Besides introducing an OECD-compliant full exchange of tax information procedure (still excluding "fishing expeditions"), the major changes to the Treaty concern the introduction of an anti-abuse/limitation on benefits provision which is new ground in Luxembourg tax treaty policy and the possibility for the situs state to tax the sale of shares in a "land-rich" entity (provided however that domestic tax law permits such taxation, which, depending on the structuring scenario, does not necessarily seem to be the case under currently existing Polish tax law and regulations).
One could add more words on the newly introduced anti-abuse provision permitting the tax authorities of both Contracting States to deny treaty protection to what the Treaty calls - without defining it - "artificial arrangements" which brings to mind the 1998 Imperial Chemical Industries (C-264/96) and the 2006 Cadbury Schweppes (C-196/04) ECJ cases. However, even though this is quite an innovative concept, its application should, at least from a Luxembourg perspective, be of limited importance, given that in a large number of cases, tax structuring is based on interpretation of domestic tax law provisions not relying on any treaty application.
The worst news though, and this not only from a Polish tax but also from a Luxembourg business perspective, is the switch from the exemption method to the credit method for Luxembourg source dividends received by Polish tax residents because this brings to an end a certain number of existing tax-efficient Luxembourg-Polish structures.
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