1. Irish dividends into the Luxembourg holdco

Provided the SARL is a qualifying parent holding a participation of at least 10% (or acquisition cost of €1.2m) held for an uninterrupted 12-month period, dividends from the Irish subsidiary are exempt under the Luxembourg participation exemption L. art. 166 LIR ↗. The exemption transposes the EU Parent-Subsidiary Directive Dir. 2011/96/EU, art. 4 ↗, subject to the anti-hybrid carve-out where the distribution is deductible at the level of the payer.

Because Ireland is an EU member state, the subsidiary is presumptively within scope; no further treaty analysis is required for the inbound dividend, though the general anti-abuse rule (GAAR) must be satisfied StAnpG §6 ↗.

2. US C-corp distributions — withholding under the treaty

Domestic US withholding on dividends to a foreign parent is 30% 26 U.S.C. §1442 ↗. The US–Luxembourg income tax treaty reduces this to 5% where the beneficial owner holds at least 10% of the voting stock Treaty art. 10(2)(a) ↗, otherwise 15%.

• The reduced rate is contingent on satisfying the Limitation on Benefits article — the SARL must meet an objective test (e.g. publicly traded, ownership/base-erosion, or active trade or business) Treaty art. 24 ↗.
• A holding company with no substance is unlikely to clear LOB; treaty benefits may be denied notwithstanding the 10% threshold.

Bottom line

The Irish dividend should be exempt at the Lux level subject to GAAR. The US dividend qualifies for the 5% treaty rate only if the SARL independently satisfies the LOB article — substance at the Luxembourg level is the operative risk. This is research output, not legal advice; verify each citation before relying on it.