Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Applicable rate of tax to be applied to dividends paid by Canadian-resident corporation to Luxembourg-resident company that holds all of the voting equity of the dividend payor.
Position: 5%
Reasons: Provided Luxembourg-resident recipient is beneficial owner of dividends, the requirements of Article 10(2)(a) of the Luxembourg Treaty will be satisfied.
XXXXXXXXXX 2011-039352
Attention: XXXXXXXXXX
XXXXXXXXXX , 2011
Dear Sir and Madam:
Re: XXXXXXXXXX
Supplemental Advance Income Tax Ruling Request
This is in reply to your letter of XXXXXXXXXX , in which you requested amendments to advance income tax ruling 2010-036537, which was issued on XXXXXXXXXX , 2010 (the "Ruling"). We also acknowledge receipt of additional information provided on XXXXXXXXXX . Unless otherwise defined, all capitalized terms in this letter have the meanings assigned to them in the Ruling.
You have requested the Ruling be amended to add the payment of a dividend by Canco Amalco to Luxco Sub on the Canco Amalco Common Shares to the Proposed Transactions and to confirm the rate of tax to be applied in respect of the dividend payment under Part XIII of the Act. XXXXXXXXXX .
Consequently, we amend the Ruling as follows:
1. The reference to Paragraph 50 in the definition of "Proposed Transactions" in paragraph (ooo) of the Definitions is deleted and replaced with a reference to Paragraph 50.1;
2. After Paragraph 50, the following is added:
50.1 Canco Amalco will pay dividends to Luxco Sub on the Canco Amalco Common Shares.
3. Paragraph 52 is deleted and replaced with the following:
52. The Proposed Transactions will allow Canco Amalco to determine, with certainty, the withholding tax rate applicable to interest paid on the Canco Amalco Debt and to dividends paid on the Canco Amalco Common Shares, without having to undertake extraordinary information gathering and analysis of a number of different tax treaties to do so.
4. The reference to "Canco Amalco Shares" in Paragraph 66 is deleted and replaced with a reference to "Canco Amalco Common Shares".
5. The following is added after Paragraph 66:
66.1 Immediately after the completion of the Proposed Transaction described in Paragraph 46, the fair market value of the Canco Amalco Common Shares will be no less than XXXXXXXXXX % of the aggregate fair market value of the Canco Amalco Common Shares and the Canco Amalco Preferred Shares.
66.2 Luxco Sub will not be considered to carry on business in Canada through a permanent establishment for the purposes of Article 10(7) and Article 11(6) of the Luxembourg Convention.
66.3 Dividends paid on the Canco Amalco Common Shares will be dividends within the meaning of Article 10(6) of the Luxembourg Convention.
6. After Ruling B, the following is added:
B.1 Provided that Luxco Sub is the beneficial owner, within the meaning of Article 10(2) of the Luxembourg Convention, of dividends paid by Canco Amalco as described in Paragraph 50.1, the amount of dividends paid will be subject to tax under Part XIII of the Act at a rate of 5% pursuant to Article 10(2)(a) of the Luxembourg Convention and subsection 10(6) of the ITARs.
The Ruling, as amended by this letter (the "Amended Ruling"), is based solely on the facts contained in the Amended Ruling, the Proposed Transactions, including, for greater certainty, the transaction described in this letter, and the additional information described in the Amended Ruling. The Amended Ruling is subject to the limitations and qualifications set forth in Information Circular 70-6R5 issued on May 17, 2002 and remains binding on the CRA provided that the Proposed Transactions which have not been completed as of the date of this letter, including the transaction described herein, are completed on or before XXXXXXXXXX .
Yours truly,
for Director
International and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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