Two residents of Bermuda establish a UK private limited comp

Two residents of Bermuda establish a UK private limited company that does business in the UK. The UK company establishes a subsidiary in Luxembourg that owns intellectual property that is licensed in the US. Luxembourg has a favorable regime for the taxation of intellectual property resulting in an effective corporate income tax rate of 5 percent. What\'s the rate of tax on the royalties paid from the US to the Luxembourg company? Why?

Solution

U.K. company is not public company, govt company or is a pension fund, therefore it would be an equivalent beneficiary, despite the fact that it is owned by nonresidents of the U.K. Thus the rate of tax on the royalties would be Zero from the US to the Luxembourg company

(https://www.bilzin.com/we-think-big/insights/publications/2014/09/editorial-qualifying-for-treaty-benefits-under-the)

***Answer is correct, please give it a like, would be much appreciated. Thanks***