the CSSF.

To mitigate their exposure to these potential tax risks, professionals must adapt their tax compliance policies and AML frameworks by integrating these nine indicators into their risk assessment processes.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.