Luxembourg: Government announces new intellectual property tax regime

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Luxembourg has announced a new regime that offers a special tax incentive for certain income from intellectual property rights. On 7 August 2017, a bill of law proposing the introduction of a new Luxembourg intellectual property (IP) tax regime was published.

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.  Under the proposal, up to 80% of the net income and capital gains derived from specific protected IP assets would be exempt from corporate income tax and municipal business tax, and these eligible IP assets would be fully exempt from net wealth tax. IP assets with a marketing nature (e.g. trademarks, domain names, designs and models) are excluded from the scope of the proposed regime. The Luxembourg government intends to guide the proposal through Parliament still this year, with an entry into force scheduled for 1 January 2018.

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