IP tax regime proposed for 2018 in Luxembourg | KPMG | GLOBAL

Luxembourg: IP tax regime proposed for 2018; patents, software covered

IP tax regime proposed for 2018 in Luxembourg

The Luxembourg government introduced a bill that would provide a new intellectual property (IP) tax regime.

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The bill (submitted 4 August 2017) would provide a 80% tax exemption of income derived from patents—including IP assets that are functionally equivalent to patents—and copyrighted software, as well as a full net wealth tax exemption for these assets. The legislation addresses measures such as:

  • What are eligible IP assets
  • How to compute the IP income that would benefit from the exemption
  • What would be qualifying research and development (R&D) expenditures
  • What would be overall R&D expenditures
  • What would be qualifying net IP income
  • How would the new measures interact with the prior IP tax regime

If enacted, the new IP tax regime would be applicable as from 1 January 2018.

KPMG observation

The introduction of the new IP tax regime underscores the willingness of the Luxembourg government to continue to promote innovative business and start-ups in Luxembourg. It also contributes to the reinforcement of R&D activities in Luxembourg, in line with international tax standards. 

 

Read an August 2017 report prepared by the KPMG member firm in Luxembourg

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