CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Luxembourg Legislates For New IP Box Regime

Luxembourg Legislates For New IP Box Regime

by Ulrika Lomas, Tax-News.com, Brussels

11 August 2017


Luxembourg Finance Minister Pierre Gramegna has introduced legislation into parliament that would establish a new intellectual property tax regime in Luxembourg.

The bill was submitted to the Chamber of Deputies on August 4, 2017, and is designed to be aligned with the "modified nexus" approach to special IP tax regimes agreed by countries under Action 5 of the OECD's base erosion and profit shifting project. This stipulates that a taxpayer would only be allowed to benefit from an IP regime, and its beneficial tax rates, to the extent that it can show that it itself incurred expenditures, such as on research and development, that gave rise to IP income in that territory.

The new IP box retains 80 percent tax exemption for IP income, as under the similar regime repealed on June 30, 2016 (subject to grandfathering provisions). This reduces the effective corporate tax rate on such income to around five percent.

However, the new IP box regime differs from the previous version by permitting a wider variety of patents and copyrights on computer software, while trademarks and designs are ineligible.

Eligible income will be determined by the ratio of eligible expenditure to total expenditure. Eligible expenditure includes spending on research and development activities directly related to the intellectual property. Outsourcing for R&D is permitted, provided an unrelated party is engaged.

Ineligible costs include those not directly related to the intellectual property, in addition to real estate, and interest and other financing costs, among other expenses.

If approved by parliament, it is intended that the new regime will apply from 2018.

TAGS: Finance | tax | trademarks | patents | property tax | interest | intellectual property | copyright | Luxembourg | legislation | trade | research and development | BEPS

To see today's news, click here.

 
















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »