Tax focus: Getting maximum return on IP

After abolishing the old IP Box regime in 2016, in April 2018, the Luxembourg parliament passed a law on introducing a new article 50ter into the Income Tax Law. It provides for an 80% exemption on income derived from the commercialisation of certain IP rights, as well as a 100% exemption from net wealth tax.

The new rules will be applicable from fiscal year 2018 (which each company can determine).

The new legislation is fully compliant with the 2015 agreement reached under the OECD/G20 base erosion and profit shifting (BEPS) project for IP Box regimes and in particular with the “modified nexus approach” set out in the BEPS final report on action 5, “Agreement on Modified Nexus Approach for IP Regimes”.